Social Security benefits are vital for millions of retirees, but they can also be confusing. In fact, only 44% of workers say they have a solid understanding of how the program works, according to a survey from the Nationwide Retirement Institute.

Even seemingly harmless misunderstandings can be costly. To receive as much as possible in Social Security benefits, make sure you're aware of these three factors.

Social Security card

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1. You may face taxes on your benefits

Depending on your income in retirement, you could owe income taxes on up to 85% of your benefits. The good news, though, is that if you're strategic about how you save, you may be able to avoid those taxes.

Your benefits are subject to both state and federal taxes. State taxes will depend on where you live, and not all states tax benefits. Federal taxes depend on your "provisional income," which is your adjusted gross income plus half your annual benefit amount. You'll owe federal taxes on up to 85% of your benefits if your provisional income is higher than $25,000 per year (or $32,000 per year for married couples filing jointly).

However, the caveat here is that Roth IRA withdrawals aren't included in your provisional income. So if you have most of your retirement savings stashed in a Roth IRA, you could potentially reduce your provisional income enough to avoid federal taxes on your benefits.

2. Your benefits won't increase at your full retirement age

If you claim benefits before your full retirement age (FRA), your checks will be reduced for the rest of your life. However, nearly 70% of baby boomers mistakenly believe they'll start receiving higher monthly payments at their FRA, according to the Nationwide Retirement Institute.

Your FRA is between ages 66 and 67, depending on the year you were born. If you claim before your FRA, your benefits will be reduced by up to 30% for life. This can come as a shock if you were expecting to receive a higher monthly payment at your FRA, so it's important to make sure you know how the age you claim will affect your benefit amount.

3. Working after claiming could reduce your benefit amount

You don't have to fully retire after claiming Social Security, but if you continue to work after filing for benefits, your monthly payments could be reduced.

How much your benefits will be reduced will depend on your age and your earnings. This rule only applies to those who haven't yet reached their FRAs, so if you're already past your FRA, you don't need to worry about your benefits being reduced.

If you won't reach your FRA in 2021, you can earn up to $18,960 per year without seeing a reduction in benefits. For every $2 you earn more than that limit, your benefits will be reduced by $1. If you will be reaching your FRA in 2021, you can earn up to $50,520 during the months leading up to your FRA. If your income exceeds that limit, you'll see $1 withheld from your benefits for every $3 you earn over the limit.

Fortunately, these benefit reductions are not permanent. If a portion of your benefits are withheld due to your income, your benefit amount will be recalculated once you reach your FRA to account for the reductions. In addition, after your FRA you can continue working as much as you'd like and your benefits won't be affected.

Don't let these surprises throw off your retirement plans

Social Security can be confusing, but having a solid understanding of how your benefits are calculated will pay off in retirement. When you know how these factors will affect your benefit amount, you'll be in better financial shape once it's time to retire.