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

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

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

Whether you’re nearing retirement or have a few years left in your career, these three lesser-known rules of Social Security can help you make the most of your monthly payments.

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

Three important factors influence the amount of your benefit: the age at which you apply for your benefit, your career income and the duration of your career.

While most people are aware of the first two factors, about 65% of American adults are unaware that your benefits will decrease if you work less than 35 years, according to a 2024 report from the Nationwide Retirement Institute.

The Social Security Administration calculates your benefit by first averaging your earnings over the 35 years of your highest-earning career. That number is then run 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, zeros will be added to your average income, making your payments lower. You usually only need to work 10 years to qualify for pension benefits, but the more years you work, the higher your benefit will be.

2. Your benefit will not increase at your full retirement age if you apply for your pension early

Your primary insurance amount based on your career earnings is how much you will receive if you file at your full retirement age (FRA). The FRA for anyone born in 1960 or later is age 67, meaning you must wait until that age to file to receive 100% of your benefit amount.

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Claiming early results in smaller checks each month. Filing as early as possible, at age 62, will reduce your benefits by up to 30%. What many people don’t realize, however, is that these reductions are permanent.

Just under half of American adults mistakenly believe that if they file early for Social Security, their benefits will automatically increase once they reach their FRA, according to the Nationwide survey. While that’s an understandable mistake, it could spell trouble for your retirement if you count on a benefit increase that doesn’t happen.

3. You can revoke your decision within 12 months of submitting your claim

Choosing the age at which you file for benefits is a big decision, because it will affect your monthly income for the rest of your life. But if you change your mind shortly after filing for benefits, you have one chance to file again.

Within 12 months of filing, you can withdraw your application and stop receiving payments. You will have to pay back all the money you have already received in benefits, including any spousal benefits and Medicare premiums. However, you can then reapply at a later date, which will increase your benefit amount.

You also have the option to suspend your benefits, which is more feasible for most people. Once you reach your FRA, you can essentially hit pause on collecting payments until age 70. When you start receiving benefits again, you’ll receive an adjusted amount. It won’t be as much as if you had suspended your benefits to begin with, but it will be more than you would have received if you hadn’t suspended your payments.

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