I’m a CPA and private finance author with greater than 30 years of expertise, which incorporates writing dozens of articles about Social Safety.
However when it got here time to file for my very own Social Safety final 12 months, I needed to pause.
I believed I knew the system inside and outside. However as soon as I moved from the theoretical aspect of the desk to the retiree aspect, I spotted that the system is full of invisible tripwires.
There are tax cliffs that aren’t listed for inflation. There are work limits that may freeze your advantages. There are breakeven myths that sound sensible however are literally mathematically illiterate.
If a CPA can get tripped up by these guidelines, I do know it’s taking place to everybody else. Listed below are the 5 dumbest errors I see retirees make — and the way I prevented them.
1. Falling for a typical tax delusion
Most individuals assume that since they paid taxes on their wages earlier than they went into Social Safety, their advantages might be tax-free.
That’s a logical assumption, however solely true in case you have little or no different revenue.
When you have different revenue sources — like a pension, withdrawals from a 401(ok) and even part-time work — you’ll seemingly set off a tax method generally known as provisional revenue.
The IRS takes your adjusted gross revenue, provides any tax-free curiosity after which provides half of your Social Safety advantages. If that quantity is over $25,000 (for single filers) or $32,000 (for these married submitting collectively), you owe taxes on as much as 50% of your advantages. If it goes over $34,000 for single filers or $44,000 for joint returns, you owe taxes on as much as 85% of your advantages.
Right here’s the kicker: These thresholds had been set within the Nineteen Eighties and by no means adjusted for inflation. They had been meant to tax the wealthy, however as we speak, they hit the center class. Be ready for this tax invoice as a result of it catches many of us off guard yearly.
2. Obsessing over the breakeven age
After I advised my mates I used to be eager about delaying my advantages declare till I hit age 70, all of them stated the identical factor: “However what for those who die?”
They pulled out napkins and calculated my breakeven age — the age I’d must dwell to for the larger checks to beat the smaller, early checks. Normally, the maths says you must dwell to about 80 to come back out forward.
Right here’s the issue with that math: It assumes you will die younger.
In accordance with the Social Safety Administration’s actuarial tables, for those who’re a person who has already made it to 65, your common life expectancy is one other 18 years (age 83). For those who’re a girl, it’s practically 21 years (age 86).
For those who declare early at 62 to “get yours” after which dwell to 90, you price your self tens of hundreds of {dollars} in assured, inflation-protected revenue. Until you will have a critical well being problem, betting by yourself early loss of life is a nasty monetary technique.
3. Working an excessive amount of (the earnings take a look at)
I’ve a pal who claimed advantages at 63 however stored his consulting gig. He thought he was double-dipping. Then he bought a letter from the SSA telling him they had been withholding his checks.
He violated the earnings take a look at.
In 2026, for those who declare advantages earlier than your full retirement age, you possibly can solely earn $24,480 a 12 months. For each $2 you earn above that restrict, the federal government withholds $1 of your advantages.
They don’t take it endlessly. They finally recalculate your profit while you hit full retirement age to pay you again, however that doesn’t show you how to pay the electrical invoice as we speak. For those who plan to maintain working, don’t declare early for those who don’t must.
4. Stiffing your partner
I’m the upper earner in my family. If I declare early, I’m completely capping the survivor profit my spouse will obtain if I die first.
When the upper earner dies, the decrease earner bumps as much as the upper earner’s examine. But when the upper earner took a decreased examine at 62, the surviving partner is caught with that decreased quantity for the remainder of their life.
In case you are the excessive earner, you aren’t simply delaying for your self. You’re primarily shopping for a better lifetime revenue on your partner.
5. Setting it and forgetting it
Social Safety isn’t a “set it and neglect it” revenue stream.
Yearly, there’s a price of dwelling adjustment (COLA). In 2026, it’s 2.8%. However Medicare Half B premiums additionally rise, they usually’re deducted straight out of your examine.
I examine my private “my Social Safety” account on-line yearly. I examine the earnings document to verify they didn’t miss a 12 months of labor (which occurs greater than you assume). And I examine my tax withholding settings.
For those who don’t ask the SSA to withhold taxes out of your examine (type W-4V), you may get hit with a large tax invoice in April. For a lot of, it’s much less painful to have it withheld month-to-month than to jot down an enormous examine to the IRS every year.
