A few months ago, I sat down with a couple in their early 60s.
They had done almost everything right.
• Saved consistently
• No major debt
• Healthy 401(k) balance
• Planning to retire in the next few years
On paper, they looked like they were in great shape.
But then we started talking about Social Security.
The husband said, “I’m just going to take it at 62. I want to get something back.”
His wife nodded. “We’ve paid into it forever. Might as well start collecting.”
Simple. Logical. Common.
And potentially one of the most expensive decisions they’ll ever make.
Because when we ran the numbers…
That “simple decision” could cost them over $180,000 in lifetime benefits.
Not because they were reckless.
Not because they were irresponsible.
But because nobody had ever shown them how the system actually works.
That’s the part most people miss.
Social Security isn’t just a benefit. It’s a strategy.
And small decisions… made without a plan… can quietly cost you tens or even hundreds of thousands of dollars over time.
Let’s walk through the most costly mistakes I see, and more importantly, how to think about them differently.
1. Claiming Benefits Too Early
This is the big one.
You can start benefits as early as age 62. But just because you can… doesn’t mean you should.
Claiming early permanently reduces your benefit. In many cases, by 25–30%.
That reduction doesn’t go away. It follows you for life.
For the couple I mentioned earlier, this was the entire issue.
They were about to lock in a lower income stream… forever… without realizing it.
Sometimes taking it early makes sense. But if you don’t run the math first, you’re guessing with a lifetime decision.
2. Waiting Too Long Without a Plan
You’ve probably heard the opposite advice too:
“Wait until 70.”
That can increase your benefit significantly thanks to delayed retirement credits.
But here’s the problem…
Waiting only works if it fits into your overall income plan.
If you’re draining your portfolio too aggressively while waiting, you might actually hurt your long-term outcome.
It’s not about waiting longer. It’s about coordinating timing with everything else.
3. Not Understanding Your Full Retirement Age
Your “full retirement age” (FRA) isn’t 65 for most people anymore.
For many, it’s closer to 67.
That matters because:
• Claim before FRA = reduced benefits
• Claim after FRA = increased benefits
If you don’t know your FRA, you’re making decisions in the dark.
And I see this all the time… people guessing instead of knowing.
4. Ignoring Spousal Benefits
Married couples have more options than they realize.
Spousal benefits allow one spouse to receive up to 50% of the other’s benefit.
But timing matters. Strategy matters.
And most couples don’t coordinate this properly.
Instead, they both claim early… or both wait… without understanding how to optimize the combination.
That’s leaving money on the table.
5. Overlooking Survivor Benefits
This one is critical.
When one spouse passes away, the surviving spouse typically keeps the higher of the two benefits.
That means the higher earner’s decision impacts not just their own income… but their spouse’s future income too.
If the higher earner claims early, it can permanently reduce what the surviving spouse receives later.
This is where strategy becomes protection.
6. Continuing to Work Without Understanding the Earnings Limit
If you claim benefits before full retirement age and continue working…
You may temporarily lose some of your benefits due to the earnings limit.
This confuses people.
They think Social Security is “penalizing” them.
In reality, the benefit is recalculated later. But if you don’t understand how it works, it can lead to poor decisions or frustration.
A lot of people assume Social Security is tax-free.
It’s not.
Depending on your income, up to 85% of your benefits can be taxable.
And this is where things get interesting…
The way you withdraw from your 401(k), IRA, or other accounts can increase or decrease how much tax you pay on Social Security.
This is where tax planning and Social Security planning collide.
And most people never connect the two.
Social Security doesn’t exist in a vacuum.
It should work alongside:
• Your 401(k)
• Your IRA
• Pension (if you have one)
• Taxable investments
The timing of each income source matters.
Pull too much from the wrong place at the wrong time… and you can increase taxes, reduce benefits, or both.
This is why I always say…
Retirement isn’t just about how much you’ve saved.
It’s about how you use it.
This might be the most common mistake.
People assume:
“I’ll just take it when the time comes.”
But Social Security isn’t automatic optimization.
There’s no one making sure you get the most out of it.
If you don’t have a plan, you’re defaulting into whatever feels easiest in the moment.
And easy decisions are often expensive ones.
10. Not Reviewing Your Earnings Record
Your benefit is based on your highest 35 years of earnings.
If there are errors in your record, your benefit could be lower than it should be.
And yes… errors do happen.
But if you never check your record, you’ll never catch them.
Here’s the Real Problem
None of these mistakes feel like mistakes when you’re making them.
They feel reasonable.
They feel simple.
They feel like you’re doing what everyone else does.
That’s what makes them dangerous.
Back to That Couple…
When we finished the conversation, they didn’t make a decision that day.
But they did something more important.
They realized this wasn’t a “set it and forget it” decision.
It was a strategy decision.
And when we mapped out a coordinated plan…
• Adjusted their claiming timeline
• Integrated their 401(k) withdrawals
• Looked at tax impact
• Built around survivor protection
That potential $180,000 mistake?
It turned into a significantly stronger, more predictable retirement income plan.
Same savings.
Different decisions.
Very different outcome.
If You’re Within 5–10 Years of Retirement…
This is the window where these decisions matter most.
Once you file for Social Security, many of these choices are locked in.
That’s why planning before you claim is everything.
Let’s Fix This Before It Becomes Expensive
If you’re thinking about when to take Social Security…
Or you’ve already made a decision and want a second look…
Let’s talk.
I’m a CFP® and an EA, and I help people coordinate Social Security, taxes, and retirement income into one clear plan.
Not guesses. Not rules of thumb. No, “my neighbor did it this way”
An actual strategy. An actual plan.
👉 Schedule a call with me and we’ll walk through your situation together.
We’ll look at:
• When to claim
• How it impacts your taxes
• How it fits with your 401(k) and other income
• And whether you’re leaving money on the table
Because the goal isn’t just to retire.
It’s to retire with a plan that actually works.
Talk soon.
-Nate
Nate Lewis CFP® EA |
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