Social Security Mistakes High Earners Often Make (and How to Avoid Them)

Social Security is a critical component of retirement planning for virtually all retirees. For high earners with large retirement savings, your monthly benefit may feel like a drop in the bucket. But when you’re at the top of the Social Security benefit scale, careful planning is still just as important as ever! Here, I’ll cover seven common mistakes high earners make—and how to avoid them – to help you maximize your Social Security income.

Mistake 1: Misunderstanding How Benefits Are Calculated

Social Security benefits are calculated based on your highest 35 years of earnings, adjusted for inflation. Some workers may consider delaying retirement if their earnings history includes a significant increase in income 33 or 34 years ago that would impact their overall average income. 

However, for high earners—those making at or above the Social Security earnings cap ($175,100 in 2025)— it’s possible that you’ve been hitting the Social Security earnings cap all along. (For instance, the cap was $51,300 in 1990.) If that’s the case, working additional years at the maximum taxable earnings likely won’t increase your benefit, since your Average Indexed Monthly Earnings (AIME) are already based on 35 years of maximum earnings. 

Regardless of your income, it’s still crucial to review your earnings record via SSA.gov to ensure accuracy because missing years or even minor discrepancies can impact your benefit calculation. Verifying that each year’s reported earnings match your records and promptly correcting any errors helps ensure you receive the benefits you’ve earned – I recommend reviewing your earnings record for accuracy annually.

Mistake 2: Claiming Benefits Too Early

The biggest mistake high earners (or any retirees) can make with their Social Security benefit is claiming too early. When you choose to start receiving Social Security significantly affects your retirement income for the rest of your life, and once you’ve claimed, you can’t go back. 

If you’re eligible for the maximum Social Security benefit, your monthly benefit (in 2025) at full retirement age is $4,018. You’re eligible to claim Social Security retirement as early as age 62 but doing so reduces your monthly payout to $2,831. In this scenario, claiming early results in a 29% reduction in benefits, forever. 

Conversely, delaying your claim until age 70 is one way for retirees who have earned the maximum Social Security benefit to further increase their monthly check. Your potential monthly benefit increases every month that you delay Social Security past your full retirement age until you reach 70 years old. Waiting until 70 can boost that maximum monthly benefit to $5,108, a 27% increase, for the rest of your life.

When claiming Social Security early makes sense

Despite the reduction in income, claiming Social Security benefits early may make sense for some retirees, depending on their situation. If you face health challenges or have immediate income needs, such as covering expenses until a deferred compensation or pension plan begins, you may consider swallowing the reduced payments in exchange for immediate income.

Longevity also plays a role. If you have a shorter-than-average projected lifespan, it may make sense for you to claim sooner. Consider calculating your breakeven point, the age at which total lifetime benefits from claiming later surpass those from claiming earlier. This analysis helps assess your decision based on your health, expected longevity, and financial needs.

Mistake 3: Anchoring Social Security to Your Retirement Date

Have you considered retiring and not claiming Social Security right away? Many professionals nearing retirement assume that they’ll claim Social Security as soon as they stop working, but for high-earning professionals who have sizeable retirement savings, this often isn’t the best option!

You just read how claiming Social Security too soon can slash your monthly benefit. But delaying your claim doesn’t mean you have to delay your retirement. For example, Casey and Sam plan to retire next year when Casey is 64 and Sam is 66. They have $3.5 million saved for retirement and recently received $600,000 from the sale of Sam’s parents’ home. 

Depending on the rest of their numbers (because there are many, many variables to weigh) I might recommend that Casey and Sam each defer Social Security to 70  to maximize their benefit. Or, Sam, who is the higher-earning spouse, might delay to 70 while Casey claims their benefit at full retirement age (67). In the meantime, they can use their non-retirement savings (most of which is not subject to tax) and leave open other tax strategies, such as Roth conversions, to lower their lifetime tax bill, savings tens or even hundreds of thousands of dollars.

Mistake 4: Overlooking Tax Implications

If you’re eligible to receive the maximum Social Security benefit, it’s very likely that you will also face the top Social Security tax bracket, meaning up to 85% of your benefits can be taxed as ordinary income. Yes, that’s right, Social Security income is subject to federal income tax. 

While avoiding this top bracket entirely may be unrealistic for high-income households, proactive tax planning can ease your overall tax burden. One effective strategy involves strategically accelerating income, such as IRA withdrawals, when you’re in a lower tax bracket during lower-income years. This approach helps mitigate the tax impact of future required minimum distributions (RMDs) from your retirement accounts, which may come into play once you reach age 73.

Mistake 5: Ignoring Spousal and Survivor Benefits

For high earners who are married, the timing of your Social Security claim determines the financial well-being of your spouse now and after your passing. It’s important that you consider both spousal and survivor benefits before claiming.

What to know about Spousal Social Security benefits

• The spousal Social Security retirement benefit can be up to 50% of the higher-earning spouse’s full-retirement-age benefit.
• Spousal Social Security benefits cannot be claimed if the higher-earning spouse has not already claimed their own benefit. 
• If the lower-earning spouse files before full retirement age, their benefit can be reduced; delaying past full retirement does not increase it.
• The spousal benefit remains the same whether the higher-earning spouse claims early or at 70 (delaying the higher-earner’s claim matters more for survivor benefits).
• You do not have to choose between spousal benefits or your own benefits – when you claim, you will receive the larger of the two.

While you do not need to choose which benefit to claim (the Social Security Administration signs you up for whichever is largest), knowing which claiming option is best for you is central to your Social Security strategy. For example, your spousal benefit might mean you don’t need to work as long as you planned!

Survivor Benefits

When the first partner passes away, the surviving spouse is entitled to receive up to the full amount of the deceased’s Social Security benefit. The math varies – the widow or widower may continue to receive their benefit, plus the difference; or they may switch from a spousal benefit to a survivor benefit. Either way, they reach the same result: 100% of the higher-earning spouse’s benefit.

I generally recommend that the higher-earning spouse delay claiming benefits until age 70 to maximize their monthly payout. That way, if the higher earner passes away first, the surviving spouse will be entitled to the full amount of this maximized benefit, which can make a big difference in their financial stability for years to come.

Creating a larger survivor benefit is an especially important consideration for high-earning men because they often pass before their wives. A 2021 report found that among U.S. adults ages 75 and up, 54% of women were currently widowed, compared to just 20% of men.

Mistake 6: Failing to Consider Longevity and Inflation

A 2025 survey revealed that 64% of Americans are more afraid of running out of money in retirement than of death itself. They’re terrified of outliving their savings.

To reduce the impacts of longevity and inflation on your retirement savings, I recommend maximizing your Social Security benefit by waiting until age 70 to claim. Consider this: a larger initial benefit also amplifies future cost-of-living adjustments (COLAs). The massive 8.7% COLA in 2022 on $4,018 would have been $349/month vs $444/month on $5,108.

Mistake 7: Overestimating Social Security’s Role in Retirement Income

Social Security alone won’t sustain a high earner’s pre-retirement lifestyle. For example, the maximum benefit at age 70 in 2025 ($5,108 monthly) might replace approximately 35% of a $175,000 annual income, but only about 15% of a $400,000 income. 

High-income individuals should plan to integrate Social Security into a comprehensive retirement income plan (at BMM, this is your Paycheck Replacement Plan), that incorporates other sources such as pensions, retirement savings, investment accounts, annuities, and real estate income. Diversifying income streams and planning ahead can help ensure your lifestyle remains comfortable and secure throughout retirement.

Note: One area where Social Security can play a major role, even for high earners? Managing sequence of return risk. Your guaranteed income from Social Security benefits can help you ride out market downturns when you might not want to draw as much from investments.

Avoid these common Social Security mistakes – start planning today!

Making smart choices about Social Security is crucial for high earners seeking a secure and fulfilling retirement. By understanding these common mistakes, carefully evaluating your unique circumstances, and consulting with a financial professional, you can significantly enhance your retirement strategy. 

Looking for personalized Social Security strategy?

Berkshire Money Management can help. Schedule a free 15-minute consultation today to get started!

Situations and characters are fictional and designed to illustrate a concept.