Claiming Social Security Too Soon Could Cost You Big

For most retirees, Social Security is the cornerstone of their retirement income plan, not just a small supplement. Yet many people still make irreversible choices that can reduce their lifetime benefits by tens of thousands of dollars. This newsletter will walk through essential terminology, highlight common mistakes (with real-world style examples), and show you how to think more strategically about when and how to claim. Along the way, I will reference my new book, Your Future Is NOW: Your Blueprint to Solving Your Retirement Puzzle, as a deeper resource on Social Security and other retirement decisions.

The Social Security Basics You Must Know

Before talking strategy, you need a working vocabulary. Here are the core terms I review with almost every client.

Full Retirement Age (FRA) This is the age at which you’re entitled to 100% of your “primary insurance amount” (your full benefit). For anyone born in 1960 or later, FRA is 67. Claiming earlier permanently reduces your benefit; claiming later increases it.
Primary Insurance Amount (PIA) Your PIA is the benefit you receive if you claim right at your FRA. It’s based on your highest 35 years of inflation-adjusted earnings. If you have fewer than 35 working years, zeros are averaged in, which can lower your benefit.
Early Retirement (Age 62) Age 62 is the earliest you can claim a retirement benefit on your own record. But your payments can be reduced by up to about 30% for life if your FRA is 67 and you file at 62.
Delayed Retirement Credits (up to Age 70) For each year you delay claiming after the FRA, your benefit increases by roughly 8% per year up to age 70. That’s in addition to cost-of-living adjustments (COLA), which then apply to a higher base.
Spousal Benefits A spouse can receive up to 50% of the other spouse’s PIA at their own FRA, if that benefit is higher than what they’ve earned on their own record. Claiming spousal benefits early results in a permanent reduction.
Survivor Benefits If you are a widow or widower, you may be able to receive up to 100% of your deceased spouse’s benefit, depending on when you claim and your age at the time of their death. Survivors can often claim as early as age 60 (or 50 if disabled), though with reductions for earlier claims.
Work Credits and Eligibility You generally need 40 work credits (about 10 years of work) to qualify for a retirement benefit. In 2026, you earn one credit for 1,890 for each of your covered earnings, up to four credits per year.
Provisional Income and Taxation of Benefits Up to 85% of your Social Security can be taxable depending on your “provisional income” (AGI + tax-exempt interest + half of your Social Security). Many retirees are caught off guard when they find that their benefits are partially taxable.

Understanding these terms is step one in avoiding costly mistakes. I devote a full chapter to “When and How to Take Social Security” in Your Future Is NOW for readers who want a deeper dive into these definitions, historical context, and formulas.

Common Mistake #1: Claiming Early Without a Plan

The most common error I see is claiming at 62 simply because it’s available or because I want to get my money out while I can, without running the numbers or considering the spouse and survivor implications.

What Going Early Really Costs

If your FRA is 67 and your PIA is 3,000 a month:

Claim before 67 and your benefit might drop to roughly 2,100–2,250 per month, a permanent reduction up to the 30% range.
Claim at 70 and your benefit could be around 3,720–3,960 per month after delayed retirement credits.

If you live into your 80s or 90s, that higher payment can translate into a significantly larger lifetime benefit, and it also provides more protection against inflation because COLAs apply to a bigger starting amount.

Earnings Test Surprise

Another pitfall: the earnings test. If you claim before FRA and keep working, there’s a limit to how much you can earn before benefits are withheld.

For 2026:

Before FRA: You can earn up to 24,480. Above that, $1 of benefits is withheld for every $2 you earn over the limit.
In the year you reach FRA: A higher limit applies (65,160 in 2026), and the reduction is $1 for every $3 over the limit, up to the month you hit FRA.
After FRA: No earnings limit; you can work and earn as much as you want while receiving full benefits.

Withheld benefits are not lost forever; they are recalculated at FRA, but many retirees are surprised when their checks stop due to unexpected income. Planning around part-time work, consulting, or phased retirement needs to be integrated with your claiming strategy, not done in isolation.

Example: The “I Retired… Then Went Back to Work” Scenario

Imagine Mark, aged 62, recently retired and immediately filed for Social Security at 62.

FRA: 67
PIA: 2,800
Claimed benefit at 62: roughly 1,960 (about a 30% reduction)

After six months, Mark is offered consulting work paying 40,000 per year. Because he hasn’t reached FRA:

Earnings above limit: 40,000 − 24,480 = 15,520
SSA withholds 1 for every 2 over the limit: about $7,706 of benefits withheld.

Mark ends up with several months of reduced or zero checks, plus a permanently reduced base benefit because he claimed early. If he had waited even a few years or used portfolio withdrawals as a bridge, he might have:

Avoided earnings-test headaches
Locked in a higher lifetime benefit
Delivered more for a future surviving spouse

The lesson: claiming early should be a coordinated decision that considers work, health, life expectancy, spouse's needs, and other sources of income. I show a full multi-income example in my book using a hypothetical retiree named Helen who coordinates pension, Social Security, and investment withdrawals to reach a specific income target.

Common Mistake #2: Overlooking Spousal and Divorced-Spouse Benefits

Spousal and divorced-spouse benefits are among the least understood aspects of the system, yet they can be critically important for couples and divorced individuals, especially if one partner had higher lifetime earnings than the other.

Spousal Benefits Basics

You may qualify for a spousal benefit if:

You are at least 62
Your spouse (or ex-spouse) is eligible for Social Security
Your own benefit is less than what you’d get as a spouse

At FRA, the spousal benefit can be up to 50% of your spouse’s PIA. If you claim before your FRA, the spousal benefit is permanently reduced.

Importantly, if you’re eligible for both your own benefit and a spousal benefit, you don’t receive both. Social Security pays your own benefit first and then adds a “spousal top-up” if the spousal amount is higher.

Divorced-Spouse Rules

You may be able to claim on an ex-spouse’s record if:

The marriage lasted at least 10 years
You are 62 or older
You are currently unmarried
Your ex-spouse is eligible for Social Security (they do not have to be collecting)
Your own benefit is less than the benefit you’d receive based on your ex-spouse’s record

Claiming on an ex-spouse’s record does not reduce their benefit or their current spouse’s benefit, and they aren’t even notified of your claim.

Example: Bill and Samantha’s Spousal Strategy

In Your Future Is NOW, I present a couple, Bill and Samantha, both age 60, who are trying to decide when to claim.

Bill’s PIA at FRA: 3,822 per month
Samantha’s own PIA: 1,100 per month
At FRA, Samantha is eligible for: Her own 1,100, or A spousal benefit equal to 50% of Bill’s PIA, which is 1,911

By understanding spousal benefits, Samantha realizes she can increase her benefit from 1,100 to 1,911 by claiming as a spouse at her FRA. They explore three options:

Claim early at 62
Claim at FRA
Delay to 70 to maximize Bill’s benefit with delayed credits

Their advisor’s analysis shows that claiming early would lock both into significantly reduced monthly checks, lower COLAs (because COLAs apply to the reduced amount), and smaller survivor benefits if Bill dies first. Coordinated claiming at FRA or later provides higher lifetime income and more protection for the surviving spouse.

For divorced clients, I often see people completely unaware that a 10+ year marriage can entitle them to up to 50% of their ex-spouse’s benefit at FRA or survivor benefits if the ex-spouse passes away. That’s money they might otherwise leave on the table.

Common Mistake #3: Mismanaging Survivor Benefits

Survivor benefits are essential income protection for widows and widowers, yet they are frequently misunderstood or ignored during initial claiming decisions.

How Survivor Benefits Work

Survivor benefits can be paid to:

Surviving spouse
Surviving divorced spouse (if the marriage lasted at least 10 years)
Dependent children
In some cases, dependent parents

Key rules for a surviving spouse:

At FRA: Can receive 100% of what the deceased worker was receiving (or entitled to receive)
As early as 60 (or 50 if disabled): Can claim survivor benefits, but with permanent reductions for earlier claiming
If caring for a child under 16: May receive survivor benefits regardless of age

A crucial point: if one spouse claims their own benefit early, that lower benefit becomes the base for future survivor benefits. In other words, when the higher earner files early, they may be reducing not just their own check, but also what their partner could receive after their death.

The 255 “Death Benefit”

Many people are surprised to learn that Social Security pays a one-time “death benefit” of $255 to a surviving spouse or eligible child. The problem?

That 255 amount has not changed since 1954.
Adjusted for inflation, 255 in 1954 would be close to 2,880 today.

It’s a symbolic benefit at this point, not a meaningful source of financial support after the loss of a loved one. This reality underscores how critical it is to treat survivor benefits and life insurance as central parts of your retirement income and risk management plan.

Example: Survivor Considerations for a Couple

Consider Maria and James:

James is the higher earner with a PIA of 3,400 at FRA
Maria has a PIA of 1,200
Both are healthy, but James has a family history of shorter lifespans

If James claims at 62 and permanently locks in a lower benefit, Maria’s future survivor benefit will also be based on that reduced amount. If instead James delays to 70, he not only increases their joint income while he’s alive but also potentially provides Maria with a much larger survivor benefit for the rest of her life.

This is why, in many married couples, the higher earner's delay of benefits can be viewed not just as a longevity bet but as an insurance decision for the surviving spouse. I walk through a similar logic in my hypothetical case studies, where coordinated Social Security timing is integrated with pensions, investment withdrawals, and required minimum distributions.

Common Mistake #4: Ignoring Taxes and Medicare Interactions

Many retirees are surprised when their Social Security benefits are taxed and when Medicare premiums start eroding their monthly checks.

Taxation of Social Security

Your Social Security may be taxable based on provisional income:

For individuals:

Below 25,000: 0% of benefits taxable
25,000–34,000: up to 50% taxable
Above 34,000: up to 85% taxable

For married couples filing jointly:

Below 32,000: 0% taxable
32,000–44,000: up to 50% taxable
Above 44,000: up to 85% taxable

This means your net benefit can be notably lower than your gross check.

Medicare Premiums Taken from Social Security

Most retirees have their Medicare Part B premiums deducted directly from their Social Security benefits. In 2026, the standard Part B premium is $202.90 per month, and higher-income retirees can pay significantly more due to income-related monthly adjustment amounts (IRMAA) for Parts B and D.

So, when you look at your Social Security benefit, remember:

Taxes may apply to up to 85% of the benefit
Medicare premiums will often be withheld before you ever see the deposit

A thoughtful strategy considers which accounts you draw from (taxable, tax-deferred, Roth) in conjunction with your Social Security start date so you can manage tax brackets, provisional income, and IRMAA thresholds. In my book, I outline how different withdrawal orders and Roth strategies can help reduce lifetime taxes and preserve more of your benefits.

Putting It All Together: A Coordinated Strategy

Social Security is not a stand-alone decision. The right claiming strategy depends on your broader retirement picture.

Key questions I walk through with clients include:

What guaranteed income will you have (Social Security, pensions, annuities)?
What investment and retirement account balances will you draw from, and at what pace?
What is your health situation and family longevity history?
Are you married, single, divorced, or widowed, and how does that affect spousal or survivor benefits?
How will taxes and Medicare premiums impact your net income?

In the book, I share a full example with “Helen,” a 61-year-old aiming for 9,000 a month in retirement income starting at 65. Her strategy coordinates:

Pension income
Social Security timing
401(k) withdrawals
Investment accounts
Tax implications and future required minimum distributions

The conclusion is not a one-size-fits-all rule, like always claiming at 70 or always claiming early. Instead, it’s a personalized plan that balances:

Income sufficiency
Longevity risk
Survivor protection
Taxes and healthcare costs
Lifestyle goals (like travel)

A Practical Next Step

If you’re within 10 years of retirement or are already retired but unsure you made the best decision, consider these steps:

Create or log in to your “my Social Security” account and download your latest statement.
Verify your earnings history to make sure your work record is accurate. Believe it or not, but the government has been known to make mistakes. Any mistakes here can reduce your benefit.
List other income sources (pension, 401(k)/IRA, brokerage, real estate, annuities) and your target monthly income in retirement.
Model several claiming ages for you (and your spouse, if applicable), including survivor scenarios.
Coordinate Social Security with tax and investment planning, not in isolation.