Full retirement age is a magic number for Social Security benefits

Pre-retirees apparently don't know much about Social Security. Or at least that's what a recent survey says. In fact, only 9% of consumers believe they are very knowledgeable about how Social Security benefits are determined, and just 38% are somewhat knowledgeable about how their benefits will be calculated, according to a joint survey released in September by the Financial Planning Association and AARP.

If that's the case, what's the bare minimum you should know about Social Security? Here's what experts had to say.

Full retirement age. Your age at the time you elect retirement benefits affects the amount of your Social Security benefit and, in many cases, your spouse's benefit, too.

You can elect to receive your benefit anytime from 62, the earliest age at which you can begin to collect benefits, to age 70, but there's a certain age when you're entitled to full or unreduced retirement benefits. That would be your full retirement age (FRA), or what some also call your normal retirement age.

Reduced benefits. Start taking your benefits before your FRA and your monthly payment will be reduced. That reduction could be anywhere from 20% to 35% depending on your FRA and whether it's your or your spouse's benefit.

Retirement: When you should take Social Security

Increased benefits. If, however, you delay your retirement benefits until after your FRA, you're likely eligible for delayed retirement credits or DRCs. In essence, you can use these credits to increase permanently the amount of your old-age benefit amount. And how much depends on when you claim. In essence, you'd earn a credit for each month (two-thirds of 1% per month or 8% per year) during the period beginning with the month you hit FRA and ending with the month you turn age 70.

So, a person born in 1960 or later whose benefit was $1,000 per month at FRA could receive $1,240 per month if they wait until age 70 to claim their Social Security benefit. By contrast, that same person would receive just $700 if they claimed Social Security at age 62.

And if you factor in cost-of-living adjustments at 1.5%, the difference between taking your benefit at age 62 vs. age 70 could be 88% says David Cechanowicz, director of education for Social Security Timing, a software program used by financial professionals to run benefit calculations. And that, he says, is almost a "doubling of the higher earner's benefit."

Know your FRA. Your FRA depends on when you were born. For those born in 1960 or later, your FRA is age 67. For those born in 1937 or earlier, the FRA was 65. And for those born from 1938 to 1959, your FRA is somewhere in between.

Brian Vosberg, author of The Complete Retiree's Guide to Social Security: Powerful Strategies to Maximize Retirement Benefits and Get the Most From Your Money, says many people associate retirement to age 65. "That may be true for many pensions, but not Social Security," he says.

Consider your surviving spouse. By waiting until at least FRA, if not age 70, someone's monthly benefit amount will be higher than if he or she had claimed it earlier. "It also means that any survivor benefit that might eventually be paid will be higher, as well," says Kurt Czarnowski, a principal with Czarnowski Consulting in Norfolk, Mass.

Claiming strategies for those who wait till FRA. By waiting until FRA, Czarnowski also says older Americans can also use one of the "claiming strategies" that are now so popular and maximize the benefits that are paid to the family. Some of those strategies include file-and-suspend, filing a restricted application for spousal benefits, and combinations of those two strategies.

For her part, Elaine Floyd, the director of retirement and life planning at Horsesmouth in New York City, says the most important thing pre-retirees need to know about Social Security is the unintended consequences of filing for benefits before full retirement age. "Not only will their benefit be permanently reduced, causing them to give up many tens of thousands of dollars in benefits over their lifetime, they will be blocked from implementing certain enhancement strategies," she says.

According to Floyd, spousal strategies can add as much as $60,000 to a household's lifetime benefits.

Working and waiting to claim. Czarnowski is fond of saying that "good things also come to those who work." That's because once you reach FRA, you can work and earn as much as you might like and receive a full Social Security benefit at the same time. "And, these additional earnings can possibly increase someone's monthly payment amount, because retirement benefits are calculated by averaging someone's highest 35 years of earnings, no matter when those years occur," he says.

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Don't decide in a vacuum. A Social Security filing decision should not be made in a vacuum, says Mark Orr, author of Social Security Income Planning: The Baby Boomer's Guide to Maximize Your Retirement Benefits. "The decision on when and how to file for Social Security, should be made as part of the overall retirement income plan with your financial goals, life expectancies and financial fears in mind."

Taking benefits before FRA will cause a permanent reduction of benefits of five-ninths of 1% for each month taken early for the first 36 months, then a five-twelfths of 1% reduction for those months in excess of 36 months. Also, by waiting to take benefits until after reaching FRA, an individual can increase benefits to be two-thirds of 1% for each month benefits are delayed past FRA, or 8% per year, according to Joseph Stenken, author of 2015 Social Security & Medicare Facts.

Robert Powell is editor of Retirement Weekly, contributes regularly to USA TODAY, The Wall Street Journal and MarketWatch. Got questions about money? Email Bob at rpowell@allthingsretirement.com.