Three Social Security myths that may mar your retirement

Millions of Americans rely on Social Security earnings in retirement for financial support. If your golden years are far off in the distance, you might not give a second thought to Social Security and what the program means for you.

But that can be a mistake. If you don’t understand Social Security now, you could be in for some unfortunate surprises after you stop working.

For starters, the program might not be as healthy as you think. “Many estimates have the Social Security Trust Fund exhausting around 2034,” said Peter Donohoe, a Boston-based financial consultant at Citizens Investment Services.

While experts are hopeful politicians eventually will act to shore up the system, there are no guarantees. So it’s wise to make some smart money moves now that could put you in a better financial position when you retire.

Here are three things everyone gets wrong about Social Security — and the truths you need to know to prepare for retirement:

Myth No. 1: Your benefit is the same regardless of when you retire

If you’re 60 or older, three months before your birthday the Social Security Administration will send you a recap of your annual earnings history. If you review this statement, you will see that the breakdown of benefits is based on your earnings to date. The statement gives you an estimate of benefits you will earn if you continue working until you reach a certain age.

Many people mistakenly assume their monthly Social Security retirement benefits will be the same no matter what age they retire.

Retiring from work and claiming Social Security at a younger age can hurt you, though.

Look closely at your statement, and you will see that you can get a bigger benefit by delaying retirement and claiming benefits after your full retirement age. The difference can be as much as a few hundred dollars more per month if you wait than if you retire at 62.

Myth No. 2: You can wait until retiring before thinking about Social Security

Long before you retire, try to learn about the Social Security benefits for which you are eligible. Too many people overlook this step.

Learning more about Social Security benefits can help you make more effective financial planning decisions, and help you maximize your Social Security income. For example, you might be eligible for your ex-spouse’s benefits, yet not even know it. You can also earn a bigger Social Security check simply by delaying retirement beyond your full retirement age.

You can find a wealth of information about retirement planning on the “Retirement Planner” page of the Social Security Administration website.

Myth No. 3: You automatically get full benefits upon reaching age 65

Don’t assume you will receive benefits as soon as you reach 65. Social Security rules have changed over the years.

“The reality is that full retirement age was age 65, but is now based on your year of birth and may currently be up to age 67,” Donohoe said.

You still have the option of taking your benefits as early as age 62, but you will receive a reduced benefit — about a 30 percent reduction — if you do. If you receive a spouse’s benefit beginning at age 62, your benefit is reduced to about 32.5 percent of the amount your spouse would receive if he or she started getting benefits at full retirement age.