5 Things Retirees Get Wrong About Social Security (#5 Hurts the Most)

For a program millions rely on, Social Security is surprisingly easy to misread. The rules change with your age, earnings, and filing choices, and one wrong assumption can shrink your check or make you miss benefits you've already earned.

This article looks at five surprising retirement mistakes and explains how getting them wrong might cost you money.

Thinking Social Security will fully replace your income

Many retirees assume that once they start benefits, Social Security will cover all their living expenses in retirement. But the program was built as a base, not a complete paycheck.

On average, it replaces only about 40% of a worker's pre-retirement earnings.

Most people need roughly 70% to 80% of their retirement income to keep the same standard of living, so savings, pensions, or other investments need to fill the gap.

For context, the average monthly retirement benefit in 2025 is about $1,976. That's a helpful foundation, but far from enough to cover housing, food, and health care for most households.

Retirees who expected a full replacement income often find themselves scrambling to budget or seeking part-time work. That's why you need to treat Social Security as your base layer and build on it with personal savings and other income so your plan actually fits your real costs.

Believing Social Security benefits aren't taxed

Many retirees still assume their Social Security checks arrive tax-free, as they once did decades ago. Today, part of your benefit can be taxable at the federal level if your total income is high enough.

The IRS looks at "combined income:" your adjusted gross income, plus nontaxable interest, plus half of your Social Security. If you file single and that total falls between $25,000 and $34,000, up to 50% of your benefit may be taxable. Above $34,000, up to 85% may be taxable. For married couples filing jointly, the thresholds are $32,000 and $44,000.

To plan ahead, you can set up withholding from your benefit (Form W-4V) or make quarterly estimated payments if you expect to cross the thresholds.

Overlooking spousal and survivor benefits

Some retirees don't realize that Social Security also provides benefits for spouses, widows/widowers, and even ex-spouses. Others incorrectly fear that if a spouse claims benefits on their record, it will reduce their own Social Security payment.

Social Security is a family program, and these rules can add real money to a household's income. For instance:

• If your own benefit is smaller, you can get up to 50% of your spouse's full benefit at your full retirement age (FRA), and this does not reduce your spouse's check.
• You may qualify on an ex-spouse's record if the marriage lasted 10+ years, you are 62 or older, and you are currently unmarried, to claim up to 50% at your FRA with no impact on your ex or their current spouse.
• If your spouse dies, you can receive up to 100% of their benefit at survivor FRA, and you can step up to the higher amount if they had a larger check.

These benefits can make the difference between scraping by and retiring comfortably, so check eligibility before you file.

Not realizing how working in retirement affects your payments

Some retirees often assume they can draw Social Security early and continue a full-time salary without penalty. Others fear that working after claiming benefits will make them "lose" money permanently. Both ideas miss how the earnings test really works.

If you start benefits before FRA and stay under FRA all year, the 2025 income limit is $23,400. SSA withholds $1 in benefits for every $2 you earn above that amount. Once you hit the month you reach FRA, there's no earnings limit.

In the year you reach FRA, a higher cap applies to earnings before that month: $62,160 in 2025, with $1 withheld for every $3 over the limit.

Crucially, withheld checks aren't lost. Social Security keeps track of the months you didn't get paid and recalculates your benefit at FRA, boosting it to reflect those months. In other words, work can lower your checks now if you claim early, but you can recoup that money later through a higher monthly amount.

Rushing to claim benefits as soon as possible

This is arguably the most common misconception, and it comes from a natural desire to reap the rewards of a program you paid into for years.

But claiming early comes at a cost. Age 62 is the earliest you can start retirement benefits, and doing so permanently reduces your monthly check. In contrast, waiting increases it for life. The system is built to be roughly "actuarially fair," meaning that if you live an average lifespan, your total payout evens out whether you start early or late.

Still, a lot of people live longer than average. SSA's life table shows that a 65-year-old man lives about 17.5 more years on average and a 65-year-old woman about 20.1 more years. That puts many retirees into their 80s, where a larger, delayed check has more time to pull ahead.

If your health and finances allow, starting benefits later can mean more total money and a bigger monthly cushion in the years you are most likely to need it.

Bottom line

You've earned every dollar of Social Security benefits, so it pays to understand how the system works and how to make the most of it. Before you decide when or how to claim, use the official Social Security tools like calculators, FAQs, and guides that cover retirement, spousal, and survivor benefits.

A clear, well-timed plan helps you set yourself up for retirement with more money, confidence, and peace of mind.

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