3 Common Social Security Mistakes That Can Cost Retirees Thousands

Social Security might be one of your most important income streams when you retire. For this reason, it's important to make sure you're making the most of it.

Unfortunately, these fairly common mistakes can result in less lifetime income from Social Security. So it's best to avoid them if you can.

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1. Claiming benefits too early

You can begin collecting Social Security as early as age 62, but doing so comes with a permanent reduction to your monthly checks. If you were born in 1960 or later, your full retirement age is 67, which means claiming at 62 results in a 30% benefit reduction.

But it's not just monthly income you might lose out on. If you end up living until your 80s or beyond, filing for benefits at 62 could mean losing out on thousands -- and possibly tens of thousands -- of dollars in your lifetime.

This isn't to say that claiming benefits early is a poor choice for everyone. But if you don't have a reason for it, don't let the fact that the money is available drive you to file well ahead of full retirement age.

2. Delaying spousal benefits

If you didn't work or don't have much of an earnings history, you may be entitled to spousal benefits from Social Security if you're married or even divorced. Those could be worth up to 50% of what your current or former spouse is eligible for at their full retirement age.

But one thing you don't want to do is delay your spousal benefit claim past your full retirement age. Waiting beyond that point boosts your benefits when you're filing for Social Security based on your own wage record. But you can't grow a spousal benefit by delaying past full retirement age.

If anything, waiting just means giving up money you could've had sooner. And while Social Security does pay benefits retroactively to a point, if you wait until age 70 to file for spousal benefits, you could miss out on a lot of money.

3. Failing to coordinate benefits with a spouse

Married couples often have more claiming options for Social Security than single retirees. Yet many fail to coordinate their strategies.

For example, if you're the higher earner in your household, it could pay to delay Social Security for larger checks while having your spouse file on time. That could also leave your spouse with a larger survivor benefit if they outlive you.

Or there may be another option that works best. But if you and your spouse don't talk about it, you may not end up maximizing your combined Social Security income.

Social Security is one of the few sources of retirement income that's guaranteed for life. So it's important to claim benefits carefully, and part of that means avoiding these potentially huge mistakes.

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