Only 16% of US adults consider themselves ‘very informed’ about Social Security — is your ignorance costing you retirement income?

Unfortunately, there’s a fair amount of basic information on Social Security that many Americans just aren't aware of. In an SSA survey conducted in 2022, only 27% of respondents correctly understood how Social Security benefits are calculated.

Furthermore, only a small percentage of respondents understood that benefits get an annual inflation adjustment, and that people who don’t qualify for retirement benefits of their own may be eligible for spousal benefits [2].

Meanwhile, a 2025 AARP survey found that only 16% of Americans ages 18 and over consider themselves "very informed" about Social Security [3].

It’s important to understand how Social Security works so that you’re able to make the most of your benefits once you’re ready to retire. And that includes avoiding these three key mistakes.

1. Filing early without understanding the consequences

On a basic level, the size of your monthly Social Security benefit check largely depends on your personal wage history, but your filing age also determines how much money you will collect each month.

Full retirement age (FRA) is when you can claim your monthly Social Security benefit without a reduction, and the FRA is 67 for anyone born in or after 1960. You can actually claim Social Security starting at 62 — however, doing so means receiving a reduced monthly benefit.

The earlier you collect Social Security, the less you’re going to get. To receive 100% of your benefit, you need to wait until FRA, and if you wait even longer — up to 70 years old — you can get even more [4].

In 2024, an estimated 22% of men and 23% of women were claiming Social Security at 62, according to Motley Fool [5]. It’s important to understand how much of a reduction you’ll face for claiming benefits early.

For example, if your FRA is 67 and you sign up for benefits at 62, your benefits will be reduced by 35%, which means you will receive only 65% of the full retirement benefit that you qualify for.

2. Not knowing how much your entitled to receive

A poll from the Cato Institute found that 38% of Americans underestimate the average yearly Social Security benefit [6]. And since Social Security might be an important income source for you in retirement, it shouldn't be a guessing game. You should know what monthly benefit you're eligible for well ahead of retirement.

There are two ways to get a good sense of the benefit you’re eligible to receive. You can use the SSA’s quick calculator to get a benefits estimate based on your age, wages and planned retirement date [7]. Or, you can create a personal account on the SSA’s website and get an individual estimate based on your actual earnings history [8].

3. Not factoring your nest egg into your claiming decision

The less money that you have saved for retirement, the more you might depend on Social Security to pay your expenses. So, it’s important to do an assessment of your savings before signing up for benefits.

As of 2022, the most recent year for which data is available, the median retirement savings among Americans ages 65 to 74 was $200,000, according to the Federal Reserve. Among the 55 to 64 age group, it was $185,000 [9].

Using the 4% rule, $200,000 translates to an annual income of $8,000, while $185,000 results in only $7,400 a year. If you don’t have a lot of savings, consider waiting until FRA to claim Social Security benefits so you don’t end up reducing your benefit check. Alternatively, to fully maximize these benefits, consider waiting until 70.

For each year you hold off on claiming benefits past FRA, you get an 8% boost (up until age 70). If your retirement savings are comparable to the median balances mentioned above, you may want to consider this option.

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[1]. Social Security Administration. “Monthly Statistical Snapshot, August 2025”

[2]. Social Security Administration. “Assessing Social Security Program Knowledge Using Longitudinal Data”

[3]. AARP. “Social Security Opinions and Attitudes on Its 90th Anniversary”