Could these 3 Social Security mistakes cost you thousands in retirement?

For millions of Americans, Social Security is one of the most important sources of retirement income. That's why understanding how and when to claim your benefits is critical. While the program provides guaranteed lifetime payments, common claiming mistakes can significantly reduce the amount you receive over the course of retirement.

The biggest Social Security mistakes retirees should avoid

The first mistake is claiming benefits too early. Although you can begin collecting Social Security at age 62, doing so permanently reduces your monthly benefit. For people born in 1960 or later, the full retirement age is 67, and claiming at 62 results in a benefit reduction of up to 30%. If you live into your 80s or beyond, that decision could cost you tens of thousands of dollars in lifetime benefits.

The second mistake involves spousal benefits. If you qualify for Social Security based on your current or former spouse's work record, waiting beyond your full retirement age does not increase your spousal benefit. Unlike retirement benefits based on your own earnings, spousal benefits do not earn delayed retirement credits after full retirement age, meaning you could simply miss out on months or even years of payments by waiting too long.    

Another costly error is failing to coordinate claiming strategies with your spouse. Married couples often have more flexibility than single retirees when deciding when to file. In many cases, it may make sense for the higher-earning spouse to delay claiming while the lower-earning spouse begins collecting earlier. This strategy can also increase the survivor benefit available if the higher earner passes away first.

Every household's financial situation is different, so there is no universal claiming strategy. Factors such as life expectancy, health, retirement savings, and other income sources should all be considered before deciding when each spouse should begin receiving benefits. Careful planning can help maximize your combined lifetime Social Security income.

Social Security is one of the few retirement income sources guaranteed for life, making every claiming decision especially important. By avoiding these three common mistakes—claiming too early, misunderstanding spousal benefits, and failing to coordinate with your spouse—you can protect your retirement income and potentially keep thousands of additional dollars in your pocket over the years.