Since approximately 70 million Americans depend on Social Security, just one Social Security mistake when claiming Social Security benefits could be detrimental and even cost citizens thousands. One thing that citizens should note is that the Social Security system is rather complex with thousands of rules and exceptions that are sometimes unknown to many retirees. A single mistake when claiming 2025 Social Security benefits could reduce the amount of benefit that a citizen receives considerably. It’s best to look at 3 common Social Security mistakes that can be sidestepped and avoided.
Initial mistake: Making a claim too early
Since eligible beneficiaries can start collecting their Social Security benefit at 62, many retirees opt to claim for these benefits when they reach 62 years of age. However, claiming rather early could shrink benefits considerably. The minute a retiree starts claiming benefits early, they secure a permanent reduction of about 30% in comparison to what they would have received if they waited until full retirement age. Benefits are thus about 76% higher when they are claimed at the full retirement age of 70.
To decide when the right time is to start claiming these Social Security benefits, citizens must assume they will live for much longer. Claiming benefits too early is always mentioned as one of the gravest Social Security mistakes as it could cost retirees about $182,000 in lost lifetime benefits. Citizens who are healthy should wait until 70 to start collecting their retirement benefits.
Second mistake: Mismanagement of Survivor and Retirement Benefits
Sometimes called the widow’s scam, this scam is a grave mistake that affects eligible citizen’s Survivor and Retirement Benefits as well as a citizen’s own retirement benefits. Widows and widowers are both able to claim from as early as 60, but the main problem arises when a citizen files for both the Survivor of Retirement Benefits and for the Social Security benefits at the same time.
While it may seem ideal that both benefits would be received simultaneously, this is not the case. Social Security Administration only pays out one of the benefits. The benefit that gets paid out is the one that is higher. When widows or widowers claim early retirement, they unintentionally locking their own retirement at a lower rate. Benefits would be greater if citizens wait until 70 to claim.
The decision on which to claim the Survivor and Retirement Benefits needs to be carefully thought out since if it’s been 12 months since you filed, you won’t be able to undo the decision. It is better to claim Survivor’s benefit earlier and then claim retirement benefits at a later age. Always do calculations and consult with financial advisors before making moves with serious consequences. Citizens must also know the 5 secrets Social Security doesn’t tell you.
The third mistake: misunderstanding the earnings test
Citizens who plan to still work whilst collecting Social Security benefits should be careful about the earnings test. Back in 2023, the SSA decided that citizens who earned $21,240 or more, would have their retirement benefits reduced by $1 for every $2 that they earned above that limit.
This reduction may push older workers out of the workforce, however, most people need to understand that once the full retirement age is reached, the SSA recalculates benefits so as to pay back anything that was initially withheld. The process is called the adjustment of reduction factor (ARF).
A good point that workers should note is that for every dollar lost due to the earnings test, they get approximately $1.20 back. Since most citizens were never informed of this or don’t realize what the earnings test could mean in the long run, they lose out on earning a higher Social Security benefit later on.
Don’t trust SSA employees alone
These 3 mistakes must be avoided by citizens who wish to reap the most benefit from their Social Security payment, however, relying on advice from the SSA employees alone may not be the ideal option. While SSA employees can help you to make the right decisions, financial advisors can advise much better.
Research is required in order to prevent overly costly mistakes. A single wrong move in the wrong direction could cost you thousands. Having the right strategy or strategies can help you gain every dollar that you deserve. It is also important to learn the SSA formula to see how Social Security benefits are calculated.
