9 Social Security Benefits Strategies Most People Get Wrong

Navigating Social Security can feel overwhelming. Many retirees assume the system is straightforward, but it's possible to make small mistakes that can snowball into major income gaps.

Knowing the common missteps and how to avoid them can help you make the most of your Social Security benefits. Here are nine benefits strategies many people get wrong when managing Social Security.

Claiming Social Security at age 62 can be tempting, but it will reduce your monthly benefit by about 30%.

Waiting until full retirement age, or even as late as age 70, can result in a much higher payout. For every year you delay past full retirement age, your benefit increases by about 8% per year until you hit age 70.

Your own circumstances will dictate the best time to file for Social Security. However, taking benefits too soon might leave you with less income during your later years, when health care and other costs may rise.

If you claim benefits before reaching full retirement age and continue to work, your Social Security income might be reduced. In 2025, you'll lose $1 in benefits for every $2 you earn over $23,400.

Once you hit full retirement age, these limits disappear and your full benefit resumes. In addition, you will begin to receive credit for the months when you lost benefits. So, over the long haul, you shouldn't lose any money.

Still, many retirees overlook this rule and the fact that in the short run, their checks might be smaller than expected.

Spousal benefits offer you the opportunity to collect an amount of up to 50% of your spouse's benefit. You must be at least 62, and your spouse must have already filed for their own benefits.

It is important to note that you can either claim a benefit based on your own earnings history or based on your spouse's benefit amount. You cannot do both.

Social Security survivor benefits can provide ongoing income to a deceased worker's spouse, children, or dependent parents. A surviving spouse can claim benefits as early as age 60, or age 50 if disabled.

If you qualify for your own benefit and a survivor benefit, you typically will have to choose one or the other.

Divorced individuals may still qualify for spousal or survivor benefits, but only under specific conditions.

To qualify, you must have been married for at least 10 years and must be currently unmarried. You also must meet the age and income requirements. These benefits do not reduce your ex-spouse's payout.

Failing to understand your eligibility for these benefits could cost you hundreds of dollars per month in lost income.

Even if you're not collecting Social Security yet, you must enroll in Medicare at age 65 to avoid potential penalties. Failing to sign up during your initial enrollment window could lead to higher costs for you.

The easiest way to apply is through the Social Security Administration (SSA) website or by calling the SSA directly.

If the Social Security Administration overpays you, you are legally required to return the excess funds. Overpayments can happen for various reasons, such as changes in income or work status, or incorrect reporting.

Even if the SSA made the mistake, the agency will send a notice and begin recovery efforts, which could include reducing future payments. Ignoring these notices can make the situation worse, potentially leading to more aggressive collection methods.

If you regret claiming Social Security early, there are two little-known ways to reverse your decision.

If you started receiving benefits less than one year ago, you can withdraw your application and repay the benefits received, as long as you've never filed a withdrawal before. After that, you can reapply later and potentially receive a higher monthly benefit.

Alternatively, you may also elect to suspend your Social Security benefits if you took benefits before full retirement age and have reached full retirement age, but are not yet 70. This can increase your monthly payout when benefits resume, which can help you get ahead financially.

These "do-over" options aren't for everyone, but can offer a valuable second chance if your financial situation changes.

While Social Security Administration employees can provide basic information, they are not financial advisors. They won't always alert you to better filing strategies or other options.

A representative's role is to process your claim and help you navigate the system, not tell you how to maximize benefits. It's a good idea to consult with a financial advisor or retirement planner to make informed decisions based on your specific situation.

The Social Security system is more complex than many people realize, and small mistakes can lead to long-term consequences.

Understanding the rules is essential if you want to get the most out of your retirement income. Learning how the system works might help you better prepare for retirement and avoid stress later.