3 Social Security Misconceptions You Can’t Go Wrong | Smart Changes: Personal Finance

(Murray Beckman)

Social Security has been around for a long time, and some aspects of the program change every year. But Social Security has some important ground rules. Believing these misconceptions might make you less money in retirement.

1. Benefits will only be temporarily reduced if you file early

Once you reach full retirement age, or FRA, you are entitled to full monthly Social Security benefits based on your income history. If you were born in 1960 or later, the FRA is 67.

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You can now enroll in Social Security for the first time at age 62. But each month you applied for benefits prior to FRA will be reduced.

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Some people are led to believe that if they apply for Social Security early and cut their monthly benefit, it will revert to its full amount once FRA goes into effect. but it is not the truth.

If you sign up early for benefits, the penalty is lifelong Benefits are reduced. Make sure you understand this – and can afford it.

2. The longer you delay getting your benefits, the more money you get

It’s true that deferring benefits beyond FRA results in higher lifetime monthly paydays — but only to a certain extent. You can’t defer your Social Security claim indefinitely, and once you turn 70, you can’t accrue delayed retirement benefits that lead to higher benefits.

In fact, if you delay applying for Social Security after age 70, you may lose money in the process. So, while waiting until age 70 to enroll may ultimately be a wise financial decision, it’s really where you end up applying for benefits.

3. You can’t get benefits if you haven’t worked

Social Security benefits are based on lifetime earnings. If you have never worked and have no income history, you may decide that benefits are not right for you and drop your application. But this could end up being a bug.

If you are or were married to someone who is eligible for Social Security based on your income history, you may be entitled to spousal benefits. These benefits will be equal to 50% of the monthly amount your spouse or ex-spouse receives.

One problem now is that if you’re still married, you can’t apply for spousal benefits until your spouse has applied for Social Security. But beyond that, you may be entitled to a decent amount of money every month—even if you never paid Social Security yourself.

understand the rules

Social Security is a complex program with many rules. Let’s face it – studying the rules doesn’t quite make for an exciting night.

But even if retirement is many years away, it’s important to read Social Security.it is especially If you’re ready to apply for benefits, be sure to educate yourself about how the program works. Doing so can help you avoid falling victim to such misunderstandings that could deprive you of money you were otherwise entitled to.

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