The 15 Biggest Social Security Surprises You Need to Know About

Social Security will likely be a key source of income for you as a retiree. Unfortunately, once you reach retirement, you may face some unpleasant surprises about these benefits.

You don't want to be caught off guard, so it's best to learn the reality now so you can make the most informed plans for how to support yourself in your later years.

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One of the biggest shocks retirees experience when it comes to Social Security is just how little of their pre-retirement income these benefits replace.

Most experts suggest that retirees replace a minimum of around 70% to 80% of earnings before retirement. This will enable seniors to avoid drastic lifestyle changes. But Social Security benefits only replace 40%, which many people don't realize until they claim them and see just how low their checks will be.

ALSO READ: Social Security Only Covers 40% of Your Salary -- Have You Planned for the Rest?

In 2022, the average Social Security retirement benefit is just $1,661. This is far lower than many people expect it to be.

The average does go up over time due to rising wages and cost-of-living adjustments that are built into the benefits program. But, in most years, it's only a few thousand dollars above poverty level -- which can come as a shock to people who were expecting generous retirement benefits.

Many retirees are surprised to find they need to wait well beyond the age when they first become eligible to claim Social Security if they do not want to shrink their standard benefit.

See, you can start benefits at 62. But your standard benefit doesn't become available until your full retirement age (FRA). If you were born in 1956 or later, FRA is between 66 and four months and 67.

This is older than many people expect, especially as full retirement age was initially 65 when Social Security was created.

ALSO READ: Think You Won't Regret Claiming Social Security at 62? Think Again

Some retirees are surprised to discover that their decision to claim Social Security early affects their spouse adversely.

Thanks to survivors benefits, the spouse who lives the longest gets to keep the higher of the two checks that were coming into the household when both parties were alive. But if the higher earner claimed benefits early and shrunk their checks, this will mean smaller survivors benefits for the spouse left behind.

Retirees who want the largest possible monthly check may also be shocked to discover that they won't be able to claim their benefits even at full retirement age.

That's because delayed retirement credits can be earned until the age of 70. These raise your standard benefit for every month you wait to claim it.

Waiting until 70 to get your first Social Security check can be a struggle if you don't plan for it, but if your goal is the biggest payment you can get each month, you need to be ready to do just that.

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You Social Security benefits are based on a formula that gives you a percentage of average earnings over 35 years. If you don't work 35 years, this means that your average earnings will be calculated with at least some years of $0 wages included. This obviously reduces your monthly payment amount.

If you do work 35 years but had some lower-earning years included in that time, you may even want to work an extra year or two if you're earning more now. Those higher-earning years could increase your average wage if they replace lower ones in your benefits calculation.

ALSO READ: 4 Social Security Secrets for Even Bigger Checks

Most retirees know that cost-of-living adjustments (COLAs) are built into Social Security and result in a benefits increase in most years. That's why it may come as a huge surprise that benefits are actually losing buying power over time.

The problem is, the formula used to calculate COLAs isn't really keeping pace with inflation for a number of reasons, including that it's based on a consumer price index for urban wage earners and clerical workers, who have different spending habits than seniors.

Unfortunately, this means that benefits won't stretch as far later in retirement when you might need them most.

Seniors may face another unpleasant surprise after signing up for Medicare. Premiums are charged for Medicare Part B and are usually taken directly from your Social Security check. This naturally reduces the money you have left over to spend on other things.

ALSO READ: Medicare and Social Security May Not Go as Far as You Expect in Retirement

If you are counting on spousal benefits from Social Security, you could face another shock. You won't be able to claim them until the primary earner whose work history your benefits are based on has started getting their own checks.

You can claim your own benefits in the meantime if you are eligible for them, and then switch over to spousal benefits when your partner finally does claim, though.

For some retirees, they may actually experience a pleasant surprise when it comes time to claim Social Security.

Seniors may be shocked to discover they can still claim spousal or survivors benefits on a spouse's work history after divorce. This is an option if the marriage lasted at least 10 years. And in some cases, it could mean much more money if your ex earned more than you.

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Another unpleasant Social Security reality could catch some seniors off guard. These benefits can actually be taxable on the federal level, which many people don't realize.

You may owe taxes on Social Security benefits if your provisional income exceeds $25,000 as a single filer or $32,000 as a married joint filer. These thresholds don't change with inflation, so more retirees are taxed each year. But not all income counts -- only half of Social Security benefits plus all taxable and some nontaxable income is used to determine if you meet the thresholds.

ALSO READ: Will You Be Taxed on Your Social Security Income? Here's How to Find Out.

Depending where you live, you may also discover that your state takes a piece of your Social Security check as well. This isn't an issue for most seniors. But there are 12 states where benefits are taxed in at least some circumstances.

If you live in one of them, it's important you understand the rules so you can determine if you will lose part of your benefits to your state.

If you're hoping to double dip and claim Social Security benefits while getting a paycheck, you could find yourself shocked to discover this may not work.

See, if you earn too much while collecting benefits before reaching full retirement age, you could lose part of your checks.

The threshold for how much you can earn changes annually, and you do get the money back eventually since your payment is recalculated at full retirement age to account for missed income. But you still may find yourself with less money than you expected to live on.

ALSO READ: Can I Work While on Social Security?

If you had certain government jobs, your Social Security benefits may also be much smaller than anticipated.

Private pensions will not affect Social Security at all, but some government pensions do. You should make sure to find out the rules under the the Windfall Elimination Provision and the Government Pension Offset before retirement so you aren't caught off guard.

Finally, the last big surprise you may face is that you cannot live comfortably on Social Security alone. You need supplementary income from a pension, 401(k), or other savings. It's best to start planning for this ASAP so you don't face a lot of stress and struggle as a retiree.

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.

As you can see, some of these Social Security surprises could be very unpleasant if you haven't prepared to supplement your benefits. But now that you know the realities of what your retirement checks will do for you, you can be ready for your later years. The sooner you realize the realities, the more time you have to save and build the financial security you deserve.

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