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4 Social Security Rules It Pays to Understand

By Maurie Backman - Apr 5, 2020 at 8:18AM

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Knowing how Social Security works will help you make the most of your benefits.

Social Security serves as a lifeline for millions of seniors today, and if you're retiring in the near future, there's a good chance you'll count on it heavily, too. The more you know about how Social Security works, the better positioned you'll be to make smart decisions with your filing, so with that in mind, here are a few essential rules to commit to memory.

1. You can't claim your full monthly benefit until you reach full retirement age

Seniors can start collecting Social Security as early as age 62, but if you go that route, you'll slash your benefits for life. Your actual monthly benefit is calculated by taking your average monthly wage, adjusted for inflation, over your 35 highest-paid years in the workforce, but you're not entitled to that full monthly benefit until you reach full retirement age.

Full retirement age hinges on the year you were born, as per the following table:

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

1960 or later


Data source: Social Security Administration.

If you claim your benefits so much as a month before full retirement age, you'll reduce them in the process. And in a most extreme scenario, filing for benefits at 62 with a full retirement age of 67 will leave you with 30% less Social Security income each month -- potentially for life.

Social Security card in someone's hand


2. You can boost your benefits by putting them off

Just as claiming Social Security early reduces your benefits, waiting to file can raise them. For each year you hold off on signing up past full retirement age, you'll accrue delayed retirement credits that give you an 8% boost -- for life. These credits stop accruing at age 70, so if your full retirement age is 67, the highest boost you can snag is 24% -- but that's still a substantial raise to give yourself.

3. You can collect benefits without an earnings history

We just learned that Social Security benefits are earnings-based. But what if you never held down a job? Thankfully, you're not necessarily out of luck, because in that scenario, you may be entitled to spousal benefits based on a current or former spouse's work record. Your spousal benefits, if you claim them at full retirement age, will be worth 50% of what your spouse or ex-spouse is entitled to.

Incidentally, you can qualify for spousal benefits even if you have your own work record. In that case, you'll get either the monthly benefit your earnings history allows for, or a spousal benefit -- whichever amount is higher.

4. You can undo your benefits once in your lifetime

Filing for benefits before full retirement age means risking a lifelong reduction in those monthly payments. But there is a way to claim Social Security early without shrinking your benefits permanently. The Social Security Administration (SSA) will let you undo your benefits once in your lifetime so that if you file early and regret it after the fact, you can withdraw your application within a year, repay the SSA all of the money in benefits it paid you, and then file again at a later age. Of course, the latter is easier said than done, but the option is on the table.

Reading up on Social Security is a smart thing to do if retirement is near. Even if you're years away from leaving the workforce, it still never hurts to understand the ins and outs of this important program and recognize the ways it might help you later in life.

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