Social Security may be one of the most important income sources you’ll rely on in retirement, yet many people make decisions that can cost them long before they reach full retirement age. With new rules, earnings limits and tax considerations affecting retirees heading into 2026, financial experts said that the choices you make in your early to mid-60s can either strengthen your financial security or quietly drain it for decades.
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1. Claiming Social Security Too Early
Claiming Social Security at age 62 is one of the most common and costly errors that retirees make before full retirement age (FRA), according to Loren Paul Fiffik, a CFP with Confluence Financial Partner Advisors. He said it’s partly a result of people not “running the numbers on how those benefits get hammered by taxes,” and that people claim early because of fear, misinformation or panic.
Derek Jones, CFA at Scratch Capital, added that many claim early without understanding the earnings test. “If someone claiming Social Security prior to FRA earns more than $23,400 per year from employment, their Social Security benefit will be temporarily reduced by $1 for every $2 they earn above the limit.”
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2. Misunderstanding How Early Filing Reduces Lifetime Benefits
Another mistake retirees make is to take early benefits because they worry Social Security will “run out.” This emotional decision leads people to permanently lock in lower monthly checks that don’t keep up with inflation.
Jones noted that a 62-year-old earning $60,000 could see their benefit reduced by $18,300. “The person who thinks filing for Social Security early will provide a nice supplement … might not actually receive much supplemental income at all.”
Fiffik emphasized that panic over the Social Security Trust Fund is exaggerated, noting that the worst-case scenario right now is that by 2032 or so benefits would be “trimmed” by 20% to 25%, “not zeroed out.”
Early filers also often fail to understand the long-term consequences of locking in a smaller base. “You’re forfeiting way more buying power than the sheet suggests,” Fiffik said.
3. Delaying Benefits Without Considering Cash Flow Needs
On the flip side, some retirees defer too long, believing delaying is better. Jones said that determining the optimal filing age to maximize benefits “is far from a perfect science” and it’s best to approach it through the lens of a retiree’s cash flow needs.
“If your financial assets alone are not sufficient to support your spending needs, then filing for Social Security early is likely preferable to rapidly draining your assets or taking on debt,” he said.
Paul Walker, financial consultant and author of “A Money Book Anyone Can Read,” suggested a simple solution: “If you need the money, you should wait as long as possible … If you don’t need the money? Take it early. Welcome to retirement math.”
4. Overlooking Spousal and Survivor Benefits
Spousal and survivor rules are also widely misunderstood and can lead to mistakes. Claiming too early can permanently reduce survivor benefits, and many retirees do not evaluate all available claiming strategies.
Widows and divorcees often take reduced benefits without checking spousal or survivor options that could pay 50% to 100% more, Fiffik pointed out.
He advises couples, “Delay the higher earner, claim smart on the lower and you can add tens of thousands [over a] lifetime.”
Since spousal benefits are not dependent on when the higher-earning spouse files, if the nonworking spouse waits to file until their FRA, they will receive the full spousal benefit regardless of when the other spouse filed, Jones added.
5. Misjudging Taxes, Earnings Tests and Medicare Enrollment
Tax impacts, Medicare timing and earnings rules often surprise retirees — sometimes resulting in penalties or higher tax bills. Fiffik warned not to try and figure this out alone. “Without an advisor crunching your specifics, you’re flying blind.”
Jones highlighted that one of the most damaging Medicare mistakes people make is assuming they are automatically enrolled in Medicare once they turn 65. “People who make this mistake can be hit with, often substantial, late enrollment penalties.”
6. Not Running Breakeven Analyses or Modeling Long-Term Scenarios
Advisors often see that retirees claim benefits based on emotion, habit or misinformation instead of data. Fiffik advised, “Run your own breakeven, model the taxes and don’t let fear call the shots.”
Additionally, Jones stressed the importance of adjusting for market conditions. “If we are in a severe market downturn, we might advise a client to file for Social Security now … to decrease the distribution rate from the portfolio.” This can mitigate long-term damage, he explained.
Avoiding these mistakes early can help ensure that your Social Security benefits work for you in 2026 and beyond.
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This article originally appeared on GOBankingRates.com: 6 Social Security Mistakes Retirees Make Before Age 67 To Avoid in 2026