The 5 Biggest Social Security Mistakes Retirees Make -- and How to Avoid Them

Social Security provides retirement income to more than 60 million Americans. It's the most popular federal program, based on a survey conducted last year. But Social Security can be confusing.

Many rules and regulations are included in a program as large as Social Security. Unsurprisingly, it's hard for retirees to keep up with all of them. This can lead to costly errors. Here are the five biggest Social Security mistakes retirees make -- and how to avoid them.

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1. Claiming benefits early due to fear

The number of individuals who claim Social Security retirement benefits before their full retirement age is growing. Claiming benefits early can be the best decision for some people. However, acting Social Security Commissioner Leland Dudek said last year that fear was causing some to claim early.

One common fear is that Social Security will go bankrupt within a few years. The combined Social Security Trust Funds are indeed on track to be exhausted by 2034 if nothing is done to bolster the program's finances. But even if the Trust Funds are depleted, Social Security will still be able to pay 77% of benefits thanks to payroll tax revenue.

When deciding when to claim Social Security retirement benefits, consider several factors, including your expected longevity, financial position, and goals. However, fears about the program's future shouldn't be on the list.

2. Working without understanding the earnings test

Some retirees receive Social Security benefits while continuing to work. However, it's a mistake to work without understanding the Social Security earnings test.

Social Security will withhold $1 in benefits for every $2 of earnings above a threshold for anyone who continues working after claiming benefits before their full retirement age. This threshold is $24,480 in 2026. The program will withhold $1 in benefits for every $3 of earnings above a higher limit during the year you reach your full retirement age. This higher limit is $65,160 in 2026.

Once you reach your full retirement age, Social Security will adjust your benefit amount to repay the previous amount withheld. However, if you plan to continue working, you'll definitely want to crunch the numbers to determine if it makes sense for you to claim Social Security benefits early or wait.

3. Not realizing that benefits can be taxable

The Social Security Administration proclaimed last year that "nearly 90% of Social Security beneficiaries will no longer pay federal income taxes on their benefits." This claim was based on the passage of the One Big Beautiful Bill Act (OBBBA). However, it would be a mistake to assume that your Social Security benefits will no longer be taxable.

While OBBBA provides an enhanced tax deduction for seniors, it's only temporary. The deduction will go away in 2028. Also, the so-called "senior bonus" begins to phase out for taxpayers with income over $75,000 for single filers and income over $150,000 for joint filers. Importantly, Required Minimum Distributions (RMDs) could push some retirees into a higher tax bracket and make their Social Security benefits taxable.

If you're banking on Uncle Sam not taking any of your Social Security benefits, that could be a big mistake. Avoid any problems by using an online calculator to see if your benefits may be taxable. One such tool is the IRS Interactive Tax Assistant.

4. Failing to coordinate spousal benefits

Filing independently for Social Security benefits without coordinating with your spouse can cost you. Under Social Security's spousal benefits, a lower-earning spouse can receive up to 50% of the higher-earning spouse's benefit.

To avoid leaving money on the table, read through the Social Security spousal benefit rules. Afterward, map out a strategy that enables you and your spouse to together maximize your household lifetime benefits.

5. Not checking your earnings record

Many retirees assume that the benefit payments they receive are correct. But that might not be the case. Errors can happen with Social Security's processing.

Social Security benefits are based on your highest 35 years of earnings. To avoid a potential error reducing your benefit amount, review your earnings record on the "my Social Security" website annually. If you see a mistake, contact the Social Security Administration.

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