I’m a Social Security Expert: 7 Things Americans Should Never Do With Their Checks
Written by
Yaël Bizouati-Kennedy
Edited by
Ashleigh Ray
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Starting to claim Social Security benefits is a major life milestone, marking a new phase in Americans’ lives. Deciding at what age to start claiming these benefits is the first important step when it comes to Social Security decisions, but as crucial as that step is, it’s only the first one.
Needless to say, navigating the many intricacies of Social Security can be challenging and overwhelming for many seniors. Yet, that’s half the battle. Indeed, several experts also note that there are many pitfalls to avoid, once you start claiming the benefits and receiving the checks.
Here are some things our experts say Americans should never do with their checks.
Don’t Claim Early
Many experts agree that claiming Social Security benefits early is something you should never do.
“Unless there is an absolute good reason, taking early benefits can cost thousands of dollars lost over your lifetime,” said Chuck Czajka, certified Social Security claiming strategist (CSSCS) and the founder of Macro Money Concepts.
While claiming before 65 is possible, it leads to a reduction in benefits. In turn, it’s much better to wait until age 65, or even age 70 if you can, advised Scott Lieberman, the founder of Touchdown Money.
“Waiting until age 70 increases your benefits by 75% compared to taking them early at age 62,” he said.
Don’t View Social Security Checks as ‘Extra Money’
You should also avoid the mistake of viewing these checks as “extra money.”
As Erika Kullberg, an attorney, personal finance expert and founder of Erika.com, explained it, you should use these checks to cover your fixed living expenses, including rent (or housing payment), food, healthcare, utilities and other necessities of life
“Overspending these funds can create other financial problems,” Kullberg warned. “[You] should have a specific plan about where these funds go every month.”
Don’t Continue To Work and Don’t Underreport Alternative Income
According to Lieberman, you can’t take a job while collecting Social Security without taking a serious financial penalty, unless you wait until full retirement age.
As noted by the Social Security Administration (SSA), in 2024, the earnings limit if you haven’t reached your full retirement age is $22,320 and “for every $2 over the limit, $1 is withheld from benefits.”
Josh Richner, the founder FaithWorks Financial, further stressed the importance of accurately reporting any additional income, such as wages from a part-time job or freelancing, when you start collecting Social Security benefits.
“Failing to do so can lead to a reduction in your benefits or even the need to repay benefits if you exceed the earnings limit,” he said.
Don’t Co-Mingle Social Security Income With Other Funds
Another key thing Richner said you should never do with your security check is put it in the same bank account as other types of income.
When protected income such as Social Security is mixed with regular earnings or other funds, it can become difficult to distinguish which portion of the money is protected.
“In the unfortunate event of a wage garnishment, the entire account balance could be at risk, even though Social Security benefits are supposed to be protected,” he warned.
Instead, Richner recommends maintaining a separate bank account solely for your Social Security deposits.
Don’t Take Cash Advances Against Your Checks
Some lenders will provide cash advances against Social Security payments, often accompanied by high fees and interest rates.
“Don’t do it,” said Dana Anspach, a certified financial planner (CFP) as well as the founder and CEO of Sensible Money. “As you struggle to pay back fees and interest on top of what was borrowed, it can send you into a downward financial spiral that gets worse each month.”
Don’t Forget About Taxes
Anspach also noted that many people don’t set up tax withholding on their benefits, but if you have additional sources of income, a portion of them may be taxable.
She suggested consulting with a tax professional or using online tax software to see how much you’ll owe and to set aside funds accordingly.
Don’t Forget To Keep Saving
Even if you’re already enjoying retirement, Kullberg said you shouldn’t gloss over the importance of saving for the future.
“Build up an emergency fund by putting at least a small portion of your monthly Social Security checks into a reserve account so that your retirement savings are ready to weather unforeseen hiccups,” she said.
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