3 Little-Known Social Security Rules That Can Make or Reduce Your Benefit Amount

About 68 million Americans will receive a Social Security check in 2024, and benefits account for nearly a third of the income of those 65 and older.

Since most retirees will depend on Social Security to some extent, it’s wise to understand at least the basics of how your benefits are calculated. While the schedule can be confusing, it’s essential to know the primary factors that affect how much you’ll receive each month.

Whether you’re nearing retirement or have career years left, these three lesser-known Social Security rules can ensure you get the most out of your monthly payments.

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1. You must work at least 35 years to maximize your benefits

Three main factors will affect the amount of your benefit: the age you start claiming, your career earnings and the length of your career.

While most people are aware of the first two factors, about 65 percent of U.S. adults don’t know that working less than 35 years will reduce your benefit, according to a 2024 report from the Nationwide Pension Institute.

The Social Security Administration calculates your benefit by first averaging your earnings over the 35 years of your highest-earning career. This number is then put through a formula and adjusted for inflation. The result is your primary insurance amount or the benefit you are entitled to based on your work history.

If you work less than 35 years, you will add zero to your earnings average, reducing your payments. You generally only have to work 10 years to qualify for retirement benefits, but the more years you work, the higher your benefit will be.

2. Your benefit will not increase at full retirement age if you file early

The primary insurance amount based on career earnings is how much you will receive if you file at full retirement age (FRA). The FRA for everyone born in 1960 or later is 67, which means you’ll have to wait until that age to receive 100% of your benefit value.

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Claiming early will result in lower checks each month. By filing as soon as possible at age 62, your benefit will be reduced by up to 30%. What many people don’t realize, however, is that these discounts are permanent.

Just under half of U.S. adults mistakenly believe that if they file for Social Security early, their benefit will automatically increase once they reach FRA, according to the Nationwide survey. While this is an understandable mistake, it could spell trouble for your retirement if you’re counting on a benefit increase that won’t come.

3. You can revoke your decision within 12 months of your application

Choosing the age to claim benefits is an important decision because it will affect your monthly income for the rest of your life. But if you change your mind shortly after you’ve claimed, you have an opportunity for a refund.

Within 12 months of submission, you can withdraw your application and no longer receive payments. You’ll have to pay back any money you’ve already received in benefits, which includes any spousal benefits and Medicare premiums. But then you are free to reapply at a later date, which will increase your benefit amount.

You also have the option to suspend benefits, which is more affordable for most people. Once you reach your FRA, you can essentially press pause on collecting payments until age 70. When you start receiving benefits again, you will receive an adjusted amount. It won’t be as much as if you deferred benefits from the start, but it’s more than you’d get if you didn’t suspend your payments.

Social Security can make retirement much more affordable, so it pays to know the factors that influence the amount of your benefit. By understanding these lesser-known rules, you can maximize your monthly payments and enjoy a more comfortable retirement.