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The three biggest myths about how Social Security works

  • More than two-thirds of workers say they are confident about their Social Security knowledge, yet most don't understand concepts like full retirement age and spousal benefits.
  • Sign up for a My Social Security online account if you haven't done so to keep tabs on your benefits.
  • Review your benefits statements at least once a year.

You probably know less about Social Security than you think.

More than two-thirds of older workers said they were confident about the rules of America's largest retirement program, according to a new survey by Fidelity Investments.

Yet among the 521 people age 55 to 61 that Fidelity polled in October, most got these three key concepts wrong:

Give advance notice

To that point, 65 percent of people close to retirement didn't know that you have to apply to the Social Security Administration three months before you receive your first benefits check. And 9 percent believed that the agency would contact them when it was time to receive benefits.

You are mostly on your own when it comes to Social Security notices. The SSA only sends out paper statements to people age 60 and over who aren't receiving benefits and who don't have a My Social Security online account.

My Social Security is the best place to learn the basics of the program, said David Freitag, a financial planning consultant at the MassMutual Financial Group. Freitag recommends people review their annual Social Security statements at least once a year.

Check to make sure the earnings record on your Social Security statement is accurate, especially for years where you've switched jobs. You can correct errors within three years, three months and 15 days following the year of the mistake. If you miss the deadline, it's still worth it to try to fix the statements because the SSA has been known to cut people some slack.

Know your full retirement age

Fidelity found only 26 percent of older workers actually knew their full retirement age, or the age at which you can claim your benefits unreduced.

Your full retirement age is based on the year you were born. For those born before 1955, the age they can claim unreduced benefits is 66. For people born in 1955 and later, the age slowly creeps up to 67.

The earliest you can claim Social Security is age 62. Most people still file for benefits before their full retirement age, yet more workers near retirement said they want to delay their claiming decision, according to Fidelity.

Only 28 percent of those age 61 that Fidelity surveyed said they are planning to claim benefits as early as possible. That is a significant decline from 2008 when 45 percent of people surveyed near age 62 said they wanted to begin collecting immediately.

"You should pay attention to Social Security. For most people, it is the biggest source of guaranteed retirement income that they will have." -David Freitag, financial planning consultant, MassMutual Financial Group

"Social Security knowledge is increasing over time," said Ken Hevert, Fidelity's senior vice president of retirement. "People are starting to think about their Social Security claiming strategy years before they retire."

Understand your spousal benefits

Your ex may be entitled to benefits based on your earnings, but it doesn't affect your payouts. Half of older workers surveyed by Fidelity thought their benefits could be reduced if an ex made a claim. That's not true.

Here are the basics of spousal benefits: Those who were married for 10 consecutive years and haven't remarried can claim either their own benefits based on their earnings or half of the former spouse's benefits, whichever is higher, once they reach full retirement age.

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Claiming options can be complicated. Fidelity launched a free Social Security benefits calculator to help people figure out which strategy works best for them. It joins the scores of free Social Security tools available online.

These calculators are a good starting point, Freitag said. He recommends that married couples, especially those with complicated money situations, share the results of these tools with their financial advisors to craft a claiming strategy.

"You should pay attention to Social Security. For most people, it is the biggest source of guaranteed retirement income that they will have," Freitag said.

Watch: Social Security fix