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3 Things You Can't Afford to Get Wrong About Social Security

By Maurie Backman - Feb 20, 2021 at 4:54AM

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Not understanding how the program works could really cost you.

Even if you save up a reasonable amount of money for retirement, there's a good chance Social Security will end up being an important income source for you. After all, once you file, you'll be entitled to a monthly benefit for the rest of your life.

As such, it's important to understand how Social Security works. To that end, here are three aspects of the program you can't afford to botch.

1. Your full retirement age

Your full retirement age, or FRA, is when you're entitled to claim your monthly Social Security benefit in full. That benefit, incidentally, is calculated based on your 35 highest-paid years in the workforce (though your earlier earnings will be adjusted for inflation).

Closeup of older man with serious expression resting face on hand

Image source: Getty Images.

FRA depends on the year you were born, and you can consult this table to see when yours is:

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 don't know your FRA, you could end up filing for Social Security early and slashing your monthly benefit as a result. Some seniors, for example, mistakenly think their FRA is 65 because that's the age when Medicare eligibility kicks in, but as you can see, claiming benefits at 65 would mean reducing them on what could be a permanent basis. Commit your FRA to memory so you'll know when to file.

2. The rules for a do-over

You're allowed to claim Social Security as early as age 62, but for each month you file for benefits ahead of FRA, those benefits take a hit. File at 62 with an FRA of 67, and you're looking at a 30% reduction.

That reduction, however, doesn't have to be permanent. If you withdraw your benefit application and repay all of the benefits you collected within a year of filing, you'll get a do-over with regard to your claim and be allowed to sign up for Social Security again at a later age to secure a higher monthly benefit. Many people, however, don't know about the do-over rule and assume they're stuck with a lower benefit if they've filed early, so don't make that mistake.

3. The rules of delaying benefits

If you want a higher Social Security benefit for life, there's an easy way to get it -- delay your filing past FRA. For each year you do, your benefits will grow by 8%.

But you can't grow your benefits indefinitely. Once you turn 70, you won't be allowed to accrue credits that raise your benefit, so at that point, there's no sense in delaying your claim any longer. In fact, if you don't sign up for Social Security at 70, you'll deny yourself money you're entitled to.

Get schooled on Social Security

Spending a Saturday reading up on Social Security may not be your idea of a rocking weekend, but it's important that you understand how the program works -- especially if you're nearing the point when you'll be eligible to sign up. Educating yourself could be your ticket to choosing the right filing age or making smart decisions that ultimately result in a financially secure retirement.

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