Millions of seniors today rely on Social Security to help fund their golden years. But there's a lot of confusion about the program and how it works, and the longer you remain in the dark, the more money you stand to lose out on. Here are three major misconceptions everyone needs to get straight.

1. You have to sign up for Social Security and Medicare at the same time

Eligibility for Medicare begins at age 65, and your initial window to enroll begins three months before the month of your 65th birthday and ends three months after the month in which you turn 65. It's a good idea to sign up during that seven-month period, as doing so can help you avoid late enrollment penalties on your Medicare Part B premiums. But that doesn't mean you need to enroll in Social Security at the same time.

Older man reading a newspaper

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In fact, it generally pays not to sign up for Social Security and Medicare simultaneously, because if you file for the former at or around age 65, you'll reduce your benefits automatically. You're only entitled to collect your Social Security benefits in full upon reaching full retirement age (FRA), which is 66, 67, or 66 and a certain number of months, depending on your year of birth. So if you were born in 1960 and are therefore looking at an FRA of 67, filing at 65 would cut your benefits by over 13%.

Another thing you should realize is that if you file for Social Security early enough, you won't get the option to enroll in Medicare simultaneously. You're allowed to claim Social Security benefits as early as age 62, but as we just learned, Medicare coverage doesn't kick in for another three years.

2. If you end up filing for benefits too early, you can undo your application anytime

The problem with filing for Social Security ahead of FRA is that you'll risk limiting yourself to a lower monthly benefit for life. The only way to avoid that fate once you file early is to undo your Social Security application and pay back however much money you collected in benefits. But don't make the mistake of thinking you can withdraw your benefits claim anytime. You only get one year from the time of filing for benefits to undo that mistake. If you wait any longer, you'll be stuck with that reduction in benefits throughout retirement.

3. It pays to hold off on benefits indefinitely if you don't need the income

Though filing for Social Security ahead of FRA will result in a reduction in benefits, delaying Social Security past FRA will have the opposite effect: You'll get an 8% boost in those payments for each year you hold off. This means that if you reach FRA and don't need the money right away, it pays to wait on claiming benefits and snag that increase, which will you'll be entitled to for the rest of your life.

But don't make the mistake of thinking you should postpone your benefits indefinitely. The delayed retirement credits you'll accrue by waiting past FRA stop accumulating once you turn 70, so at that point, there's no incentive to wait. In fact, Social Security will only pay up to six months of retroactive benefits, so if you file well after your 70th birthday, you could end up losing money permanently.

The more you know about Social Security, the greater your chances of making the most of your benefits when you need them. So take the time to read up on the program, especially as retirement draws near. This way, you won't risk falling victim to misinformation like so many seniors ultimately do.

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