6 Social Security Decisions That Can Reduce Your Benefit

05.18.2026 | Category: Navigating Your Retirement

Reviewed by: Mark Zagurski, CLU®, ChFC®, CMFC® and CRPC®

Summary: Some Social Security decisions can permanently lower your monthly retirement benefit, while others can reduce the amount that actually reaches your bank account. Claiming early, continuing to work before full retirement age, taxes, Medicare deductions and benefit suspension can all affect what you receive. Understanding the difference between a lower benefit and a smaller check can help you make more informed decisions about when to claim and how Social Security fits into your retirement income plan.

Key takeaways

Claiming Social Security before full retirement age permanently reduces your monthly retirement benefit.
Working before full retirement age can temporarily reduce checks if you earn above the annual limit.
Taxes and Medicare premiums can make your monthly payment smaller even if your core benefit amount has not changed.
Voluntarily suspending benefits after full retirement age is different from losing benefits.
Money in the bank usually does not affect Social Security retirement benefits, but it can affect Supplemental Security Income (SSI).

What reduces Social Security benefits?

When people say they “lost” part of their Social Security, they may be talking about a few different things. Some decisions can permanently lower your monthly retirement benefit. Others can temporarily reduce checks, or simply reduce the amount that reaches your bank account after deductions. That difference matters because each situation calls for a different decision.

Decision or situation	What it can do	Permanent or temporary?
Claiming before full retirement age	Lowers your monthly retirement benefit	Permanent
Working before full retirement age and earning above the limit	Withholds part of your benefits	Temporary
Federal taxes on benefits	Reduces what you keep after taxes	Depends on income
Medicare Part B premiums	Reduces your net monthly check	Ongoing deduction
Voluntarily suspending benefits after full retirement age	Stops payments while you delay	Temporary by choice
Confusing retirement benefits with SSI resource rules	Can lead to misunderstandings about whether savings affect benefits	Depends on program

1. Claiming before full retirement age

One of the biggest decisions that can reduce your Social Security retirement benefit is claiming early. The Social Security Administration says you can start retirement benefits as early as age 62, but if you claim before full retirement age, your monthly benefit is reduced for each month you start early.

For people born in 1960 or later, full retirement age is 67, and the Social Security Administration’s example shows that a $1,000 monthly benefit at full retirement age would be reduced to $700 if claimed at 62, about a 30% reduction. ¹

That reduction is permanent, which is why timing deserves a close look. As Mark Zagurski, director of strategy and operations at Mutual of Omaha Advisors and host of the Make it Personal Podcast, explains, “There is no best age for everyone. Taking benefits at age 62, at full retirement age, or waiting until age 70, carries unique risks and rewards. Ultimately, it’s your choice and you should make an informed decision based on your personal situation.”

2. Continuing to work before full retirement age

If you claim benefits before full retirement age and keep working, Social Security may withhold part of your benefit if your earnings go over the annual limit.

In 2026, the exempt amount is $24,480 if you are under full retirement age all year, and Social Security withholds $1 in benefits for every $2 above that limit.
In the year you reach full retirement age, the 2026 limit rises to $65,160, and Social Security withholds $1 for every $3 above the limit for months before you reach full retirement age. ²

Beginning the month you reach full retirement age, there is no earnings limit.

This is often confused with permanently losing benefits, but it works differently from early claiming. SSA also says that when you reach full retirement age, it recalculates your benefit to give you credit for the months benefits were reduced or withheld because of excess earnings.

3. Overlooking taxes on your benefits

Your Social Security check may also feel smaller because part of your benefit is taxable. The IRS says benefits may be taxable if one-half of your benefits plus all your other income, including tax-exempt interest, is greater than the base amount for your filing status.

The base amount is $25,000 for single filers, heads of household and qualifying surviving spouses, and $32,000 for married couples filing jointly. ³

That does not mean Social Security reduced your benefit formula. It means your after-tax income may be lower than expected. As Nate Hobson, National Sales Director at Mutual of Omaha Advisors, says, “Determining the right withdrawal strategy in retirement is really the million-dollar question because it’s a moving target.”

4. Forgetting that Medicare premiums can come out of your check

A smaller monthly deposit can also happen when Medicare premiums are deducted from your Social Security benefit. Medicare says most people get their Medicare Part B premium deducted automatically from their Social Security benefit payment. If you do not get benefits from Social Security, Medicare sends you a premium bill instead. ⁴

So if your check looks smaller after Medicare starts, your Social Security benefit itself may not have changed. The amount that reaches your bank account may simply be lower after deductions.

5. Suspending benefits without understanding the tradeoffs

If you have reached full retirement age but are not yet 70, the Social Security Administration says you can ask to suspend your retirement benefit payments. Doing that earns delayed retirement credits for each month your benefits are suspended, which can result in a higher future benefit payment.⁵

But suspension also stops your checks while benefits are paused. It can affect benefits paid on your record, and Medicare Part B premiums can no longer be deducted from suspended benefits. The Social Security Administration says that if those premiums are not paid on time, you may lose Part B coverage.

6. Confusing Social Security retirement benefits with SSI

Many people search whether money in the bank can reduce Social Security. For Social Security retirement benefits, the answer is usually no. Retirement benefits are based mainly on your earnings record and claiming age, not the amount you have in savings.

Supplemental Security Income, or SSI, is different. SSI is a needs-based program for people who are age 65 or older, blind or disabled and who have limited income and resources. The Social Security Administration says the resource limit in 2026 is $2,000 for an individual and $3,000 for a couple. ⁶

So if you are asking whether money in the bank affects Social Security, it helps to know which program you mean. Social Security retirement benefits and SSI follow different rules.

Why these decisions matter in a broader retirement plan

Social Security is an important part of retirement income for many households, but it usually works best when it is viewed as one part of a larger plan rather than the whole plan. In Mutual of Omaha’s 2025 Retirement Drawdown Study, 96% of retired respondents said Social Security was one of their retirement income sources, and 65% of fully retired respondents said they have three or more sources of income in retirement.

That is one reason claiming decisions deserve a closer look. The age when you claim, whether you plan to keep working and what other income sources you have can all shape how much pressure Social Security has to carry in your monthly budget. As Mark Zagurski says, “You cannot easily undo your claiming decision.”

Looking at Social Security as part of a broader retirement income plan can help you weigh those tradeoffs more clearly and decide how benefit timing fits within your comprehensive financial plan.

Thinking about when to claim Social Security?

A financial professional can help you look at how benefit timing, other income sources and your retirement timeline may fit together.

How long will my money last in retirement?

Frequently asked questions about reduced Social Security benefits

What can reduce my Social Security benefits?

The most common reasons are claiming before full retirement age, working before full retirement age and earning above the limit, taxes on benefits and Medicare premiums deducted from your check. Claiming early is usually the biggest permanent reduction.

Why is my Social Security check smaller than expected?

A smaller check does not always mean your benefit formula changed. It may reflect temporary withholding because you are still working before full retirement age, taxes or Medicare premium deductions.

Does money in the bank affect Social Security retirement benefits?

Usually no for retirement benefits. But it can affect SSI because SSI has resource limits and counts cash and bank accounts as resources.

Can you lose Social Security by working?

If you are under full retirement age and earn above the annual limit, part of your benefits may be withheld. Once you reach full retirement age, the earnings limit no longer applies.

Why would my Social Security be reduced in 2026?

A smaller Social Security check in 2026 does not always mean your core benefit was cut. It may reflect claiming before full retirement age, temporary withholding because you are still working, taxes on benefits or Medicare premium deductions. For people who are still working before full retirement age, the 2026 earnings limits may also affect how much is withheld from monthly checks.

Reviewed by: Mark Zagurski, CLU®, ChFC®, CMFC® and CRPC®

Mark is Mutual of Omaha Advisors’ Director of Strategy & Communications. With more than 30 years of experience, he has worked extensively in advisor development, strategy, and communications, focusing on helping advisors and their clients make informed financial decisions. He is also the host of the Mutual of Omaha Advisors podcast, “Make it Personal,” which explores personal finance and strategies to help you take control of your money and future.

Sources:

*About this survey: Mutual of Omaha worked with research vendor, quantilope, to conduct research related to Decumulation – the strategic drawdown of assets during retirement years. This research had a sample size of 496 respondents aged 50+ who were already retired (n=327) or nearing retirement (n=169) within the next 10 years. Respondents who stated they did not have at least some assets to draw down during retirement were excluded from the survey. The research was conducted in a 10-minute online survey from October 6-15, 2025. All data included in this report are based on Mutual of Omaha proprietary research unless otherwise noted.

Social Security Administration. Starting Your Retirement Benefits Early. No date listed. Accessed April 2026. https://www.ssa.gov/benefits/retirement/planner/agereduction.html
Social Security Administration. If You Were Born in 1960 or Later, Your Full Retirement Age Is 67. No date listed. Accessed April 2026. https://www.ssa.gov/benefits/retirement/planner/1960-delay.html
Social Security Administration. 2026 Cost-of-Living Adjustment (COLA) Fact Sheet. No date listed. Accessed April 2026. https://www.ssa.gov/news/en/cola/factsheets/2026.html
Internal Revenue Service. Social Security Income. Last reviewed Sept. 5, 2025. Accessed April 2026. https://www.irs.gov/faqs/social-security-income
Medicare. How to Pay Part A & Part B Premiums. No date listed. Accessed April 2026. https://www.medicare.gov/basics/costs/pay-premiums
Internal Revenue Service. Social Security Income. Last reviewed Sept. 5, 2025. Accessed April 2026. https://www.irs.gov/faqs/social-security-income

Disclosures:

Registered Representatives offer securities through Mutual of Omaha Investor Services, Inc., Member FINRA/SIPC. Investment Advisor Representatives offer advisory services through Mutual of Omaha Investor Services, Inc. Mutual of Omaha Advisors is a division of Mutual of Omaha Insurance Company.

All investing involves risk, including the possible loss of principal, and there can be no assurance that any investment strategy will be successful.

Mutual of Omaha and its representatives do not provide tax and/or legal advice, and the information provided herein is general in nature and should not be considered tax and/or legal advice.

Not all Mutual of Omaha agents are registered representatives or financial advisors.

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