Like many things that fall into the retirement bucket, retirees often wait to think about the ins and outs of Social Security until they decide to claim it. However, everyone should educate themselves on how Social Security works well before it’s time to claim, so you can make it part of your retirement strategy and not get caught by surprise.
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While there are many possible mistakes that are easy to make regarding Social Security, I asked ChatGPT to drum up the ones with the worst repercussions for retirees, so you can avoid them.
It’s common to want to retire as early as possible, before full retirement age of 67. However, claiming Social Security benefits at 62, the earliest year you are eligible, simply because it’s available, without assessing longevity, health, income needs or other assets can be a big mistake for some, ChatGPT said. When you claim early, benefits are reduced — by as much as 25% to 30% compared with full retirement age, and the cut is permanent.
ChatGPT suggested that retirees considering this should first run claiming scenarios at three stages: age 62, full retirement age and age 70. If you’re healthy, expect longevity and have other income sources, delay as long as you can. Use early benefits only if cash flow or health truly requires it.
Benefits increase roughly by 8% each year, adjusted for inflation, so the longer you delay, the more you get. In practical terms, ChatGPT framed Social Security as a guaranteed, inflation-protected income stream rather than a short-term cash decision.
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Another mistake occurs when spouses claim benefits without considering how those decisions affect each other. The lower-earning spouse may end up with a permanently smaller survivor benefit if the higher-earning spouse claims early at a reduced rate. It’s best to prioritize the higher earner delaying their benefits, when possible, ChatGPT advised. Survivor benefits are based on what the higher-earning spouse was receiving at death, making coordination especially important. Always factor survivor benefits into retirement security and model scenarios that account for both spouses’ lifespans.
Another common mistake is assuming that Social Security is tax-free. Depending on how much income you have in retirement — including that which you withdraw from your retirement accounts — up to 85% of benefits can be taxable depending on income. This taxation is determined by “provisional income,” which includes adjusted gross income, tax-exempt interest and half of Social Security benefits.
