Key Takeaways

-Some people believe you have to start claiming Social Security benefits at age 62. That's a myth: 62 is the earliest age you can claim your benefit, but it’s not the only age to do so.

-Waiting to claim Social Security after age 62 comes with a bonus: roughly 8% additional monthly income per year for each year you delay claiming (up to age 70).

-If you're divorced and meet certain conditions, you're entitled either to your own Social Security benefit or to 50% of your ex’s Social Security benefit, whichever is higher.

Understanding how Social Security benefits work can be a challenge: There are a lot of rules, the formulas can seem complex, and making decisions with incomplete or incorrect information could end up costing you. That's why it's important to work with financial professionals to develop a Social Security claiming strategy for your overall retirement income plan.

Before you make decisions about claiming this valuable benefit, let's clear up 5 of the most common myths about Social Security that could undermine your ability to generate the income you’ll need in retirement to live the life you want.

Myth #1: You must claim your Social Security benefit at age 62

Some people think you have to start claiming your Social Security benefits at age 62. That's a myth: 62 is the earliest age you can claim your benefit, but it's not the only age to do so.

Your base benefit is calculated according to your "full retirement age," or FRA, and your FRA is determined by your date of birth. The Social Security Administration (SSA) calculates your base Social Security benefit based on your average indexed monthly earnings during the 35 years in which you earned the most (only the years that you paid Social Security taxes).  

Tip: You'll find your FRA at Social Security's website, or on a paper statement mailed to you by the SSA. If you were born between 1955 and 1959, your FRA is 66 plus some months. If you were born in 1960 or later, your FRA is 67.

If you claim Social Security benefits any time before your FRA, you lock in a permanent reduction in monthly income. Claiming at 62 translates to a reduced monthly income of 25% to 30%, relative to your FRA monthly benefit. That means you may receive a lot less monthly retirement income, every year, for potentially several decades. A key consideration for when you claim Social Security benefits is maximizing your income for a retirement that could last longer than 30 years.

Wait until age 70 and lock in a "bonus":

Waiting to claim Social Security after age 62 comes with a bonus: roughly 8% additional monthly income per year for each year you delay claiming (up to age 70).

If your FRA is 66, your monthly income would increase 32% by waiting.

If your FRA is 66 years and 6 months (if you turned 62 in 2019), your monthly income would increase 28% by waiting.

If your FRA is 67, your monthly income would increase 24% by waiting.

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