With their many twists and turns, the thought of trying to figure out Social Security policies can make your head spin. Myths abound about Social Security. Unfortunately, many people believe them.

Sadly, these myths can cost you big time.

Social Security Myth #1 – The “Maximum” Is the Highest Payment You Can Get

The Social Security “maximum” ($2,687) is the highest payment you can get at “Full Retirement Age.” The actual top payment you can receive is at age 70.

Full Retirement Age (FRA) is when the Social Security Administration deems you eligible for your “full” benefit. If you apply earlier, your payment is reduced, but if you apply later, your payment will increase. The Full Retirement Age used to be 65 for everybody. Now it depends on the year you were born.

Delayed Retirement Credits Boost Your Payment

For each year you wait after your Full Retirement Age, your payment amount is permanently increased by 8%.

Waiting until age 70 can increase your monthly payment up to 32%. The maximum amount for Social Security is listed at $2,687, but that’s at your Full Retirement Age. You can increase your payment 32% and get the true maximum of $3,576 at age 70.

Waiting Until 70 Is Best

While waiting until age 70 will give you the highest payment, it is not the best choice for everyone. To know what’s best for you, you need to know that it’s an option. Many people don’t.

My hairdresser, Susan, was surprised when I told her she wasn’t getting as much as she could. A Social Security agent told her she would get the maximum at 66. In Social Security terms, that is true. She is getting the maximum, but it is not the highest payment she was eligible to receive. Had she waited until 70, Susan could have gotten about $600 more per month.

If she lived until 85, that increase would have amounted to over $100,000 more in lifetime benefits.

Social Security Myth #2 – If You Work, You’ll Lose Your Social Security

Many retirees claim that having a good social life is the key to happiness as you grow older. Having a job is an excellent way to meet people and stay active and engaged.

When I suggest to seniors that they get a job, I often hear them say they can’t work because they’ll lose their Social Security. This is a common myth, and it is holding many seniors back from earning money, as well as meeting more people and enjoying life more.

If you are over your Full Retirement Age, you can earn as much as you want or are able. It does not affect your Social Security payment whatsoever.

There is no penalty for working, and you will receive your full Social Security payment if you are over 66. If you are between 62 and your Full Retirement Age, you can earn up to $16,920 per year without your payment being affected. Many part-time jobs pay less than that.

If you earn more than $16,920, you are subject to a penalty of $1 for every $2 you earn over the limit. Your Social Security payment may be withheld sometime in the future until the penalty is satisfied.

Whether or not you plan to work is a major consideration in deciding when to start collecting Social Security. If you know you are going to earn a good deal over the limit, you may want to wait until a more financially advantageous time.

Social Security Myth #3 – Your Monthly Payment Is Based on Your Earnings at the Time You Retire

Many people believe that your Social Security payment will be based on the amount you are earning when you retire, but that is not the case. Your Social Security monthly payment amount is based on your 35 highest earning years.

To calculate your benefit, Social Security takes your 35 highest earning years, converts them to today’s dollars, enters those figures into a formula and comes up with your monthly payment amount.

What you have earned over your working lifetime determines what your monthly payment will be. You do not have to try and beef up your earnings in the last few years before you retire.

You can get a copy of your earnings record by going to this website. You’ll be able to see everything you’ve earned and all of the payments made on your behalf. You can also use the benefit estimator, which will let you know approximately how much your monthly payments will be at different ages.

My Experience

When I was 58, I got concerned. I didn’t know how Social Security worked, when I could begin collecting, or how much my payments would be.

How would I survive?

It was time for me to learn my Social Security options so I could make the right choices.

I researched online through websites and articles and in books. There was a lot of confusing and conflicting information. I collected mountains of paper. I wore myself out. Until one day I thought wouldn’t it be nice if all of this information were in one place in simple, easy-to-understand language.

I became a writer that day. My current book, The New Retirement Basics, is simple, concise, and easy-to-understand. It gives you all you need to know to navigate the basics of Social Security under one cover.

Social Security can be challenging and intimidating, but it doesn’t have to be. The more you know, the more you will be able to make good, educated decisions. With the right information, you’ll keep busting those myths and get what you are entitled to.

Do you have any Social Security policies you are confused about? Have you had an experience where you didn’t get the right information? Have you figured out your payment amount and the best choice for you? We look forward to hearing your comments and questions.