Social Security is a critical lifeline for millions of Americans, especially as they approach retirement. However, many are confused about the finer details of the program, which can lead to poor decisions about when and how to claim benefits.
A recent AARP survey revealed some common misconceptions that could have a serious financial impact if not addressed. Here are five crucial things you should know about Social Security benefits.
1. The Earliest Age You Can Claim Benefits
While 62 is the earliest age you can begin claiming Social Security benefits, this doesn’t mean you’ll receive your full benefit amount. Many people don’t realize that if you start receiving benefits at 62, you’ll be subject to a permanent reduction of up to 30% compared to waiting until your full retirement age (FRA).
Additionally, if you’re born after the second day of the month you turn 62, you won’t qualify until the following month. However, claiming early could be the right choice if you have financial struggles or a short life expectancy.
2. Age 70 Is When Your Monthly Benefit Peaks
A surprising number of people think they can get larger benefits by waiting longer than 70 to claim Social Security, but the truth is, your monthly benefit won’t increase once you turn 70.
In fact, you’ll lose money if you delay further. You should claim your Social Security benefits by age 70 to maximize your payments, as waiting any longer won’t increase your benefit.
3. Understanding Your Full Retirement Age (FRA)
Many people mistakenly believe that 65 is the FRA, but that’s not the case anymore. While FRA was 65 for decades, it has since increased for people born in 1960 or later to age 67.
The FRA is the age when you can receive 100% of your Social Security benefits without penalties. If you claim before your FRA, you’ll experience a reduction in benefits, but if you wait beyond your FRA, your benefits will increase.
4. Claiming Benefits on an Ex-Spouse’s Work Record
Many divorced individuals don’t know that they may be eligible to claim Social Security benefits based on their ex-spouse’s work record, but only under certain conditions. To qualify, you must have been married for at least 10 years, not remarried, and be 62 or older.
If you meet these criteria, you can claim benefits without affecting your ex-spouse’s benefits or their new spouse’s benefits. If you remarry, you become eligible for benefits based on your new spouse’s record.
5. The Earnings Test and What Happens to the Money You Lose
If you claim Social Security benefits before your full retirement age and continue to work, you’ll be subject to the Social Security earnings test. If you earn more than the threshold ($23,400 in 2025), you’ll lose $1 for every $2 you earn over the limit.
If you reach your FRA within the year, the penalty becomes less severe. The good news is that when you reach FRA, the Social Security Administration will “make up” for the money withheld, increasing your benefits to compensate for the lost amount.
Maximizing Your Social Security Benefits
If these misconceptions have surprised you, it may be time to reevaluate your Social Security claiming strategy. With a better understanding of when and how to claim benefits, you can make smarter decisions that will have a positive impact on your retirement income.
There are also hidden Social Security “secrets” that can help boost your retirement savings. By learning how to maximize your benefits, you could potentially increase your monthly payments by up to $23,760 per year.
Don’t miss out on this important opportunity to secure a better financial future. Consider reviewing your Social Security strategy and contacting the SSA for further guidance if needed.
