3 Social Security Rules People Get Wrong Every Year

I've seen the same Social Security mistakes over and over again. They happen to smart, capable people who are just trying to make the best decision for their retirement. The problem isn't carelessness. It's that the rules are confusing, and the fine print is easy to miss.

Here are three of the biggest ones.

Rule 1: How your benefit is actually calculated

Your benefit isn't based on your last job or what you earned right before retiring. It's based on your highest 35 years of earnings.

If you don't have 35 full years, the Social Security Administration fills missing years with zeros. That lowers your average and reduces your monthly check. Even one zero can make a noticeable difference.

This is why working an extra year or two later in life can pay off. Replacing a low-earning year with a higher one boosts your average and raises your benefit for the rest of your life.

If you haven't checked your earnings record lately, now is a good time. You can review it anytime by signing in to your mySocialSecurity account.

Rule 2: How working while collecting affects your benefits

If you collect benefits before your full retirement age and keep working, the earnings test can temporarily reduce your monthly check.

Many people don't realize this. Earn above the annual limit, and part of your benefit is withheld until you reach full retirement age. You don't lose that money forever, but the temporary reduction can catch people off guard and complicate a budget.

This often leads to the wrong conclusion that you "can't work at all" while collecting. You can. You just need to understand the income limits and how they apply to your situation.

If you feel like you need some help managing your retirement planning, a short questionnaire from our partner SmartAsset, helps match you with up to three fiduciary financial advisors, each legally bound to work in your best interest.

Rule 3: How survivor and spousal benefits actually work

Spousal and survivor benefits are some of the most misunderstood parts of the entire system.

A lot of people assume they're automatic. They're not. You have to apply for them, and the rules depend on your partner's work history, when each person files, and whether you're eligible for a benefit based on your own earnings record.

This misunderstanding can cost couples thousands. For example, if the higher earner delays claiming, it increases the survivor benefit down the road. That one decision can change the financial stability of the surviving spouse for the rest of their life.

What to do next

A few quick steps can help you avoid the most common mistakes:

• Check your earnings record for accuracy.
• Compare your benefit at 62, 67, and 70.
• Run the earnings test if you plan to work while collecting.
• Review spousal and survivor benefit rules before filing.

Social Security is complicated, but understanding these rules can help you make smarter decisions and keep more of the money you've earned.

And for cash you won't use right away, make sure to stash it in a high-yield savings account so it earns as much interest as possible and stays working for you. Check out our list of the top high-yield savings accounts available now.