Five Social Security Mistakes That Could Cost You $100,000 or More
The most common Social Security mistakes, like claiming too early, ignoring spousal or survivor benefits, or misunderstanding key rules, can cost you $100,000 or more in lifetime benefits.
Although Social Security has been around for nearly 90 years, many Americans still lack basic knowledge about their benefits, including when to take them, how to maximize them, and why the full retirement age, or FRA, is important.
A 2025 survey from Nationwide Financial (pdf) points out that few people know all the factors for determining an individual’s maximum Social Security benefit. For instance, just 21% of all respondents were able to correctly identify at what age they are eligible to receive full Social Security benefits.
With over 72 million Americans on track to collect Social Security this year, knowing when to retire and how to maximize your benefits is crucial.
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Don't miss out on reaching your retirement goals. Here are several big missteps you don't want to take when claiming your Social Security benefits.
1. Miscalculating your Full Retirement Age (FRA)
Your Social Security ‘full retirement age’ (FRA), also known as normal retirement age, is the age you’re entitled to 100% of your earned Social Security benefits.
FRA is 66 for beneficiaries born between 1943 and 1954. It gradually increases to 67 for beneficiaries born in 1960 or later. In terms of a retirement strategy, claiming Social Security before your FRA reduces your monthly benefit, while delaying benefits until age 70 increases your monthly benefit.
The Social Security Administration (SSA) defines your FRA based on your birth year and your lifetime earnings history, and adjusts your actual earnings based on the 35 years when you earned the most money. If you worked fewer than 35 years, Social Security credits you with zero earnings for each year up to 35. Although you can start collecting Social Security at age 62, if you sign up before your full retirement age, you won't receive the full benefit you have earned.
Oddly enough, if you were born on the first day of a month, the SSA uses the previous month to figure your FRA. So, if you were born on March 1, the SSA considers you to have been born in the previous month (Feb). If you were born on January 1, the SSA bases your FRA on the previous year.
This is your FRA by birth year:
Year of Birth | Full Retirement Age (FRA) |
1937 or earlier | 65 |
1938 | 65 and 2 months |
1939 | 65 and 4 months |
1940 | 65 and 6 months |
1941 | 65 and 8 months |
1942 | 65 and 10 months |
1943 - 1954 | 66 |
1955 | 66 and 2 months |
1956 | 66 and 4 months |
1957 | 66 and 6 months |
1958 | 66 and 8 months |
1959 | 66 and 10 months |
1960 and over | 67 |
2. Claiming benefits too early
You can claim Social Security as early as age 62. But claiming Social Security early will result in a permanently reduced monthly benefit. Yes, that's right, the reduced monthly benefit is lifelong, set in stone, permanent for all time.
Year of Birth | Months Between Age 62 and FRA | Percentage of Reduction in Benefit | Percentage of Reduction in Benefit for Spouse |
1937 or earlier | 36 | 20% | 25% |
1938 | 38 | 20.83% | 25.83% |
1939 | 40 | 21.67% | 26.67% |
1940 | 42 | 22.50% | 27.50% |
1941 | 44 | 23.33% | 28.33% |
1942 | 46 | 24.17% | 29.17% |
1943 - 1954 | 48 | 25% | 30% |
1955 | 50 | 25.83% | 30.83% |
1956 | 52 | 26.67% | 31.67% |
1957 | 54 | 27.50% | 32.50% |
1958 | 56 | 28.33% | 33.33% |
1959 | 58 | 29.17% | 34.17% |
1960 and later | 60 | 30% | 35% |
This is how much your initial monthly benefit will be permanently reduced for every month you claim your Social Security benefit before reaching FRA:
- Your benefit will be reduced by five-ninths of 1% per month (6-2/3% per year) for as many as 36 months before full retirement age.
- Your benefit will be reduced by five-twelfths of 1% per month (5% per year) for every month you claim early beyond 36 months.
However, your Social Security benefit will be permanently increased if you wait until after your full retirement age (FRA) to start your benefits.
3. Forgetting to factor in your life expectancy age
How much you receive in monthly benefits depends on the age at which you begin receiving Social Security. Putting off filing for benefits as long as possible will maximize your monthly payments. However, when you start claiming benefits is up to you and will depend on several circumstances, such as if you decide to continue working past the age of 62.
If you experience an unexpected health emergency or you don't expect to live a long life, you may decide to claim benefits early. On the other hand, if you have resources like a pension, a 401(k), an investment portfolio, or income from other sources, you might be more flexible about when to take Social Security benefits.
4. Not understanding the basics of Social Security
The Nationwide survey also pointed out that only two in five are confident (or very confident) in their knowledge of Social Security.
However, even a basic knowledge of Social Security is important. After all, for many people, it’s one of the biggest chunks of their retirement income, and tiny decisions, like when to start claiming or whether to coordinate with a spouse, can increase (or decrease) your lifetime payout by tens or hundreds of thousands of dollars.
For instance, making the decision when to start Social Security payments is crucial. Starting too early could mean the loss of tens of thousands of dollars for you and your spouse.
But that's not the only problem. There are claiming rules and plenty of personal factors that come into play as you decide when to file for your benefits. Here are three factors regarding age that can help you get the most out of your benefit —
Full Retirement Age (FRA) –
FRA is the age at which you can start receiving your full retirement benefit amount. If you were born from 1943 to 1954, your FRA is age 66. The FRA gradually increases if you were born from 1955 to 1960, until it reaches 67. If you were born in 1960 or later, your full retirement benefits are payable to you at age 67.
Use our Social Security Full Retirement Age calculator to sort it all out.
Early Retirement Age –
You can begin taking Social Security retirement benefits as early as age 62. However, taking benefits before your full retirement age will mean a permanent reduction in your payments, as much as 25% to 30%, depending on your full retirement age. And, despite what you may think, your payment will not automatically increase to 100% of your full retirement benefit when you reach full retirement age.
However, Social Security gives you 12 months from the date you applied for retirement benefits to cancel your initial claim if you change your mind. That way, you can refile when you reach full retirement age and get your full benefit amount. However, you will have to repay any money Social Security has paid out to you. Also, if you continue working but claim benefits early, your monthly payment might be cut further, depending on your income. However, this reduction is not permanent.
Delayed Retirement Age –
If you hold off claiming your Social Security benefits beyond your FRA, your retirement benefit will continue to increase until age 70. There is no incentive to delay claiming after age 70. All things considered, it pays to delay claiming your benefits, sometimes even beyond your FRA.
Read Avoid These Three Common Mistakes When Claiming Social Security to gain an even greater understanding of the errors often made when claiming your benefits.
5. Not coordinating benefits with a spouse
Not coordinating Social Security benefits with a spouse is one of the most expensive mistakes married couples make, often costing $50,000 to $150,000 or more in lifetime income, especially when it comes to what the surviving spouse gets left with.
If both you and your spouse claim benefits at 62 or the higher earner starts early, it locks in a permanently smaller check for the higher earner, and reduces the survivor's check after one of you passes. This is especially costly for couples with an earnings gap, where benefits should ideally be delayed until age 70 for the higher earner, while providing a bigger safety net for the remaining spouse.
The smarter play is usually coordinating your efforts. Let the higher earner hold off claiming to increase the survivor benefit as much as possible, while the lower earner claims earlier, maybe on their own or taking advantage of spousal benefits.
Skipping this kind of planning means overlooking spousal and survivor perks, not factoring in age or health differences or underestimating how long one of you might live, leaving a substantial pot of unclaimed money on the table.
Other key insights from the survey
The Nationwide Financial survey revealed that few people know all of the details of how Social Security works, with almost half of Americans having an incorrect view about how claiming benefits early (or late) will impact their monthly benefit. Here's more:
- When asked to respond to 15 true-or-false questions about Social Security, the average respondent gave only eight correct answers.
- Many of those surveyed aren’t sure at what age their retirement savings may run out.
- Those who currently receive Social Security report Social Security benefits cover 59% of their retirement expenses, much higher than what is expected by those who expect to receive Social Security in the future.
- When thinking about retirement, nearly two-thirds plan to use or are using their full Social Security benefit for their monthly expenses.
- Only two-fifths agree the government will do the right thing and fix the Social Security system.
- More than three in five who work with a financial professional report that they receive advice about how and when to file for benefits.
- Those aged 60-65 expect to draw Social Security at an average age of 65.
The future of Social Security
While the future financial status of Social Security is uncertain, the program is not going bankrupt. Still, nearly three-quarters of American adults worry about Social Security running out of money in their lifetime, with a third strongly agreeing, according to the survey. In fact, 8 in 10 agree the Social Security system needs to change, including 30% who strongly agree
Gen Z, Millennials, and Gen Xers are more likely than those aged 60-65 to worry they won't get a dime of the Social Security benefits they have earned. What's more, women are more likely than men to worry about the Social Security program running out of funding in their lifetime.
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