3 Mistakes Retirees Make with Social Security and How to Avoid Them
“Will my money last as long as I do?”
It’s the question that keeps many retirees up at night. And when it comes to stretching your retirement dollars, few decisions have a bigger impact than how you handle Social Security.
I’ve seen too many retirees make quick decisions about their benefits based on general advice or what a neighbor did—without understanding how those choices affect their financial security for decades to come.
Let’s look at three Social Security missteps that can cost you thousands in retirement—and what to do instead.
1. Claiming Too Early Without a Strategy
Social Security benefits can begin at age 62—but that doesn’t mean it’s the right move for you. Many people claim early because they worry about the system’s future or simply want to start retirement right away. The consequence? A permanent reduction in monthly benefits that lasts a lifetime.
A Better Approach:
Before locking in a reduced benefit for life, look at your complete financial picture. Ask yourself: Do you have other savings you could tap in your early retirement years? Even working part-time while delaying Social Security can dramatically boost your long-term income security.
Remember, patience often pays off. Those extra years of waiting can mean significantly larger monthly checks that continue for the rest of your life—and potentially your spouse’s life too. It’s not just about collecting benefits sooner; it’s about maximizing what you’ll receive when you might need it most in your later years.
2. Ignoring How Social Security Is Taxed
Many retirees are shocked when they discover that their Social Security benefits might be subject to federal income tax. What good is maximizing your benefit if Uncle Sam takes a bigger slice than necessary?
A Better Approach:
Pay attention to your total income picture, including Social Security, retirement account withdrawals, and other income sources. When your income exceeds certain thresholds, your benefits become taxable—something many retirees don’t plan for until it’s too late.
You can manage this by strategically drawing from different accounts throughout retirement. For example, taking more from tax-free accounts in high-income years, or carefully planning conversions to Roth accounts during lower-income years, could help you keep more of your Social Security benefits in your pocket where they belong.
The key is coordination—looking at your retirement income not just as separate pieces, but as a unified strategy that works together to minimize tax impact.
3. Overlooking the Spousal and Survivor Benefit Strategy
Married couples often focus on their own Social Security benefits, but the real concern is how those decisions affect total income over both lifetimes. Many people claim when the timing feels right for them, without thinking through what happens to their spouse’s income if they pass away first.
A Better Approach:
Remember that when one spouse passes, the surviving spouse keeps the larger of the two Social Security checks—not both. This means the higher earner claiming decision directly affects the long-term financial security of the surviving spouse.
I’ve seen firsthand how this planning gap can leave surviving spouses with significantly reduced income at a vulnerable time. In many cases, it makes sense for the higher earner to delay benefits as long as possible, even if the lower earner claims earlier.
This isn’t just financial planning—it’s a gift of security and peace of mind to the person you care about most.
Making Social Security Work for Your Whole Retirement
Social Security decisions shouldn’t be made in isolation or based on general rules of thumb. These benefits will likely be the most reliable income stream you have for the rest of your life—potentially spanning decades.
Taking the time to explore your options can mean the difference between just getting by and truly enjoying the retirement you’ve worked so hard to achieve. It’s about creating confidence that your money will support the life you want to live, for as long as you live it.
Ready to make sure your Social Security strategy aligns with your retirement dreams?
Call me, Barb Swiatek, at 719.597.2179 to get started.
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