Personal Finance

3 of the Most Disastrous Social Security Moves You Can Make

Maurie Backman

Published: January 25, 2025 11:54 am

Millions of seniors today would not be able to pay their bills without Social Security. And when it’s your turn to retire, you’ll probably rely on those payments to cover your expenses as well.

That’s why it’s so important to be careful about claiming Social Security. With that in mind, here are three moves that could seriously backfire on you.

1. Filing for benefits without knowing your full retirement age

Full retirement age (FRA) is when you can collect your complete monthly Social Security benefit without a reduction. And if you were born in 1960 or any year after that, it’s 67.  However, you’re allowed to sign up for Social Security beginning at age 62.

Filing a claim before FRA results in a permanent reduction, though — even if it’s just a month early. So it’s important to know your FRA before you sign up.

Along these lines, don’t get confused and assume that your FRA is 65. Age 65 is when Medicare eligibility begins, so some seniors assume that 65 is when they should claim Social Security. But filing at that age could reduce your benefits quite a bit.

2. Claiming benefits before knowing how much money to expect

You may decide to file for Social Security at age 62 to get your money as soon as you can. Or, you may be inclined to wait longer for a higher monthly paycheck.

But either way, it’s important to have an estimate of your monthly benefit so you have a basic idea of how much money to expect. And there’s a really easy way to do that.

Just create an account on the Social Security Administration’s website and access your most recent earnings statement. You’ll see what monthly benefit you’re entitled to based on your wage history to date, and also, what that benefit might look like if you claim it early or late.

3. Not factoring in your health and break-even age

Social Security will reduce your monthly benefits if you file before FRA. But it will also reward you with boosted benefits if you delay your claim past FRA. In fact, for each year you wait to sign up, your benefits grow 8%, up until you turn 70.

You may like the idea of snagging a larger monthly paycheck for life. But before you delay your Social Security claim, think about your health. If it isn’t so great, you could end up losing out on Social Security income if you don’t live very long beyond your filing date.

In fact, one thing you should do — regardless of your health — is a break-even analysis. This is a calculation that tells you when your total benefits received from filing at later age will equal the total benefits received from an earlier filing age.

As an example, you may be torn between claiming Social Security at your FRA of 67 versus waiting until age 70. If your monthly benefit is $2,000, you’ll receive $372,000 in total under either scenario if you live until 82.5. So 82.5 is your break-even age.

If you think you’ll live longer, then delaying your claim makes sense. But consider your health when you make that decision, because if it’s not in great shape, filing earlier may be a safer bet.