Social Security is a financial lifeline for older Americans, but the benefits can be modest even when you use strategies to get the largest amount you possibly can.
Much depends on when you were born, when you retire, and many other factors. Though $2,861 a month is this year's max for someone leaving the workforce at normal retirement age, you could find yourself collecting far less.
Watch out for these 10 ways the choices you make can lead to reduced or lost benefits.
1. If you claim benefits too early
What Social Security calls normal or full retirement age is somewhere between 66 and 67, depending on the year you were born. At that age, you can claim everything you’ve got coming to you based on your work record.
But you can file for benefits starting as soon as age 62. Many seniors do file early because of job loss or health problems, but doing so dramatically reduces benefits.
If your full retirement age is 67 but you file at 62, your monthly benefit will be reduced by 30%. The reduction is permanent unless you withdraw your claim within a year and pay back any early benefits you received.
2. If you earn too much after taking benefits early
If you take benefits early and keep working, your income might further reduce the amount you can get. Limits on earnings are adjusted each year to reflect national wage trends.
In 2019, the cap is $17,640. For every $2 you earn over that, you lose $1 in benefits. During the year you turn your full retirement age, the cap rises to $46,920. One dollar is withheld for every $3 earned above the threshold.
After you reach full retirement, there’s no limit to how much you can earn. Nothing will be deducted from your benefits.
3. If you take a spousal benefit too soon
Spousal benefits can be a good deal for couples with lopsided incomes, or if one spouse never worked. The lower-earning partner can receive up to 50% of the monthly benefit that the high earner has coming at full retirement.
But to receive the maximum spousal benefit, you have to wait until your own full retirement age. If you claim a spousal benefit early — say at 62 — you may receive as little as 32.5% of your better half's benefit.
The only time this scenario makes sense is when the higher earner decides not to take Social Security until age 70, to collect the ultra-largest benefit. During that wait, the other partner's early spousal benefit can bring some Social Security money into the household.
4. If your identity is stolen
Social Security numbers have become a bigger target for hackers than credit card numbers, according to Javelin Research. Numerous attempts have been made at breaching the Social Security website, and 58,000 allegations of fraud were logged over three recent years.
Identity thieves pose as real beneficiaries and attempt to claim their Social Security money. If a victim delays filing for benefits, the theft might go undiscovered for years.
Protect yourself by creating a mySocialSecurity account at SSA.gov. Check it regularly for suspicious activity. You can hold the account long before you're ready to claim benefits.
5. If you fall victim to other scammers
Fake phone calls supposedly from the Social Security Administration have skyrocketed. From March 2018 to March 2019, more than 76,000 people reported Social Security phone scams that cost them $19 million, the Federal Trade Commission says.
Fraudsters may call and ask for personal information under the guise of updating your account or reporting suspicious activity. Some may demand money for “unfreezing” your account.
Social Security workers typically don’t operate that way, so hang up. Call the agency at 1-800-772-1213 (NOT at the number you see on your caller ID) to find out if someone legitimately contacted you. And, report any fake calls to the Office of the Inspector General.
6. If your income triggers taxes on your benefits
You can lose benefits to taxes, depending on how much you earn in retirement.
If your income is more than $25,000 as an individual or more than $32,000 as a married couple filing jointly, you'll owe federal taxes on a portion of your benefits. The portion could be 50% or 85% based on your income level.
"Income" in this case is defined as the sum of your adjusted gross income, your nontaxable interest and half of your annual Social Security. Thirteen states apply taxes to Social Security benefits, too.
7. If you owe student loans, back taxes or alimony
Debt can be a heavy burden at any age, but it’s especially punishing in retirement.
The first $750 of your monthly Social Security will always be safe, but what's called an offset could reduce additional amounts. An offset occurs when a legitimate claim is filed against your benefits to pay off a debt.
Offsets usually stem from back taxes, unpaid alimony or child support, and defaulted student loans. Student loan debt is growing quickly among older people — it rose 4.5% in the last year for people in their 60s, reports the credit bureau Experian.
8. If your income raises your Medicare premiums
Medicare Part B premiums are deducted from the benefits paid to most people on Social Security. Even when premiums rise sharply, most beneficiaries never see a reduction in their Social Security check, under what's called the "hold harmless" rule.
But the rule doesn't apply to a very small percentage of seniors whose higher incomes require them to pay greater Medicare Part B premiums.
Those costs can eat into Social Security benefits, particularly whenever your income rises and crosses a threshold where an increase in Medicare premiums kicks in.
9. If Social Security undergoes changes
Social Security has long-standing financial woes. In fact, it's paying out more money than it collects in payroll taxes.
Congress has tossed around several ideas, including whether to raise the full retirement age, maybe to 69 or even 70. Under such a scenario, retirees would receive less than they currently do if they choose to take Social Security at 62 or another early age.
If full retirement were raised to 69, benefits claimed at age 62 would be reduced by 40%, according to Urban Institute calculations reported by Reuters.
10. If you receive a pension
Benefits can be reduced for retired government workers, teachers, railroad workers and employees of foreign companies. It typically happens if you collect a pension and if your employer didn't pay into the Social Security system.
The program's complex "windfall elimination provision" can cut your Social Security by up to 50%, but the impact depends on your work history. Something called the government pension offset can be even tougher if you're taking a spousal or survivors benefit.
There are exceptions, so you may not be affected at all. You'll want to talk to your pension administrator and a financial adviser with Social Security experience to find out where you stand.