Retirement Planning Pitfalls: Why Your Social Security Decisions in Your 60s Matter More Than You Think

Your 60s are a critical decade for retirement income planning. The choices you make about Social Security before reaching full retirement age can have profound financial consequences that ripple through decades of retirement. As we head into 2026 with evolving tax rules and earnings limits, understanding the common errors financial advisors see repeatedly can help you avoid costly mistakes.

The False Urgency of Early Filing

One of the most widespread errors involves claiming Social Security at age 62. Many retirees feel pressured to file early, driven by fear that the program might not survive or by simple misinformation about how benefits work. According to financial professionals, people often rush into this decision without fully calculating the tax implications and long-term reduction in monthly payments.

The mechanics of early filing can be particularly punishing. If you claim before reaching full retirement age and earn more than $23,400 annually from employment, your Social Security benefit faces a temporary reduction of $1 for every $2 earned above that threshold. For someone earning $60,000 at age 62, this earnings test alone could result in approximately $18,300 in reduced benefits—far more than many anticipate when they file early.

The Permanent Impact of Reduced Monthly Checks

Beyond the earnings test, there’s a deeper structural problem with claiming too early: you permanently lock in a lower benefit amount for life. This isn’t just about receiving less money next month—it’s about forfeiting inflation-adjusted increases over potentially 30+ years of retirement. While concerns about Social Security insolvency make headlines, experts emphasize that even worst-case scenarios project only a 20-25% adjustment by 2032, not a complete elimination of benefits. Taking an early, permanently reduced benefit based on exaggerated fears about program failure often proves to be a false economy.

Delay Strategy Without Financial Runway

Conversely, some retirees delay benefits too long, operating under the assumption that postponing is always optimal. However, this approach ignores individual cash flow circumstances. If your investment portfolio and other savings are insufficient to cover your living expenses, continuing to drain these assets at an accelerated rate while waiting for higher Social Security payments can be financially counterproductive. In such cases, beginning to receive benefits earlier and reducing portfolio withdrawals becomes the mathematically superior choice. The optimal filing age depends heavily on your personal financial situation, not on universal principles.

Missing Spousal and Survivor Benefit Strategies

A frequently overlooked dimension involves spousal and survivor benefit rules. Many couples fail to coordinate their claiming strategies, leaving tens of thousands of dollars on the table. For example, when a higher earner delays claiming while the lower-earning spouse files at full retirement age, the household receives substantially more lifetime income than both claiming simultaneously. Widows and divorcees often accept reduced benefit amounts without exploring survivor or spousal options, which can provide 50-100% more in monthly income. Additionally, spousal benefits at full retirement age don’t depend on when the higher-earning spouse actually files, allowing for sophisticated coordination between household members.

Tax, Earnings Limits, and Medicare Coordination Issues

The intersection of Social Security taxation, Medicare enrollment requirements, and earnings limitations creates additional complexity that surprises many retirees. Failing to understand how Social Security benefits interact with Medicare creates distinct risks. Those who assume automatic Medicare enrollment at age 65 without taking affirmative action can face substantial late enrollment penalties. Similarly, the taxation of Social Security benefits based on combined income thresholds often goes miscalculated without professional review. Without a financial advisor examining your specific tax situation, you may be operating with incomplete information about the true after-tax value of your claimed benefits.

The Power of Data-Driven Decision Making

Rather than basing Social Security decisions on emotion, guesswork, or half-understood rules, financial advisors recommend running breakeven analyses and modeling multiple scenarios. This means comparing your lifetime income under different filing ages while accounting for taxes, longevity assumptions, and current investment market conditions. During market downturns, some retirees benefit from filing earlier to reduce the pressure on portfolio withdrawals. Running your own calculations—or having a qualified advisor do so—ensures your choices reflect your actual financial position rather than general fears or habits.

Entering 2026 with a data-informed approach to Social Security claiming can meaningfully strengthen your financial security throughout retirement.