About a quarter of all married couples and almost half of all unmarried persons rely on Social Security to provide at least 90% of their income. Yet, while many retirees need Social Security to cover their basic costs of living, must people don't actually understand how Social Security works -- in fact, 91% of near-retirees don't understand how to maximize Social Security benefits. 

Misunderstandings about Social Security can cost you real money. Here are five misconceptions that could cost many people vital Social Security benefits.

Social Security cards on top of 100 dollar bill

Image source: Getty Images.

1. You should claim your benefits at 65

Future retirees, on average, expect to claim Social Security benefits around age 65. A lot of retirees pick this age because it's when they become eligible for Medicare, or because they believe it's the "standard" retirement age. And 65 was previously the age when you could receive your "primary insurance amount" -- that is, the monthly retirement benefit you're entitled to receive when you reach your "full retirement age."

However, for those born after 1937, full retirement age is later than 65 -- and if you were born after 1960, you need to wait until age 67 to get your primary insurance amount.

If you claim benefits before your full retirement age, you'll lose a portion of your benefits for each month early that you claim. But if you wait past your full retirement age, you can actually boost your benefits for each month you delay them, up until age 70.

This helpful chart shows you how the age at which you claim Social Security could affect the total benefits you receive throughout your lifetime. If you still want to retire at 65 -- or even earlier -- then you can, but be aware that your benefits will take a hit. 

2. Your benefits will be far above current averages

According to Nationwide, future retirees expect to receive around $1,578 in monthly benefits. But today's retirees receive average benefits of $1,404 per month, while retirees who retired a decade or more ago receive average benefits of $1,308.

With Social Security benefits increasing slowly and not quite keeping pace with seniors' cost of living, there's no reason for future retirees to believe they'll do much better than the current average benefits.

In fact, with the Social Security Trust Fund expected to run out in 2034, it's possible future retirees will receive less than the retirees of today. If the Social Security trust fund does run out in 2034, there will be enough money to pay just 77% of promised benefits, which could mean a big cut. Although it's unlikely Congress wouldn't take some action to stave off such a large benefits reduction, bipartisan action has proved difficult in the past, so there are no guarantees that benefits will be preserved at expected levels.

The bottom line is that your benefits will likely be smaller than you expect -- especially because many people have to retire earlier than they planned and therefore take a reduced benefit. 

3. Your benefits will be enough to live on

More than a third of retirees expect Social Security will be a major source of their retirement income. While it's true you'll likely rely on Social Security to cover many of your costs, the problem is that almost four in 10 workers indicate that neither they nor their spouse has saved anything at all for retirement -- which means millions of Americans will have nothing but Social Security to depend on. 

The problem is, Social Security benefits will barely keep you above poverty level. With an average benefit of $1,404, a senior relying on Social Security alone would have just $16,848 in annual income -- a major shortfall, as the average senior's annual healthcare expense alone is $5,994.

To make sure you're not relying on Social Security benefits as your sole source of support, contribute as much as possible to retirement accounts while you're working. 

4. If you claim benefits early, they'll increase later

Almost four in 10 pre-retirees are under a major misconception about what happens when they claim Social Security benefits early. When responding to a Fidelity survey, 38% of pre-retirees thought that if they claimed reduced benefits at 62, their benefits would automatically go up to the standard retirement benefit once they reached full retirement age. 

This is definitely not the case. If you've claimed benefits before full retirement age, you'll likely receive that reduced benefit for the rest of your life. If you realize later that you made a mistake, your options are very limited.

Unless you rescind your claim for benefits within 12 months -- and pay back everything you've already received -- your benefits reduction from claiming early will be permanent.  

5. You can claim your benefits whenever you want

According to the same Fidelity survey, 65% of pre-retirees weren't aware they could apply for Social Security benefits no earlier than three months before receiving the first benefit if claiming at 62, or no earlier than four months before receiving benefits if filing at any other age. 

Worse, an estimated 9% of pre-retirees think Social Security will contact them to set up their benefits when it's time to start receiving them. If you're waiting for the Social Security Administration to reach out to you, you'll be waiting forever.

To make sure you can get your benefits on time, be sure to submit an application online or in person within the three or four months before you want the benefits to begin -- and be prepared for a one-month lag in the arrival of your check, as benefits are paid the month after they're due.

This means if you start benefits in April, you won't actually receive a check until May. 

Make sure you maximize your Social Security benefits

Whether you'll get most of your income from Social Security or just use your benefits to supplement other sources of retirement income, it's vital that you understand how Social Security benefits work so you can maximize the money coming in. 

Now that you know some of the basics about Social Security, you can make a more informed choice about when to claim benefits and how you'll need to invest for retirement so you can cover the expenses Social Security will not. 

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