Many seniors inevitably wind up relying heavily on Social Security to pay the bills. That extends to those who do their best to save for retirement independently. The reality is that retirement often ends up being more expensive than seniors anticipate, and so they're often forced to depend on Social Security to make ends meet.

The problem, however, is that Social Security is a complex program loaded with many, many rules. And if you're not familiar with how it works, it could throw your retirement off course. Here are two rules in particular that could really mess up your plans if you don't anticipate them.

Social Security cards

Image source: Getty Images.

1. Filing early generally means locking in a lower benefit for life

The monthly Social Security benefit you're entitled to in retirement is based on the wages you earn during your 35 highest-paid years in the labor force. From there, you can collect that benefit once you reach full retirement age, or FRA.

FRA isn't universal. It's based on the year you were born, as follows:

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.

You're allowed to sign up for benefits much earlier than FRA, though. In fact, you can first file for Social Security once you turn 62. But if you go that route, you must be aware that your monthly benefit will be reduced. And that reduction will generally remain in effect for the rest of your retirement.

Why "generally?" Technically, you can undo your filing once in your lifetime and claim benefits at a later age. But there's a catch.

To take advantage of the do-over option, you must withdraw your application for benefits within a year of submitting it and repay all of the Social Security benefits you received. Many seniors who file early have trouble with that second part, and so they get stuck with a lower benefit for life.

2. Benefits are subject to taxes

There are some states that impose their own taxes on Social Security, while others leave those benefits alone. But even if you don't retire in a state that taxes benefits, you might lose a chunk of that income to taxes nonetheless. That's because Social Security is taxable at the federal level depending on what your income looks like.

Unfortunately, you don't need to earn a lot to have your benefits taxed. If your provisional income (your non-Social Security income plus 50% of your annual benefits) falls between $25,000 and $34,000 and you're single, or between $32,000 to $44,000 and you're married, then up to 50% of your Social Security benefits could be taxed. Beyond $34,000 for singles and $44,000 for couples, up to 85% of your benefits could be taxed.

Know the rules

The more you read up on Social Security, the less these and other less-than-favorable rules are apt to hurt you. If you're aware that filing early will result in a lower monthly benefit for life, you can push yourself to work longer and avoid claiming Social Security before FRA.

And now that you know to expect taxes on benefits, you can take steps to avoid them. That could mean moving to a state that doesn't impose taxes or keeping your retirement savings in a Roth IRA, since withdrawals from that type of account won't count toward provisional income.

Social Security might not be the simplest program to navigate. But the more you learn about it, the better positioned you'll be to make the most of it.