Most people get this wrong—and it costs them big. Sarah Thompson thought she’d done everything right. She filed for Social Security at 62, eager to start her retirement dream. Three years later, she discovered the truth: claiming early had cost her $400 every single month for the rest of her life.
According to a 2024 Nationwide Financial survey, nearly 49% of Social Security beneficiaries don’t know how to maximize their benefits. Another 33% didn’t even know at what age they were eligible for full retirement benefits.
With over 72 million Americans collecting Social Security this year, these simple errors are draining billions from retirees’ pockets. The twist? Almost every mistake is entirely preventable—if you know what to watch for.
Claiming benefits at 62 because “everyone does it”
Here’s what the government doesn’t advertise. According to the 2024 Social Security Administration’s Annual Statistical Supplement, a staggering 63% of 50.1 million retired workers received reduced benefits because they claimed before reaching full retirement age.
Think about that. Nearly two-thirds of retirees are getting smaller checks than they could be.
Claiming at 62 instead of your full retirement age permanently slashes your monthly payment. For every month before your FRA, your benefits get trimmed. Wait five years less? You’re looking at a 30% reduction.
The kicker? Once you start collecting, there’s no do-over. That reduction follows you for life.
Trusting that your earnings record is accurate (spoiler: it probably isn’t)
The government makes billion-dollar mistakes—with your money. Reports show that the U.S. Social Security Administration made about $13.6 billion in improper payments in 2022 alone. That breaks down to $11.1 billion in overpayments and $2.5 billion in underpayments.
Now here’s where it gets personal.
If your employer fails to report just one year of earnings correctly, your future payments could drop by $100 per month. Do the math over a 20-year retirement: that’s $24,000 gone.
The fix is simple but crucial. Log in to ssa.gov annually and scan your earnings record. Look for missing years or suspiciously low amounts. One 10-minute check could save you thousands.
Discovering errors too late to fix them
There’s a ticking clock you probably don’t know about. According to Kiplinger’s analysis, you’ve got three years, three months, and 15 days from the end of the taxable year to correct your earnings record.
After that deadline? Good luck.
Corrections become monumentally more problematic—sometimes downright impossible. It’s like the SSA says, “You snooze, you lose… permanently.”
Keep your W-2 forms and tax returns for at least 3-4 years. Store them digitally if you hate clutter. Just keep them somewhere you can access when you need proof.
The SSA advises checking your earnings records every August, when updated data typically hits the system. Mark your calendar. Make it a ritual. Your future self will thank you.
Leaving thousands on the table because you don’t know about divorced spousal benefits
Plot twist: Your ex might be your retirement plan. An AARP report found that more than 4 in 10 Americans nearing retirement have no idea that divorced people can collect benefits based on their ex-spouse’s earnings.
Were you married at least 10 years? You might qualify for up to 50% of your ex’s full retirement benefit. Even if your ex remarried. Even if you haven’t spoken in decades.
The beautiful part? Your ex won’t get a notification when you file. A single penny won’t reduce their benefit. It’s like free money they’ll never miss.
According to the latest SSA data, women make up 95% of the nearly 641,000 people receiving divorced spousal benefits. If you’re in that demographic, this could be a game-changer.
Assuming your parents’ retirement age is yours
Your birth year just became your most important financial detail. According to Kiplinger’s guide, for those born in 1959, full retirement age is 66 and 10 months. Born in 1960 or later? It’s 67.
Claiming even one month before your FRA triggers permanently reduced benefits. Not temporarily. Permanently.
If you claim at 62 when your FRA is 67, your monthly benefit gets slashed by about 30%. That’s $593 less every month if you’re hitting the average benefit of $1,978.
But here’s the flip side: waiting until 70 maxes out your monthly payment through delayed retirement credits. Every year you delay past the FRA adds roughly 8% to your benefit.
Working part-time while collecting early—and watching your checks disappear
The earnings test is the penalty nobody warns you about. In 2025, if you’re under full retirement age, the annual earnings limit is $23,400. Earn more? For every $2 above that threshold, the government withholds $1 in benefits.
The year you reach FRA, the limit jumps to $62,160. Still exceed it? They withhold $1 for every $3 over the limit.
Let’s say you’re 64 and take a $35,000-a-year consulting gig. That’s $11,600 over the limit. The SSA will withhold $5,800 of your annual benefits. Surprise!
The good news? After reaching FRA, the earnings cap vanishes completely. Work as much as you want without penalty.
Forgetting that Medicare is about to raid your Social Security check
Medicare Part B doesn’t ask permission—it just takes. For 2025, according to CMS data, the standard Part B premium is $185 per month—up $10.30 from 2024.
That’s $2,220 annually, automatically deducted straight from your Social Security payment before you ever see the money.
But it gets worse for high earners. If your 2023 income exceeded $106,000 (individual) or $212,000 (joint), you’ll pay IRMAA surcharges on top.
Research shows that total Part B premiums can soar from $259 to $628.90 monthly, depending on income. That’s up to $7,547 annually.
Nobody tells you this when you’re planning retirement budgets. Now you know.
Flying solo when you should be tag-teaming with your spouse
Married couples who don’t coordinate are leaving money behind. According to financial expert Tina Ambrozy of Nationwide, “Americans across all generations need more Social Security education.”
She’s being diplomatic. The truth? Most couples have no clue how spousal benefits work.
Spouses can claim up to 50% of their partner’s full retirement age benefit. But here’s the catch: you must claim at your own FRA to get the complete 50%. Claim early? That spousal benefit gets permanently reduced, too.
Another gotcha: Your spouse must already be receiving benefits for you to claim spousal benefits—unless you’re divorced and the marriage lasted 10+ years. Then different rules apply.
Get this strategy wrong, and you could forfeit $50,000 or more over a typical retirement.
Changing your name and forgetting to tell Social Security
Your earnings have to match your Social Security number—exactly.
If you changed your name after marriage or divorce but never reported it to the SSA, your earnings might be missing from your record.
Here’s how it breaks: Employers report earnings using the name and SSN combination on their W-2 forms. If that name doesn’t match SSA records, your earnings might not get credited to your account.
It’s like making deposits into someone else’s bank account. The money disappears into the void.
Report name changes immediately. Visit ssa.gov or call 1-800-772-1213. Five minutes now prevents headaches later.
Overlooking survivor benefits when they could save your retirement
Widows and widowers: the rules change in your favor. Survivor benefits allow the surviving spouse to receive the higher of their own benefit or the deceased spouse’s full benefit.
You can claim survivor benefits as early as age 60 (or 50 if disabled). But—and this is essential—claiming early means permanently reduced benefits, just like retirement benefits.
Here’s what most people miss: You have claiming strategy options that can maximize lifetime income. You could claim survivor benefits early, let your own benefit grow until 70, then switch.
Financial advisors call this “sequencing strategy.” Most widows and widowers never hear about it.
Believing the myth that Social Security will cover your retirement
Let’s talk reality. The average monthly benefit in 2025 is around $1,978.77.
That’s roughly $23,700 annually. Try living on that.
Most financial planners recommend Social Security cover only 40-50% of pre-retirement income. The rest? That’s on you.
Build retirement savings beyond Social Security. Max out 401(k)s. Fund IRAs. Invest consistently. Social Security was designed as a safety net, not a hammock.
Going it alone instead of getting expert help
The most expensive mistake might be DIY-ing your claim. As noted in the U.S. News analysis, one of the most damaging mistakes is not consulting with a trusted financial professional before making a claim.
Financial advisors can review your documents, analyze your options, and create an optimal claiming strategy. They’ll factor in your health, life expectancy, other income sources, and spousal coordination.
Yes, it costs money. But getting your claiming strategy wrong could cost you $50,000 to $100,000 over retirement.
According to AARP reporting, the 2025 COLA of 2.5% adds $49 monthly for the average retiree. But that only matters if you’ve maximized your base benefit first.
Key takeaway
Social Security isn’t an automatic pilot—it’s a high-stakes decision that affects every month of retirement. Check your earnings record annually (especially in August when data updates). Know your full retirement age—it’s likely 67 if you were born after 1960. Calculate the permanent reduction before making an early claim.
Research divorced spousal benefits if you were married for at least 10 years. Budget for Medicare premiums of at least $185 monthly. Remember: 63% of retirees claim early and receive reduced benefits. Don’t join them without understanding exactly what you’re giving up. Get professional advice before filing—your lifetime benefit amount depends on getting these decisions right the first time. There are no do-overs.
Disclaimer – This list is solely the author’s opinion based on research and publicly available information. It is not intended to be professional advice.
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