For Mark Roberts’ Use: Social Security will provide an important part of retirement plans for just about everyone, and yet a recent poll uncovered a shocking truth. Among those age 50 and older, a surprising 91 percent did not know how the amount of a person’s Social Security benefit is determined!

Social Security is a complicated program, but since it affects all of us, you should know at least these three basic facts.

Benefits are based upon your earnings. Social Security uses a formula to determine your benefit amount, and it’s based upon your 35 highest-earning years of work.

If you work fewer than 35 years, the zeros added into your formula will bring down your benefit amount. But if you continue to work longer than 35 years, you could potentially add a few higher-earning years to your work history and increase your benefit amount.

Timing is (almost) everything. Social Security benefits are calculated based upon your Full Retirement Age, which is determined by your date of birth. Currently FRAs fall between 65 and 67.

However, you can retire as early as age 62, if you’re willing to accept a monthly benefit that is up to 25 percent smaller than it would have been otherwise. Or, you can delay retirement and earn a benefit that is about 8 percent greater for each year that you delay (up until age 70, and then there is no point in delaying your claim).

There is more than one type of Social Security benefit. If your spouse’s earnings history is more impressive than your own, claiming the spousal benefit might actually be a better deal for you. You can claim spousal benefits as long as you have been married at least 10 years first.

If you’re divorced or widowed, you can claim spousal or survivor benefits on your spouse’s work record, provided the ten-year rule applies to you.

Before you file for your benefits, it is a good idea to run the numbers both ways to determine which benefit you would rather claim. If you need help evaluating your Social Security benefits or any other aspect of retirement planning, give us a call and we can schedule a time to talk.