Maximizing Social Security: How Avoiding These 7 Mistakes Can Add $120K to Your Nest Egg

Social security and medicare concept with social security card and pile of money.
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Social Security is one of the main sources of income for many retirees, along with employer-sponsored pensions, retirement accounts, income-producing assets and savings. This makes it a vital part of many people’s retirement plans.

But despite how important it is, there’s still a lot of mystery surrounding Social Security and how it works. Because of this, a lot of people make certain decisions that can significantly reduce their benefit amount after retirement.

Here are the top Social Security mistakes you should know about and how avoiding them could add hundreds or thousands of dollars to your monthly retirement income and nest egg.

Not Working the Full 35 Years

“A big mistake, as far as Social Security is concerned, is not working for at least 35 years,” said Todd Stearn, founder and CEO of “That’s because your Social Security payments are calculated using your 35 highest-earning years. So, say you only work for 30 years — that’s five zeroes that will be entered into your calculation.”

The higher your annual income and the more years you’ve worked, the higher your payout tends to be. The exact amount depends on your average income across all years you worked, though.

Collecting Benefits Before Full Retirement Age

You can start collecting Social Security as early as 62 years old, but doing so could cut into your retirement income significantly.

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“Claiming Social Security benefits at the earliest age of 62 can result in a permanent reduction in your monthly benefit,” said Tarek El Ali, CEO at Smart Insurance Agents. “For each year you delay claiming between your Full Retirement Age (FRA) and 70, your benefit increases by about 8%. Avoiding this mistake by waiting until FRA or beyond can lead to a substantial increase in your monthly benefit, which could translate into thousands of dollars over the course of your retirement.”

Stearn added, “To maximize your Social Security benefit, earn more taxable money each year and wait until age 70 to withdraw the money. The closer you get to the maximum wage taxable by Social Security — $160,200 in 2023 — and the closer to age 70 you wait to take out the money, the more money you’ll potentially receive. Each month you postpone claiming Social Security equates to higher payments for when you do decide to take the money.”

Not Maximizing or Collecting Spousal Benefits Too Early

“Married couples have the opportunity to coordinate their Social Security claiming strategies to maximize benefits,” said El Ali. “Failing to explore options like ‘file and suspend’ or ‘restricted application’ can lead to lower combined benefits. Depending on the difference in earnings between spouses, the potential increase in lifetime benefits could amount to tens of thousands of dollars.”

Mike Cocco, CFP, a financial professional with Beacon Wealth Partners in alliance with Equitable Advisors, said another common mistake people make is collecting spousal benefits too early.

“Timing is important, because every year one waits to start collecting Social Security, they will receive an increase in benefits for that additional year of deferral up until a maximum age of 70,” said Cocco. This is true when collecting your own benefits or your spouse’s — or ex-spouse’s.

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Before deciding to collect spousal Social Security benefits, it’s important to come up with a game plan. Cocco suggested reviewing your financial situation, current health and expected longevity of both you and your spouse, and the age difference between you and your spouse.

Along with this, Cocco said it’s a good idea to calculate both of your primary insurance amount (PIA) to get an estimate of your benefit amount. You can do this at

Continuing To Work While Receiving Social Security

Some people choose to work while receiving Social Security. The downside is that you can only earn up to a certain amount of income without affecting your benefits. If you earn more than the annual earnings limit and haven’t reached the full retirement age, you could see a reduction in benefits.

“Claiming Social Security before your FRA while continuing to work can result in your benefits being temporarily reduced if your earnings exceed a certain limit,” El Ali said. “For every $2 you earn above the limit — which is adjusted annually — $1 of your Social Security benefits may be withheld. This reduction typically stops once you reach FRA.”

Failing To Account for Taxes

Social Security benefits, said El Ali, may be subject to federal income tax if they exceed a certain threshold. While the exact amount varies, not accounting for these potential tax implications could cut into your retirement income.

According to the SSA, Social Security benefits are usually only taxed if you make a significant amount of income from other sources, like dividends or self-employment. Depending on your income amount and tax filing status, you could end up paying taxes on up to 85% of your Social Security benefits.

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Not Taking Advantage of Survivor Benefits

Certain individuals, such as a surviving spouse or a dependent, could be eligible for monthly survivor benefits. This benefit amount primarily depends on the deceased’s earnings.

“Survivor benefits can be crucial for the surviving spouse,” El Ali said. “If the higher-earning spouse delays claiming until FRA or later, it can lead to a larger survivor benefit, providing greater financial security for the surviving spouse after the other’s passing.”

Not Keeping an Eye Out for Mistakes

Although the Social Security Administration strives for accuracy, there’s always a chance of administrative mistakes occurring. One common mistake is when a person’s earnings were not reported correctly. If this happens, it could impact the monthly and total benefit amount. That’s why it’s important to review your Social Security statement for errors and report them as quickly as possible to ensure you’re receiving the maximum benefit amount.

“Avoiding these mistakes can potentially add significant value to your retirement nest egg,” El Ali said. “To provide a rough estimate, let’s consider a hypothetical situation where avoiding these mistakes leads to an additional $500 per month in Social Security benefits.

“Over a 20-year retirement period, that’s $120,000 in additional income. If the increase is even more substantial due to better strategies, you could be looking at hundreds of thousands of dollars over the course of your retirement.”

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