Whether you're already retired or just hoping to retire someday, the odds are good that Social Security will play a key role in helping you make ends meet. Yet it can be hard to get facts about exactly how the Social Security program works, and a lack of knowledge can prove costly.
To help offer some simple guidance, you'll find seven key aspects of Social Security here that you can't afford not to know about. They have all historically been sources of confusion, so getting a handle on how they all work could make a big difference in the size of your benefits in retirement.
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1. Early Social Security benefits are still available...
The full retirement age (FRA) under Social Security has been on the rise in recent years, having gone up from 66 for those born between 1943 and 1954 to 67 for those born in 1960 or later. But that hasn't changed the program's provisions that allow most workers to claim benefits as early as age 62.
Although some proposals boosting the overall retirement age would increase the minimum claiming age as well, taking away the right to an early benefit would be highly unpopular given the frequency with which Americans claim their benefits before FRA.
2. ...but taking them early can be costly
The problem with claiming Social Security earlier is that you give up a sizable portion of your monthly check. For those with an FRA of 67, claiming at 62 will result in monthly payments that are 30% smaller than they would be five years later. Granted, claiming earlier means getting more checks during your lifetime, but later in retirement, you could end up wishing you had held out longer.
3. Waiting past FRA can put even more money in your pocket...
Waiting beyond FRA entitles workers to delayed retirement credits. For every month you wait, you'll get two-thirds of a percent extra in your monthly checks. For those with an FRA of 67, waiting until the maximum age of 70 can boost your payments by 24% from what they would be if you had claimed three years earlier.
4. ...and in your spouse's pocket as well, after you pass away
Your claiming decision doesn't just affect you. If you're married, then the survivor benefits your spouse will be entitled to after your death are also based in part on when you claimed your retirement benefits. If you wait longer, your surviving spouse's benefits will be larger as well.
5. Spouses can get benefits during your lifetime as well...
Married couples also have the right to claim spousal benefits, which can be particularly useful in one-earner households or when there's a big pay discrepancy between two spouses. The key, though, is that your spouse can't claim benefits on your work record until you claim your own retirement benefits, which requires some coordination.
6. ...even if you're no longer married to them, in some cases
Ex-spouses can claim the same benefits as those who are still married, as long as they were married for 10 years or more and haven't remarried. Note that you can still make an ex-spousal benefit claim even if your ex has remarried, as long as you otherwise meet the requirements.
7. Working while on Social Security can cause you to forfeit benefits -- but it's not the end of the world
If you claim Social Security early but keep working, there are earnings limits that can lead you to give up some of your benefits. For 2023, the relevant figures are $21,240 for those who will be under their FRA all year, and $56,520 for those who will reach FRA at some point in 2023. Earn above those limits, and you'll lose $1 in annual benefits for every $2 above the $21,240 limit or every $3 above the $56,520 you earn.
The good news, though, is that for every month of benefits you lose as a result of this provision, you'll get credit at full retirement age for starting your Social Security a month later than you actually did. This doesn't immediately pay back what you forfeited, but over time, it can help you completely catch up.
Be in the know
It's hard to know everything about Social Security. Knowing these facts, however, will put you in elite company among those who know the program much better than most Americans.
