Social Security plays an essential role in providing the income that Americans need after the end of their careers. Although it's important to make the most of your benefits, Social Security is complex enough that many people don't fully understand everything they should about the program, and that can end up costing you after you retire.

Most people understand that Social Security provides income that's tied to your work history, but many key details fly under the radar. Below, we'll reveal the three secrets about Social Security that most people got wrong, according to the results as of May 18 of a recent MassMutual quiz about the program.

Two Social Security cards next to a $100 bill on a flat surface.

Image source: Getty Images.

1. If you're still working when you claim Social Security, your benefit might be reduced, depending on earnings and age

Many people take Social Security at the earliest available age, which is 62. Although many of those who take early benefits have already stopped working, a good number like the idea of continuing to work and earning a paycheck while getting Social Security at the same time. For that second group, however, there's a "gotcha" in Social Security law that can trip you up, and only 45% of those answering the quiz got it right.

Social Security imposes an earnings test on those who take benefits before they reach full retirement age, which is currently between 66 and 67 depending on the year you were born. If you make more than $17,040 in 2018 and won't hit your full retirement age this year, then you have to forfeit $1 in annual Social Security benefits for every $2 you get in annual wage or salary income from work. So if you make $2,000 a month at your job, then you could potentially have to give up $3,480 in Social Security benefits -- or half the $6,960 by which your total annual wages of $24,000 exceed the $17,040 threshold.

There's a trade-off for losing benefits, though: For every month's worth of Social Security you lose, you'll be treated as if you had retired one month later. That will boost your monthly payments in the future. Yet the offset takes years to make up for what you've lost, and for many, it could make claiming Social Security early a much less attractive move.

2. Under current Social Security law, your benefits will be reduced if you claim them at age 65

When Social Security was first created, 65 was the standard age at which people left their jobs, and the Social Security program adopted 65 as the full retirement age. However, reforms to Social Security in the early 1980s established a timeline for boosting the full retirement age from 65 to 67. For those born between 1943 and 1954, 66 is the full retirement age, while those born in subsequent years saw their full retirement ages rise by two months per year until hitting 67 for those born in 1960 or later.

If you retire at 65 but your full retirement age is higher, you'll take a modest pay cut. Those whose full retirement age is 66 will see their benefits fall by 6 2/3%, while those with a full retirement age of 67 will get a 13 1/3% haircut. That's not as bad as the 25% to 30% reductions that those retiring at 62 will see, but it's still a slap in the face if you had expected to get a full benefit when you turned 65 -- as 71% of those answering the quiz mistakenly believed.

3. Some non-U.S. citizens can collect Social Security retirement benefits

Only 25% of those answering the quiz knew that Social Security benefits aren't limited to U.S. citizens. That stems in large part from the fact that most noncitizens who work in the U.S. have to pay Social Security payroll taxes just as citizens do, and so it makes sense to pay the same benefits in exchange for the same tax revenue.

There are rules for noncitizens to get Social Security. In general, you have to meet the same tests as citizens, including at least 40 work credits over a 10-year period to earn retirement benefits. Noncitizens also must live in the U.S. and be lawfully present, which includes both permanent residents and other recognized immigration statuses. For certain countries with which the U.S. has international agreement relationships, somewhat looser provisions apply that, in some cases, can allow those living abroad to receive payments.

Be smart about Social Security

If you want to be financially secure in retirement, you need to make the most of Social Security. By knowing these and other key components of the laws that provide the benefits you'll receive, you'll be better able to come up with a strategy that will help you the most when you retire.

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