For many retirees, Social Security is a key piece of their retirement plan. Yet decisions made years before claiming benefits can reduce the windfall. Through a variety of errors, retirees sometimes shrink their own benefits without realizing it.
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GOBankingRates had retirement experts lay out the most common missteps so retirees can collect their maximum benefits.
1. Claiming Benefits Too Early
One of the most common ways retirees shrink their Social Security income is by claiming benefits too soon.
Hagen Pruemm, a retirement planner, president and owner at SIS Financial Group, explained that claiming at age 62 reduces the benefit by 30% compared to full retirement age (67 for anyone born after 1960).
“In this case, the breakeven age would approximately be around age 78. With life expectancy on the rise, it is not uncommon for many people to live well into their 80s and thus by claiming early could greatly reduce the total amount received over time.”
Many retirees misunderstand how permanent the claiming decision is, according to Nick St. George, a CFP fiduciary advisor and owner of St. George Wealth Management.
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“[They] consider it an on/off switch. They hear they can begin receiving Social Security at age 62, and believe because they just turned 62, they have to turn it on.”
If your full retirement age benefit is $2,500 a month, and you claim at 62, your monthly benefit will be reduced to about $1,750 for the rest of your life, St. George said. That is a $750 per month difference.
2. Working While Claiming Before Full Retirement Age
Retirees who claim Social Security early but continue working can see their benefits temporarily reduced because of earnings limits.
Joe Braier, president and CEO of Lake Country Advisors, explained that many retirees are caught off guard by these rules. “Exceeding the earnings limits will lower benefits temporarily and many retirees don’t realize this until after they are affected.”
Pruemm noted retirees should watch specific thresholds, known as “the earnings test.” The limit for 2026 is $24,480 in earnings. For every $2 of earnings above that amount $1 of Social Security will be withheld, he explained.
3. Overlooking Medicare Premiums and Taxes
The difference between estimated and actual payments often surprises retirees, St. George said. This is largely due to deductions and taxes. Medicare premiums are automatically withheld from Social Security checks.
“The standard Medicare Part B premium in 2026 is $202.90 and is deducted monthly from each Social Security payment,” Pruemm explained. The amount varies based on a person’s modified adjusted gross income (MAGI) and could become as much as $689.90 per person per month, he said.
Taxes can also reduce the net amount retirees receive, particularly people in higher income tax brackets, Pruemm said.
“After deductions, some retirees are discovering they are short $200 or $300 a month or even more from their estimated pension incomes.”
4. Not Arranging Spousal or Survivor Claiming Strategies
For married couples, filing decisions can significantly affect lifetime Social Security income, especially survivor benefits.
Timing matters most for the higher earner. Filing for Social Security early may leave the surviving spouse with significantly lower income in the future.
“The higher earning spouse should delay benefits to maximize survivor benefits,” Pruemm said.
However, couples often fail to coordinate their claiming strategies. Both spouses claiming early retirement can be a costly mistake especially if there was a large disparity in earnings.
“When one of you dies, the benefit that the surviving spouse receives is almost always more than what you currently get. If the primary earner applied at an early age, the lower benefit that is paid to the survivor for the rest of her life would continue.”
5. Not Understanding How Social Security Is Calculated
Even decisions made decades before retirement can reduce Social Security benefits as Social Security benefits are calculated by using the highest 35 earning years indexed for inflation, Pruemm explained.
“If a person doesn’t have 35 years of earnings, the missing years will be replaced with $0, which can significantly reduce benefits.”
Because of this formula, working longer or earning more in later years can sometimes raise future benefits.
Understanding how these rules work can help retirees avoid unintentionally shrinking the benefit they rely on most.
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This article originally appeared on GOBankingRates.com: 5 Ways Retirees Accidentally Shrink Their Social Security Income
