Over 74 million Americans rely on Social Security benefits to pay the bills and enhance their lifestyles in retirement. Factors like when they claim their benefit, the percentage of their income they expect it to replace and numerous other variables determine how much financial security the program will provide. No matter if you have to live off of your Social Security check alone are use it to subsidize your fixed income and other retirement accounts, make sure you’re mapping out the best course.
High Yield Savings Offers
Powered by Money.com – Yahoo may earn commission from the links above.
For You: 40 States Where You’ll Feel the Biggest Social Security Increase This Year
Read Next: 3 Reasons Retired Boomers Shouldn’t Give Their Kids a Living Inheritance (And 2 Reasons They Should)
Bank tellers are on the front lines. They stand between retirees and their money — literally — and see the positive outcomes when people get it right firsthand every day they go to work. However, they also see the consequences suffered by those who get it wrong.
GOBankingRates spoke with Izabella Bogumil, a relationship advisor with Addition Financial Credit Union in Lake Mary, Florida. Relationship advisors are Addition Financial’s equivalent of tellers, and Bogumil serves as the bridge between the retirees she serves and the Social Security income she safeguards on their behalf.
In her experience, these are the four most common and consequential mistakes she sees retirees make with their Social Security benefits. Avoid them to get as much out of the program as possible.
The full retirement age, when recipients can collect their entire benefit payment, is 67 for those born in 1960 or later. Everyone becomes eligible to claim Social Security at 62, but the tradeoff for an early retirement is a smaller check.
The Social Security Administration (SSA) reduces benefits by 5/9 of 1% for every month you claim early up to 36 months. After that, The SSA further reduces your benefit by 5/12 of 1% per month until your check shrinks by up to 30%, an outcome Bogumil sees all too often.
“The most common mistake I see is with seniors who reach age 62 and then immediately claim their benefits,” she said. “This makes them lose a significant amount of their full benefit per month. With everything getting more expensive as time goes on, seniors who are cashing out early are struggling to make ends meet.”
Just as the SSA reduces benefits for those who claim early, they issue credits that increase your payment for delaying retirement and claiming late. “If possible, I recommend waiting until age 70 to claim Social Security to receive the maximum benefit,” said Bogumil.
Bogumil has a good point, as the maximum Social Security retirement benefit in 2025 is $5,108 per month for those who delay claiming benefits until age 70, whereas the maximum benefit for those who claim benefits at the earliest age of 62 is $2,831 per month.
Learn More: 8 Common Mistakes Retirees Make With Their Social Security Checks
According to the SSA, 37% of men and 42% of women over 65 and receive Social Security count on their benefits for 50% or more of their income. Even worse, 12% of men and 15% of women rely on Social Security for 90% or more of their income, a percentage the program was never designed to support.
“For many seniors, Social Security is their main source of incomebut there are many older members who need to return to work due to the rising cost of living,” said Bogumil. “Unfortunately, Social Security just doesn’t cut it as a sole source of income.”
The SSA says that benefits typically replace about 40% of pre-retirement income, which means other streams have to do the heavy lifting. “I recommend having a second or even a third source of income to cover those extra living expenses, such as a pension, 401(k) or IRA,” said Bogumil.
Another big mistake is getting complacent and tuning out, which is by no means unique to seniors when it comes to financial management. They have the most to lose, though. Just like with budgetingmake sure to keep track of what money is coming in and going out.
“Many seniors feel as if once they apply and are receiving Social Security, they can ‘set it and forget it,’” said Bogumil. “However, records can often be incorrect or incomplete. I recommend seniors check their earnings reports yearly to ensure they are accurate and complete. If something seems incorrect, contact the Social Security Administration right away.”
Another common error that is not unique to people of retirement age — but one that can harm them more than younger demographics — is navigating a complex and consequential financial procedure on their own without fully understanding the process, options or potential outcomes.
“Social Security is not always an easy step-by-step process,” said Bogumil. “I hear from many seniors who find the process lengthy and confusing when they go to apply. Financial advisors can help build a plan and walk individuals through each step on how to get the most out of their benefits.”
Caitlyn Moorhead contributed to the reporting for this article.
More From GOBankingRates
This article originally appeared on GOBankingRates.com: I’m a Bank Teller: 4 Mistakes Social Security Recipients Make
