Though most people are somewhat familiar with Social Security, there's a lot of confusion out there as to how the program actually works. And unfortunately, it's leading a large number of applicants to make bad decisions with regard to taking benefits.

According to a recent report by the U.S. Government Accountability Office (GAO), in-person claimants who visit Social Security field offices to apply for benefits are not consistently given key information that could lead to better filing strategies. And while the GAO found that online claimants actually have access to more information, many applicants still lack the insight needed to maximize their benefits.

Social Security card


With that in mind, here are three factors that can impact your Social Security benefits. It pays to review these points in detail so that you can make the best decision for your retirement.

1. Your earnings

Your Social Security benefits are based on your highest 35 years of earnings. Though working longer won't necessarily mean that you end up with a higher payout, putting in a few extra years on the job could help boost your benefits under the right circumstances.

For example, say you're earning considerably more money today than you did during your first two decades in the workforce. If you extend your career a couple of years, you can replace some of those lower-earnings years with higher numbers, thus raising your average and boosting your benefits.

2. The number of years you worked

We just learned that your Social Security benefits are based on your top 35 years of earnings. So if you didn't work a full 35 years, you may not get as much out of the program as someone who did put in that time.

Say you took time off during your career to raise children or care for a family member, and therefore don't have 35 working years to show for. If that's the case, you'll get a $0 factored in for every year you didn't earn an income. If you work a bit longer later in life, and replace some of those $0 years with an actual salary, you'll end up boosting your benefits.

3. Your age

Though your Social Security payments are based on your earnings record, the age at which you file for benefits can cause that number to go up or down. Once you reach what's known as your full retirement age for Social Security purposes, you're entitled to collect your base benefit amount in full. Your full retirement age is based on your year of birth, as follows:

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




Now you can file for Social Security as early as age 62, but you should know that for every year you claim benefits early, you'll lose a portion of the money you'd otherwise be entitled to. For example, if your full retirement age is 67, and you choose to file at 62, you'll slash your benefits by 30%. Furthermore, this reduction will remain in effect for the rest of your life.

On the flipside, you don't have to collect Social Security just because you've reached full retirement age. If you wait until age 70, you'll get an 8% boost in benefits for each year you hold off. This means that if your full retirement age is 67, but you delay your benefits until age 70, you'll increase them by 24% -- for life. (Note: While you technically don't need to claim benefits by age 70, that's the latest age to accrue delayed retirement credits -- so there's no point in postponing further.)

It's crucial to understand how the age at which you file for Social Security can impact your benefits. While there are certain circumstances where it makes sense to file early, it often pays to wait until full retirement age or later to start collecting your money.

There's no question that better education is essential for helping older workers make the most of Social Security. Before you rush to file for benefits, it pays to read up on Social Security and learn more about how it works. The more prepared you are, the better your chances of making a smart decision that you'll no doubt come to appreciate down the line.