Social Security is a life-changing financial security for most Americans, providing one of the greatest anticipated retirement incomes imaginable. Many Social Security beneficiaries, on the other hand, are misinformed, which can be harmful. Here are three typical blunders that individuals make when thinking about Social Security benefits and why it’s important to avoid them.

1. All seniors will receive the same benefit

Almost two in three working Americans (38%) think that everyone will get the same amount from Social Security during retirement. Instead, your benefit payment is calculated based on your yearly earnings and the taxes you paid throughout your working career in Social Security.

Recipients’ avg. monthly earnings over the decades are used to calculate the amount each individual will receive at the full retirement age (FRA). Social Security assumes that people who earned more money during their careers will require less assistance in retirement. The more money you earn, the smaller the percentage of your income Social Security replaces after you retire.

2. Even if you claim benefits early, they will increase when you reach full retirement age

You may begin receiving Social Security when you reach age 62, but you do not have to stop working. The SS full retirement age is determined by the year of your birth: 66 for individuals born in 1943 and later, gradually rising to 67 for those born in 1960 or later.

If you start collecting your Social Security benefit before your full retirement age, it will be reduced by nearly 30% per month permanently because the same total amount of benefit money that you are owed – based on the average life expectancy of 78.6 years – will be distributed over more checks and a longer amount of time. If you live longer than that, claiming benefits early will result in bigger checks for the rest of your life than if you waited till age 70.

3. Annual COLA is guaranteed

The annual cost-of-living adjustment, or COLA, adjusts Social Security payments to compensate for inflation by using a subset of the Consumer Price Index which is known as the CPI-W.

However, according to the SS Act, benefits will only rise if the third-quarter CPI-W is higher than that of the same quarter last year. In some years, there is no increase in benefits at all for inflation – but this is only because inflation itself hasn’t increased.