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Two recent surveys show that Americans are severely lacking when it comes to even basic Social Security knowledge. For example, the majority of people don't even know what the normal Social Security retirement age is. And knowledge of topics like citizenship requirements, ability to work while collecting Social Security, and the future ability of the U.S. to pay benefits isn't much better. With that in mind, let's clear up these four things Americans should know about Social Security.

1. What is full retirement age? (Hint: It's a trick question)
According to a survey of 1,513 Americans conducted by MassMutual, 71% believe that the normal (or full) retirement age is 65. And while this may be the standard in much of the corporate world, Social Security is a little different.

In reality, the normal retirement age depends on when you were born, and it ranges from 66 for people reaching retirement age now to 67 for those born in 1960 and later. Here's how to determine your own normal retirement age for Social Security purposes:

If you were born in... Your normal (or full) retirement age is...
1943-1954 66 years
1955 66 years and 2 months
1956 66 years and 4 months
1957 66 years and 6 months
1958 66 years and 8 months
1959 66 years and 10 months
1960 or later 67 years

Source: Social Security Administration

2. You don't need to be a U.S. citizen to collect benefits
This is a topic that three-fourths of respondents to the same survey got wrong. Contrary to popular belief, resident aliens can be eligible for Social Security benefits, as long as they meet the criteria of a "qualified alien" and if one of the following statements is true:

  • They were receiving Social Security and legally residing in the U.S. as of August 22, 1996
  • They are a lawfully admitted resident alien and have 10 years (40 quarters) of work experience
  • They are currently on active duty in the Armed Forces, or are an honorably discharged veteran
  • They are blind or disabled, and were legally residing in the U.S. on August 22, 1996
  • They were granted immigration status in certain categories, such as refugee or asylum (maximum benefit period of seven years)

3. Relax, Social Security isn't going to disappear anytime soon
According to a Pew Research survey of 1,692 American adults, 41% believe there will be no Social Security benefits when they retire. And the younger age groups are even more pessimistic, particularly those between 30 and 49 years of age -- 47% of whom believe they'll receive no Social Security benefits in their lifetimes.

However, this is simply not the case. According to the Social Security and Medicare Trustees' 2014 report, all of the Social Security trust funds will run out of money by 2033. Still, the report claims that the incoming Social Security taxes will be enough to cover 77% of the current level of benefits at that time. Even as far out as 2088, there will still be enough money coming in to pay out 72%.

Furthermore, this assumes that Congress will do nothing to address the shortfall, which it has a good history of doing. For example, the last major changes made in 1983 gave the program an additional 50 years of solvency -- this is the reason it is expected to make it to 2033 in the first place. Between now and then, Congress could decide to increase Social Security taxes on employers or employees (or both), increase the normal retirement age, or slightly decrease benefits in order to improve the program's financial footing.

4. One more downside to claiming benefits early
Aside from receiving a reduced benefit amount, there is an additional consideration for those who may want to retire before reaching normal retirement age -- how much you are allowed to earn.

In the MassMutual survey, 55% of respondents believe you can continue to work and collect your full benefit amount regardless of how old you are. However, this only applies to those who have reached their normal retirement age.

If you've claimed Social Security early (you can start receiving benefits as early as 62), any earnings you have will be subject to the "retirement earnings test" to see if they exceed a certain limit ($15,720 in 2015). For every $2 you earn over that amount, your benefit will be reduced by $1. During the year in which you will reach normal retirement age, your benefits will be reduced by $1 for every $3 you earn over a higher amount (currently $41,880) until the month of your birthday.

Once you reach your normal retirement age, you can work all you want and still collect your benefit. And, any benefit reductions will serve to permanently increase your benefit once you reach normal retirement age.

The more you know, the better you can plan
Knowing these four facts about Social Security won't necessarily get you any more money, but they can certainly help you plan better. The bottom line is that with any area of personal finance, the more you understand about a topic, the better prepared you'll be to make sound decisions for you and your family.

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