3 Social Security Mistakes That Could Leave You Miserably Penniless | personal finance

(Maurie Backman)

Social Security serves as an important source of income for many seniors. And there’s a good chance you’ll end up drawing on your benefits to cover your living expenses in retirement.

the problem with Social SecurityOf course, the program is loaded with rules. And if you don’t know some of those rules inside and out, you could end up making some pretty bad decisions that will hurt you financially over time. With that in mind, here are three such mistakes that you really should try to avoid.

Image source: Getty Images.

1. Not knowing your full retirement age

Social Security does not pay all seniors the same benefit. Rather, the amount of money you’re entitled to in retirement will depend on how much money you earned during your highest-paid 35 years in the workforce.

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You can enroll in Social Security beginning 62 years. However, you are not entitled to your full monthly benefit based on your earnings history until you reach full retirement age or FRA.

Just as Social Security does not pay a single universal benefit, FRA is not a universal age. Rather, it depends on the year you were born, as follows:

Year of birth

full retirement age




66 and 2 months


66 and 4 months


66 and 6 months


66 and 8 months


66 and 10 months

1960 or later


Data source: Social Security Administration.

If you apply for benefits before you get to FRA, expect them to be reduced. And if you sign up at the earliest possible age, 62, you should expect a significant reduction.

2. Not understanding the advance claim rules

You can assume that if you decide to apply for Social Security before you get to the FRA, the reduction in benefits you’ll face will be temporary. not so

If you claim Social Security before the FRA, the monthly benefit you secure could be the monthly payment you’ll have to pay for life. Granted, seniors on Social Security are eligible for annual cost of living adjustments, so they could increase your profit over time. But the base amount you start collecting will be less if you apply early, and your benefit won’t automatically increase once you reach the FRA. (If that were to happen, there would effectively be no incentive for seniors to wait until FRA applied.)

3. Don’t undo an early submission if the opportunity presents itself

Some seniors claim Social Security early and regret it after the fact. If that happens to you, it can assume that you have a lower monthly benefit for life.

Actually, that’s not automatically the case. Social Security allows taxpayers one repeat. If you sign up early but withdraw your claim within a year and pay back all the money you received, you can reapply later.

However, many older people don’t realize that this redo option exists. As such, they lose the opportunity to claim a higher benefit after filing early. But if you act fast enough, that doesn’t have to happen to you.

The more you know about Social Security, the less likely you are to make poor decisions about your benefits. It’s worth reading as much as you can about the program, especially if you’re of an age where you could claim benefits in the not-too-distant future.

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