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3 Reasons You Should Be Stuck With A Smaller Social Security Allowance | Smart Change: Personal Finance

(Maurie Backman)

Many seniors see Social Security as an important source of income when they retire. And for some people, these benefits are actually quite generous.

But a few mistakes on your part can get you a lower monthly benefit throughout retirement. Here are a few reasons why you should short circuit Social Security.

Image source: Getty Images.

1. You didn’t work for 35 years

Social Security does not pay all seniors the same benefit. Rather, the amount of money you will qualify for will depend on what your earnings look like throughout your career.

Specifically, Social Security considers your most profitable 35 years of earnings when calculating the monthly benefits you’ll qualify for. But if you don’t work for the full 35 years, you may not like the benefit you get. This is because you have a factor of 0 in your benefit calculation for every year you don’t have income.

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That’s why it’s a good idea to try to spend at least 35 years in the workforce. Doing so can also make it easier to build a solid nest egg for retirement, so it’s really a win-win.

2. You made a claim before full retirement age

You are allowed to start collecting Social Security at: 62 years. However, if you apply at this age or at any point before full retirement age (FRA), you will reduce your monthly earnings in the process.

The FRA is somewhere between 66, 67 or, depending on your year of birth. (It’s actually a huge misconception that you’re eligible for full benefits at age 65, because is is When Medicare kicks in, it’s not FRA for Social Security purposes). If you apply before the FRA, your benefit will be permanently reduced.

The extent of this reduction will depend on how soon you finish filing. But to give you an example, if your FRA is 67 and you claim Social Security at age 62, you will reduce your monthly payment by 30%. Ah.

That’s why knowing your FRA is so important. You can use this table to see at what age you will be eligible for full Social Security benefits:

Year of birth

Full Retirement Age




66 and 2 months


66 and 4 months


66 and 6 months


66 and 8 months


66 and 10 months

1960 or anytime later


Data source: Social Security Institution.

3. You never check your earnings statements

There is an easy way to predict your future Social Security benefits. All you have to do is create an account at and check your annual earnings charts.

But that’s not the only reason it’s smart to access these documents. Your earnings statements also include a summary of your wages. And if your wage information is covered, it could lead to a lower benefit in retirement.

Imagine a year where you made $120,000, only changed jobs halfway through, and somehow your income from one of those jobs wasn’t reported to the Social Security Administration. In this case, your income may be listed as $60,000 for that year, not $120,000. But because your future monthly income is based on your earnings, under-declared income can mean being stranded with less money than Social Security.

Therefore immortality Checking your earnings statement annually can be a costly mistake. Taking a few moments can help you spot an error and, if you fix it, could save you a lower Social Security benefit.

Don’t abbreviate for retirement

No matter how your finances retire, it pays to get as much money out of Social Security as possible. Avoiding these blunders can give you a more generous benefit to enjoy.

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