What Can Go Wrong: Avoiding Common Mistakes

While chasing bigger checks, retirees frequently fall into behavioral traps that derail their financial security.

• Claiming Out of Fear: Headlines predicting the impending bankruptcy of the Social Security trust fund prompt many healthy retirees to claim at 62. While the system faces funding challenges, sweeping benefit elimination for current retirees is politically unviable. Claiming out of panic permanently locks in a 30% reduction.
• Ignoring the Windfall Elimination Provision (WEP): If you spent part of your career in a government job that did not pay into Social Security (earning a pension instead) and part of your career in the private sector, your Social Security check will likely be reduced by the WEP. Failing to account for this reduction leads to disastrous retirement income shortfalls.
• Misunderstanding Break-Even Points: Many retirees fixate on the “break-even age”—the age at which the cumulative total of delaying benefits surpasses the cumulative total of claiming early. This mindset treats Social Security like an investment to be beaten rather than longevity insurance designed to prevent poverty in your eighties and nineties.