15 Social Security Rules That Could Trip You Up

Many seniors end up relying heavily on Social Security once they retire, and there's a good chance you'll do the same. That's why it's important to know the program's many rules -- and steer clear of traps that could leave you with lower benefits for life. Here are some rules that could mess with your retirement if you aren't careful.

I Can't Believe This $17,166 Social Security Bonus Was So Easy Uncover a handful of little-known "Social Security secrets"... including a simple process that removes the guesswork and makes it easy to earn as much as $17,166 in additional benefits every year. Click here to get access to information on how you can uncover this lucrative strategy and even more insider information you won't want to miss.

It's a big myth that all seniors get Social Security automatically. To become eligible for benefits, you need to accumulate 40 work credits in your lifetime. The amount of earnings it takes to secure a work credit changes annually, but right now, $1,510 of income is worth one work credit, and you're limited to four credits per year.

Social Security doesn't simply pay a universal benefit. Rather, the benefit you're entitled to will hinge on your earnings during your 35 highest-paid years in the labor force. If you don't work a full 35 years, you'll have a $0 factored into your benefit calculation for each year you're missing an income.

Full retirement age is when you're allowed to claim your full Social Security benefit. But that age varies by year of birth, so it's important to know what yours entails. If you were born in 1960 or later, full retirement age is 67, but if you were born earlier, that age is either 66 or 66 and a specific number of months.

You're allowed to sign up for Social Security as early as age 62. But for each month you claim benefits before full retirement age, they get reduced on a permanent basis. You shouldn't expect a lower benefit to be restored to its full amount once you reach full retirement age.

ALSO READ: Social Security at 62: 2 Pros and Cons

Social Security doesn't force you to sign up by full retirement age. You can opt to hold off on signing up past that point and boost your benefits by 8% a year in the process. However, if your health is poor going into retirement and you're unlikely to live a long life, then delaying benefits may not make financial sense for you.

I Can't Believe This $17,166 Social Security Bonus Was So Easy Uncover a handful of little-known "Social Security secrets"... including a simple process that removes the guesswork and makes it easy to earn as much as $17,166 in additional benefits every year. Click here to get access to information on how you can uncover this lucrative strategy and even more insider information you won't want to miss.

The 8% yearly boost you get by delaying Social Security past full retirement age? It only works until age 70. Once you turn 70, your benefits can no longer grow, so there's no sense in holding off on filing at that point.

Claimed Social Security too early? If you undo your filing within a year, you can then sign up again at a later age and snag a higher benefit as a result. But to go this route, you'll also need to repay all of the money you received from Social Security to date, which is something many seniors seeking a do-over aren't in a position to do.

While Social Security will give you a chance to undo your filing, this option is only available to you once in your lifetime. If you file for benefits at 62, undo that claim, and then sign up again at age 64, you can't then enjoy another do-over if you decide you should've waited even longer to file.

Social Security allows you to work and collect benefits at the same time, and once you reach full retirement age, the amount you earn won't impact your benefits at all. But if you're collecting benefits and working before having reached full retirement age, there's an annual earnings limit you'll need to stick to. If you earn too much, you'll risk having some of your benefits withheld.

ALSO READ: Here Are the 2022 Social Security Earnings-Test Limits

Even if you didn't earn enough work credits to qualify for Social Security on your own, if you're married to someone who's entitled to benefits, you may be able to claim a spousal benefit on their earnings record. But you can't sign up for spousal benefits before your spouse actually files, so if your spouse opts to delay his or her claim, you, too, will need to wait.

I Can't Believe This $17,166 Social Security Bonus Was So Easy Uncover a handful of little-known "Social Security secrets"... including a simple process that removes the guesswork and makes it easy to earn as much as $17,166 in additional benefits every year. Click here to get access to information on how you can uncover this lucrative strategy and even more insider information you won't want to miss.

Delaying your own benefit past full retirement age will result in a boost. But spousal benefits don't work that way. You can't score a higher spousal benefit by waiting, so there's no sense in delaying your claim past full retirement age as long as your spouse has claimed benefits by then.

The fact that your spouse is eligible for survivors benefits after you pass is a good thing. But you'll need to be careful about claiming Social Security early if you think your spouse will outlive you by many years. The survivors benefit your spouse gets will equal 100% of your benefit, so slashing it by filing early could leave your life partner in the lurch.

If Social Security is your sole income source, you might avoid federal taxes on your benefits. But if you have other income and are a moderate earner, you may lose a chunk of those benefits to federal taxes, leaving you with less money.

There are 13 states that tax Social Security to varying degrees. Before you settle down in retirement, do some research to see whether your state is on that list.

ALSO READ: Retirees in These 13 States Risk Losing Some of Their Social Security Checks

Social Security cost-of-living adjustments, or COLAs, are supposed to help seniors maintain their buying power through the years. But COLAs are based on inflation data and aren't guaranteed, so you can't automatically expect your monthly benefits to increase from one year to the next.

I Can't Believe This $17,166 Social Security Bonus Was So Easy Uncover a handful of little-known "Social Security secrets"... including a simple process that removes the guesswork and makes it easy to earn as much as $17,166 in additional benefits every year. Click here to get access to information on how you can uncover this lucrative strategy and even more insider information you won't want to miss.

There's lots to learn about Social Security, so take some time to read up on the program before you're on the cusp of retirement. Doing so could lead to a higher benefit -- and more financial flexibility for you later in life.

The Motley Fool has a disclosure policy.