6 Social Security Mistakes That Cost Middle-Class Retirees $30,000

A few timing and planning errors, especially around when you claim, whether you work, how much you work, and how you handle taxes can shave five figures off lifetime income.

The fixes are simple once you know the rules and can help you avoid money mistakes that can eat away at your retirement funds.

Claiming at 62 when you're healthy and can wait

Claiming at 62 permanently cuts your check. For most readers with a full retirement age (FRA) of 67, the reduction is about 30%. The Social Security Administration (SSA) reduces early claims 5/9 of one percent per month for 36 months, then 5/12 of one percent beyond that.

On a $2,000 FRA benefit, claiming at 62 yields $1,400, costing you $600 per month. Over just 5 years, that's $36,000 lost, before cost-of-living adjustments (COLAs).

Stopping at FRA instead of waiting until 70

After FRA, every month you wait earns Delayed Retirement Credits (DRCs) of ⅔ of one percent per month, which equates to 8% per year, up to age 70.

With a $2,000 FRA benefit at 67, waiting until 70 boosts it 24%, or $480 per month, taking your allowance to $2,480 per month. This works out to an additional $5,760 per year for as long as you live.

So, just six years of payments at the lower FRA rate leaves $34,560 on the table, and you also shrink future COLAs in dollar terms by starting from a smaller base.

Working before FRA and tripping the earnings test

If you claim before FRA and keep working, Social Security withholds $1 for every $2 you earn above the annual limit, which is $23,400 in 2025. Note that in the year you reach FRA, the annual limit is $62,160, with a $1 withholding for every $3 you earn above that.

If, for example, you're 63 and you've already claimed, but you earn $35,000 for the year, that puts you $11,600 over the limit. So the SSA withholds $5,800 that year, which equates to roughly four months of a $1,400 early retirement benefit.

Do this for three years, and you've had $17,400 withheld, plus you locked in the permanent early-claim reduction from mistake number one. Even after SSA's later recomputation, the combo can easily exceed a $30,000 loss over time.

Letting the higher earner claim early and shrinking a future survivor check

Survivor benefits can equal 100% of the deceased worker's benefit at survivor FRA, and they include any DRCs the worker earned.

If the higher earner claims early, the survivor inherits that smaller number. Whereas if the higher earner delays, the survivor inherits the larger, DRC-boosted mount.

For example, if a higher earner with a $2,500 primary insurance amount (PIA) claims at 62, they'd only receive $1,750 per month, whereas if they delayed until 70, with the 24% boost, they'd receive $3,100 per month. So there's a significant gap of $1,350 per month.

If a widow collects for just 24 months, that gap equates to $32,400. This is a huge sum for middle-class retirees.

Ignoring taxes on your benefits

Up to 85% of your Social Security benefit can be included in taxable income based on "combined income", which is adjusted gross income (AGI), tax-exempt interest, and half of Social Security.

For single filers in 2025, benefits are taxed up to 85% if the combined income exceeds $34,000. For married filing jointly, that rises to $44,000.

Federal taxes are only part of the picture. Nine states still tax Social Security, often with income-based carve-outs, so where you live impacts how much you'll need to account for taxation.

Not "undoing" a too-early claim by suspending benefits at FRA

If you have reached FRA and have already claimed benefits, you can suspend your payments and earn DRCs until age 70. The SSA confirms you'll earn credits for each month of suspension. Just know that anyone paid on your record, apart from a divorced spouse, will also be paused while you suspend your claim.

So, if you took an early benefit amount of $1,400 per month at 62, but decided to suspend the benefit at 67 and restart at 70, you'd get DRCs totaling a 24% boost of your early benefit amount. Then, when you restart, your check would be $1,736, which is an extra $336 per month. Over 8 years, that's an increase of $32,256, which is a big boost if you regret your early claim.

Bottom line

Each mistake looks small month to month, but over a typical retirement, they snowball. A $600 early-claim gap, $5,800 withheld year while working, or a $2,244 annual tax bill can cost you $30,000 over a modest time horizon. Two or more of these mistakes, unaddressed, can easily cost you upwards of $50,000.

Check your FRA and run scenarios with SSA's early/late calculator. If you claimed early, note that you can suspend at FRA to rebuild. If you're a couple, coordinate that way. Make the higher earner the delay-to-70 candidate to protect survivor income, because survivor benefits include DRCs. If you'll work before FRA, watch the earnings limits.

And, last but not least, get professional help. They can help you sequence income, time your claim, and avoid expensive missteps to maximize your retirement savings.