4 Facts About Social Security You Didn't Know

Millions of seniors rely on Social Security, but there's a lot of misinformation out there about the program and how it works. Whether you'll be claiming benefits in the near or distant future, here are a few things to be aware of.

1. Age matters when filing for Social Security

Your Social Security benefits are based on how much you make during your 35 highest years of earnings, but once your base benefit amount is established, you have the power to raise or lower your payments depending on when you first file. If you wait until your full retirement age to take benefits, you'll get to collect those payments in full. But if you claim Social Security before reaching your full retirement age, you'll forfeit a portion of those payments.

Here's how to figure your full retirement age based on your year of birth:

Year of Birth

Full Retirement Age




66 and 2 months


66 and 4 months


66 and 6 months


66 and 8 months


66 and 10 months




Say you were born in 1966 and are eligible for $1,500 in monthly benefits at your full retirement age of 66. Though you're allowed to start taking benefits as early as 62, doing so will result in a 25% reduction, thus slashing your payments to just $1,125. On the other hand, if you wait past your full retirement age to claim Social Security, you'll get an 8% boost in your payment amounts for every year you delay up until age 70, at which point you might as well claim. In our example, waiting until 70 to file would push a $1,500 benefit up to $1,980 per month.


2. The benefit amount you collect initially is what you'll get for life

There's a reason 62 is the most popular age to claim Social Security -- many folks want to get their hands on their benefits as quickly as possible. But while most people are aware that claiming early will result in a benefits reduction, many are surprised to learn that this reduction is, in fact, permanent.

Contrary to what you may have been led to believe, if you file for Social Security at age 62 when your full retirement age is 66, your benefits won't be restored to their full value once you turn 66. Rather, the amount you get initially is what you'll lock in for life, which is why it's so important to claim at the right age.

3. You can work and collect Social Security simultaneously

Sometimes, even working seniors need a little extra cash. The good news is that you're allowed to collect Social Security at the same time you're earning a paycheck. Just be aware that your benefits may be reduced if you earn too much and file before reaching your full retirement age.

Currently, you can earn up to $16,920 per year without losing a portion of your benefits, but for every $2 in earnings above that limit, you'll forego $1 in benefits. Now if you're turning 66 this year, that limit jumps all the way to $44,880, and if you make more than that, you'll lose just $1 for every $3 of earnings. That said, any money that's withheld from your Social Security payments up front because you're working will be added back into your benefits later on, so you're not relinquishing that income -- just pushing it off.

Furthermore, once you reach your full retirement age, you can earn as much as you'd like without losing a cent in Social Security income. The aforementioned reductions only apply to workers who claim benefits prior to reaching full retirement age.

4. You can't live on Social Security alone

In a recent Transamerica retirement survey, 25% of current workers said they expect Social Security to serve as their primary source of income once they end their careers. The problem, however, is that Social Security was never meant to sustain retirees by itself. In fact, those monthly benefits will only suffice in replacing about 40% of the average worker's pre-retirement income. Since most seniors need a good 70% to 80% of their previous income, and some inevitably wind up needing 100% or more, relying too heavily on those benefits could result in some pretty serious financial trouble. A much better plan is to save independently for retirement, ideally through a tax-advantaged account like an IRA or 401(k), and then use those Social Security benefits to supplement your income.

The best way to maximize your Social Security benefits is to learn more about the program's various rules and perks. The more educated you are, the more you'll get out of the benefits you've worked hard for.

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