3 Surefire Ways to End Up With Social Security Regrets

The last thing you want to do is find yourself in retirement without the funds you need, or with less Social Security income than you expected.

Unfortunately, Social Security is complicated, and many people make the wrong choices that end up compromising their financial security during their later years. This can have serious consequences, as it can leave you struggling when it's too late for you to easily return to work.

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There are three surefire ways to find yourself in this situation, regretting your decisions and wishing you had made different ones. Here's a look at each and how to avoid them.

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1. Not doing your break-even calculation

One of the first and biggest mistakes you can make is not doing a break-even calculation. This calculation helps you decide between different Social Security claiming ages.

See, you can claim benefits as young as 62, even though your full retirement age is typically not until after age 66 or, if you were born in 1960 or later, age 67. An early claim results in early filing penalties that shrink your checks, while you get your standard benefit at your FRA and an increased benefit if you wait until after FRA and earn delayed retirement credits that are available until age 70.

When you decide between claiming ages, you should calculate how much income you'll miss out on if you delay your checks for months or years, and how much delaying will increase your future income. Then, see how long it's going to take for the extra money from the delay to make up for the missed benefits. Doing this calculation can help you determine if you're likely to live long enough to make up for the forgone income.

So, for example, if you are deciding between claiming benefits at 62 or 70, you'd want to see what your benefits would be at both ages. Your mySocialSecurity account has that info. Let's say your standard benefit was $2,000:

• A claim at 62 would give you a $1,400 monthly benefit after early filing penalties were applied.
• A claim at 70 would give you $2,480 per month after delayed retirement credits were applied.
• If you wait from 62 to 70, you give up eight years of $1,400 monthly benefits, or $134,400.
• Delaying increases your check by $1,080.
• At a rate of $1,080 per month, you'd make up for $134,400 in missed income in 124.44 months, or 10.37 years.

If you expect to live past 80.37 years old, you would be better off with the delayed claim. Make sure you do this calculation whenever you decide between two claiming ages -- otherwise, you'll make an uninformed choice and could be left regretting it.

2. Claim benefits without coordinating with your spouse

There's another big error you want to avoid if you are married. That's collecting Social Security without coordinating with your spouse. This can be a major source of regret, because decisions you make don't just affect you.

For example, if a higher earner starts their checks early, they can end up reducing survivor benefits. If the higher earner passes away first and the lower earner has a smaller monthly check, the lower earner may struggle to cover the bills once they are left alone.

On the other hand, spousal benefits are available based on a higher earner's work record, and can sometimes be higher than retirement benefits for the lower earner. They aren't available until the higher earner gets their retirement benefits, though. So couples need to do a careful assessment of whether the spouse who earned more should claim benefits early to open up the door to spousal benefits, or should delay to maximize survivor benefits.

This is just one of many tough choices married couples need to discuss to decide on a claiming strategy that maximizes their combined lifetime Social Security income.

3. Plan to over-rely on Social Security

Finally, planning to rely too much on Social Security can be a big source of regret.

If you anticipate that your benefits are going to be enough to support you -- or even come close -- you are setting yourself up for serious financial problems. Benefits are only designed to replace around 40% of preretirement income. It's critical you plan to have a supplementary source of funds, as you generally need to replace at least 70% to 80% or more of the amount you were earning at your job.

The good news is, now that you know about these common mistakes that lead to regrets, you can avoid them and make a Social Security claim that actually makes good sense for you.

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