Fewer Than One in 10 Americans Knows How to Maximize Social Security Benefits | Smart Change: Personal Finance


Americans also had some incorrect guesses about factors affecting their benefits, with 12% incorrectly assuming their life expectancy matters; 5% erroneously believing their financial history had an impact; and 24% believing that all of the above factors (including both the correct and incorrect ones) would affect their check amount.

The truth about earning the maximum Social Security benefit

The sad reality is that some of the biggest points of confusion about Social Security can have the greatest impact. For example, while fewer than four in 10 Americans realized the importance of the age when they start collecting benefits, your filing age is one of the most crucial factors determining the size of your monthly checks.

Retirees must claim at a specific age between 66 and 2 months and 67 in order to get their standard benefit (which is based on work history, as most people know). The age when they need to claim is called full retirement age, and it’s determined by birth year.

Those who file for benefits ahead of their FRA are hit with early-filing penalties. These permanently reduce the size of Social Security checks, and they apply on a monthly basis. Starting benefits even a single month early can lower checks for life. The penalties have a big impact too, reducing benefits by 6.7% for each of the first three years you claim early and by 5% for each prior year.