What Every 65-Year-Old Should Know About Social Security

Over half of all Americans (55%) believe that 65 is the age when you can claim your full Social Security benefit. This is not true, and believing this myth could be damaging. The age of 65 is a milestone, but that's because of Medicare.

If you're 65, you must be aware of some very important Social Security facts to make informed choices about your retirement planning. Here's what you need to know.

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1. Age 65 is no longer full retirement age for Social Security

The first and most important thing that you must be aware of is that 65 is no longer full retirement age (FRA).

While it once was the age when everyone could claim their standard benefit, that changed due to Social Security reforms. FRA was gradually raised, and now anyone born in 1960 or later must wait until 67 to claim Social Security to receive their full benefits.

Because of this, if you claim at 65, it's considered an early claim. You'll shrink your monthly Social Security check, and you'll never catch up to where you'd have been if you waited to claim benefits.

2. You can claim Medicare at 65, and premiums will come out of your benefits

The next key thing to know is that you become eligible for Medicare at 65.

When you become eligible, you need to sign up for Part B to avoid potentially facing a 10% monthly premium penalty for each full year that you delay signing up for coverage. There are exceptions, such as having qualifying insurance through a job. But you must either sign up or make sure you fall within the exceptions to avoid making Medicare more expensive for the rest of your life.

When you sign up for Medicare, the premiums are typically deducted from your Social Security benefits. This can affect the amount of benefits you have for covering other expenses, so be sure to plan for that.

3. Your benefit is based on a 35-year work history

Understanding how benefits are calculated is also important because it can impact your decision about how long you want to work.

Specifically, benefits are based on a percentage of your average wage from your 35 highest-earning years, adjusted for inflation. If you've worked fewer than 35 years, you'll have years of $0 wages factored in. If you work more than 35 years, you can push out some lower-earning years when benefits are calculated.

If your work history doesn't span 35 years, or if you're currently earning a higher salary than you did earlier in your career, you may want to put in some extra years before retiring to increase your monthly benefit.

4. Your average payout is just $1,607

Finally, you need to know that the average Social Security payment for someone who is 65 is just $1,607. Understanding this is important so you can have a realistic perception of what Social Security will do for you as a retiree.

If you're 65 and haven't claimed your benefits yet, you must understand all these details to make an informed claiming choice. And if you have claimed benefits already, then it's important to understand your Medicare sign-up requirements before you risk getting hit with a penalty.

Knowing this information helps you make the best retirement plan possible for your situation.

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