3 Social Security Misconceptions You Can’t Afford to Get Wrong

Social Security has been around for a long time, and certain aspects of the program can change from year to year. But Social Security has a number of basic rules it’s important to know about. And buying into these misconceptions could leave you with less money during retirement.

1. Benefits are only reduced temporarily if you file early

You’re entitled to your full monthly Social Security benefit based on your earnings history once you reach full retirement age, or FRA. If you were born in 1960 or later, FRA is 67.

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Now you’re allowed to first sign up for Social Security at age 62. But for each month you claim benefits ahead of FRA, they get reduced.

Some people are led to believe that if they file for Social Security early and slash their monthly benefit, once FRA kicks in, that benefit gets restored to its full amount. But that’s not true.

If you sign up to take benefits early, the penalty is a lifelong reduction in benefits. Make sure you understand that — and can afford it.

2. The longer you delay your benefits, the more money you get

It’s true that delaying benefits past FRA will result in a higher monthly payday for life — but only to a point. You can’t postpone your Social Security filing indefinitely, and once you turn 70, you can’t accrue the delayed retirement credits that result in higher benefits.

In fact, if you hold off on filing for Social Security beyond the age of 70, you might lose money in the process. So while waiting until age 70 to sign up could end up being a smart financial decision, that’s really your end point for claiming benefits.

3. You can’t get benefits if you never worked

Social Security benefits are based on lifetime earnings. If you never worked and don’t have an earnings history, you might assume that benefits are off the table for you and give up on filing. But that could end up being a mistake.

If you are or were married to someone who’s eligible for Social Security based on their earnings history, then you may be entitled to spousal benefits. Those benefits will equal up to 50% of what your spouse or ex-spouse collects each month.

Now the one catch is that if you’re still married, you can’t claim a spousal benefit before your spouse files for Social Security. But otherwise, you may be entitled to a nice sum of money each month — even if you never paid into Social Security yourself.

Know the rules

Social Security is a complex program with lots of rules. And let’s face it — studying those rules doesn’t exactly have the makings of a thrilling evening.

But it’s important to read up on Social Security even if retirement is many years away. And it’s especially important to educate yourself on how the program works if you’re gearing up to claim benefits. Doing so could help you avoid falling victim to misconceptions like these that could deprive you of money you’re otherwise entitled to.

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