Social Security Mistake You Need to Avoid – It Could Cost You $4,560 Every Year

Social Security is a cornerstone of retirement planning, but its complexities often lead to misinterpretations. Among the most critical—and frequently misinterpreted—aspects is your full retirement age (FRA). Misjudging your FRA could cost you thousands annually in reduced benefits. Let’s look into why this detail is so important.

Full Retirement Age (FRA)

Your FRA is the age at which you’re eligible to receive 100% of your Social Security benefit, calculated based on your earnings history. Filing before your FRA reduces your monthly benefits, while delaying your claim increases them.

Unfortunately, a 2024 survey by the Nationwide Retirement Institute revealed that only 15% of U.S. adults could accurately state their FRA. Even among adults over 50, just 16% knew this critical age. The most common incorrect guess was age 61, despite the fact that everyone’s FRA falls between 66 and 67, depending on their birth year.

Filing early—before your FRA—can permanently reduce your benefits by up to 30%. For example, if your FRA is 67 and you claim at age 64, your checks would be slashed by 20%.

Real-World Example

The average Social Security benefit in 2024 was $1,925 per month. Let’s say you’re eligible for $1,900 monthly at your FRA of 67. If you mistakenly believe your FRA is 64 and file early, your checks will be reduced by 20%, leaving you with $1,520 per month. That’s a reduction of $380 per month or $4,560 annually.

Table:

Age	Monthly Benefit
62	$1,298
63	$1,339
64	$1,460
65	$1,563
66	$1,740
67	$1,884
68	$1,948
69	$1,945
70	$2,038

Reductions

While early filing reduces your monthly checks, Social Security is designed to equalize total benefits over your lifetime, regardless of when you file. Filing early means smaller checks but more payments, while delaying gives you larger payments but fewer overall.

For those expecting to live into their 80s or beyond, delaying can be advantageous. On the flip side, if you anticipate a shorter lifespan, filing early may help you maximize your benefits while you can enjoy them.

Claim Strategically

There’s no universally correct age to start claiming Social Security—it depends on your personal circumstances, health, and financial needs. However, knowing your FRA and planning your claim carefully ensures you won’t face unexpected benefit reductions.

Key Takeaways

1. Know your FRA to avoid costly misinterpretations.
2. Weigh your life expectancy and financial needs when deciding when to file.
3. Filing early can be beneficial for short-term needs, while delaying may be better for long-term financial security.

Planning for Social Security isn’t just about knowing numbers—it’s about aligning them with your retirement goals.

FAQs