3 Things You Probably Didn’t Know About Social Security — but Should

Social Security is a critical income source for millions of older Americans today. But whether you’re close to retirement age or are much younger, it’s important to know the ins and outs of how the program works. Here are a few things about Social Security you may not have realized but definitely need to be aware of.

1. How benefits are calculated

Your Social Security benefits are calculated based on your lifetime earnings. Specifically, the Social Security Administration (SSA) will take your 35 highest-paid years of earnings into account when determining what monthly benefit you can get. Earlier wages will be indexed to inflation.

From there, your filing age will play a role in how much money Social Security actually pays you each month. If you file at your exact full retirement age (FRA), which is 67 for anyone born in or after 1960, you’ll get your complete monthly benefit based on your top 35 years of earnings. If you file before reaching FRA — which you can do starting at age 62 — your monthly benefits will be reduced.

2. How much of a boost your benefits can get

There’s a penalty for claiming Social Security prior to FRA. But you delay your claim until after FRA, your monthly benefits will be boosted 8% per year you hold off.

That said, the SSA won’t let you grow your benefits indefinitely. Once you turn 70, you can no longer accumulate the delayed retirement credits that give your benefits an increase.

That doesn’t mean you’ll be forced to claim Social Security at 70, though, or that you’ll be signed up automatically. So once your 70th birthday arrives, it’s a good idea to claim benefits so you don’t miss out on retirement income you’re entitled to.

3. Social Security checks aren’t a thing anymore

The days of Social Security being paid in the form of an actual check are pretty much behind us. These days, there are two primary ways to receive Social Security.

First, you could sign up for direct deposit and have your benefits land in a designated bank account automatically at the same time each month. A second option is to sign up for a Direct Express debit card.

Once you have your card, the SSA will deposit your benefits onto your card each month at the same time. You’ll then be able to swipe that card to pay for purchases. You can also use it to withdraw cash.

If you’re wondering why Social Security doesn’t send physical checks anymore, it’s simple. With a paper check, there’s the possibility of a criminal getting a hold of your mail, altering the check, and stealing that money. Direct deposit and Direct Express are much more secure options.

Also, you never know when a piece of physical mail might get lost or delayed. Given the number of Social Security recipients who can’t pay their bills without those benefits, that’s just too much of a risk. So sending those funds electronically in one form or another is really the safest and most efficient bet.