5 Social Security Misconceptions That Could Cost You Money

A comprehensive AARP survey uncovered some troubling gaps in how Americans understand Social Security benefits. These knowledge gaps aren’t just academic concerns—they can lead to costly mistakes that permanently reduce your lifetime benefits. When you don’t understand the program’s intricacies, you might claim too early, wait too long, or miss out on benefits you’re entitled to receive.

The survey results paint a concerning educational picture. Many Americans harbor fundamental misunderstandings about when they can earliest age for claiming Social Security benefits, how much they’ll receive, and what factors influence their monthly payments. These misconceptions could translate into thousands of dollars in lost income over a retirement that might span decades.

The Minimum Age Confusion

Here’s a question that stumped most survey participants: what’s the earliest age for claiming Social Security benefits? Surprisingly, only 40% correctly identified age 62 as the minimum claiming age. This basic fact forms the foundation of retirement planning, yet six out of ten Americans got it wrong.

According to SSA guidelines, the reality involves more nuance than simply turning 62. You must be 62 for an entire month to qualify, and the Social Security Administration has specific rules about birth dates that many people overlook:

• If you were born on the first of the month, that birth month counts toward eligibility
• If you were born on the second of the month, that birth month also counts
• If you were born later in the month, you’ll need to wait until the following month to apply

Claiming at 62 comes with significant trade-offs that deserve careful consideration. Since this age falls below your full retirement age (FRA), you’ll face early claiming penalties that can reduce your monthly benefit by up to 30%. However, this early start might make sense if you’re facing financial hardship or have health concerns that suggest a shorter life expectancy.

The Age That Maximizes Your Monthly Payments

Even fewer survey respondents understood when Social Security benefits reach their peak value. Only 25% correctly identified age 70 as the magic number for maximum monthly benefits. This widespread awareness gap could prove financially devastating for retirees who don’t understand the program’s structure.

Most people guessed ages younger than 70, which suggests they might claim prematurely and leave substantial money on the table. Every month you delay claiming beyond your full retirement age (up to age 70) increases your benefit through delayed retirement credits. Based on 2024 regulations, these credits can boost your monthly payment by as much as 32% compared to claiming at full retirement age.

The Delayed Retirement Credit System

Here’s how delayed retirement credits work in practice. For each year you postpone claiming beyond your FRA until age 70, your benefit increases by approximately 8%. This means someone with a full retirement age of 67 who waits until 70 would see their monthly benefit increase by about 24% (8% × 3 years).

But here’s the flip side that creates another common misconception. Some people mistakenly believe they need to wait beyond age 70 for even larger benefits. This misconception leads to unnecessary delays since Social Security payments stop growing after your 70th birthday. According to SSA guidelines, waiting past 70 means forfeiting months of payments with no corresponding increase in benefit amount.

Understanding Your Full Retirement Age

Your full retirement age represents the sweet spot where you can claim your complete benefit without early penalties or delayed credits. Yet survey results revealed dangerous confusion about this critical milestone that affects millions of Americans.

More than one-third of respondents incorrectly believed their full retirement age was 65. Another quarter admitted they simply didn’t know. The age 65 assumption isn’t entirely random—it was the full retirement age for many years. However, legislative changes in the 1980s gradually raised this age to help ensure the program’s long-term solvency.

Current Full Retirement Ages

Today’s retirement landscape looks quite different from previous generations. Based on current SSA regulations, here’s how full retirement ages break down:

• Born in 1937 or earlier: Full retirement age is 65
• Born between 1938-1942: Full retirement age gradually increases from 65 and 2 months to 65 and 10 months
• Born between 1943-1954: Full retirement age is 66
• Born between 1955-1959: Full retirement age gradually increases from 66 and 2 months to 66 and 10 months
• Born in 1960 or later: Full retirement age is 67

This misconception about age 65 could lead people to claim too early, thinking they’re at full retirement age when they’re actually facing benefit reductions of up to 25% or more.

Claiming Benefits on an Ex-Spouse’s Record

Divorce doesn’t necessarily end your connection to Social Security retirement benefits based on your former spouse’s work history. Yet half of survey respondents either answered incorrectly or didn’t know whether divorced individuals could claim benefits based on your ex-spouse’s work record.

Eligibility Requirements for Divorced Spouse Benefits

According to SSA guidelines, the rules are specific but potentially valuable for qualifying individuals. You can claim benefits based on your ex-spouse’s work record if several conditions are met:

• Your marriage lasted at least 10 years
• You are currently unmarried
• You are at least 62 years old
• The benefit you would receive based on your ex-spouse’s record is higher than your own retirement benefit

The 10-year threshold is firm – marriages lasting nine years and 11 months don’t qualify, no matter how close they came to the decade mark. This rule has caught many divorced individuals off guard when they assumed they might be eligible.

Remarriage affects your eligibility in interesting ways that often surprise people. If you remarry, you lose the ability to claim on your ex-spouse’s record. However, you might become eligible for benefits based on your new spouse’s work history instead. Your ex-spouse’s remarriage doesn’t impact your eligibility at all, and your claiming doesn’t prevent their new spouse from receiving benefits either.

The Truth About the Earnings Test

Working while collecting Social Security before your full retirement age triggers what’s known as the earnings test. But few people understand how this mechanism actually works or that it’s not a permanent penalty. The test temporarily reduces benefits for those who earn above certain thresholds while claiming early.

How the Earnings Test Works in 2025

Based on 2025 regulations, the earnings limits create a sliding scale of benefit reductions that many find confusing:

• If you’re under your full retirement age for the entire year, you’ll lose $1 in benefits for every $2 you earn above $23,400
• In the year you reach full retirement age, you’ll lose $1 for every $3 you earn over $62,160, but only for earnings before your birthday month
• Once you reach your full retirement age, the earnings test no longer applies regardless of how much you earn

The Misunderstood Benefit Recovery

Here’s what most survey respondents missed entirely: these “lost” benefits aren’t gone forever. When you reach your full retirement age, the Social Security Administration recalculates your benefit to account for the months when payments were reduced or withheld. This adjustment effectively returns the money you lost to the earnings test, spread out over your remaining lifetime.

For example, if the earnings test caused you to lose 12 months of benefits, the SSA will recalculate your benefit as if you had claimed 12 months later than you actually did. This means you’ll receive a higher monthly payment for the rest of your life to compensate for those temporarily withheld benefits.

Making Informed Decisions About Your Future

These survey results highlight why Social Security education matters so much for your financial security. Each misconception represents a potential costly mistake that could reduce your lifetime Social Security benefits by thousands of dollars. Understanding the rules empowers you to make strategic decisions about when to claim, whether to work while collecting benefits, and how to maximize your household’s total Social Security income.

The complexity of Social Security rules means that what works for your neighbor or friend might not be the best strategy for your situation. Factors like your health, family longevity, financial needs, and marital status all play crucial roles in determining the optimal claiming strategy.

If any of these facts surprised you, consider reviewing your claiming strategy with fresh eyes. The Social Security Administration offers resources and personalized guidance through SSA.gov to help you understand how these rules apply to your specific situation. You can also create a my Social Security account to access your earnings history and benefit estimates. Your retirement security depends on getting these decisions right the first time, since many Social Security choices cannot be easily reversed once made.