Only about one in eight adults know when they’ll be eligible for full retirement benefits through Social Security, the Nationwide Retirement Institute 2023 Social Security Survey revealed. And compared to 2014, fewer people age 50 and up now know whether they might be eligible for Social Security benefits based on an ex-spouse’s record (they might) or if Social Security might offer benefits for their spouse or children (also yes).

For a program that’s been around for nearly 90 years, there’s still a lot of confusion about how it works. Here are some of the Social Security topics financial pros find are often misunderstood.

Working for smaller check

If you claim Social Security before you hit full retirement age (66 to 67, depending on when you were born) and you’re still earning income, you’ll lose some of your Social Security benefits if your earnings go over a certain threshold.

The threshold isn’t terribly high: If you’re not full retirement age in 2024, you’ll lose $1 in Social Security benefits for every $2 you earn above $22,320. If you will reach full retirement age this year, you’ll lose $1 in benefits for every $3 you earn above $59,520, until the month you turn full retirement age. From that month forward, you’re in the clear.

“It’s just important to be informed that this penalty exists,” says David Haas, a certified financial planner in Franklin Lakes, New Jersey. “And you’re supposed to report it, which nobody ever does.” The net result of this quirk is that you might get a bill from Social Security for the income it wants back – but not for a few years.

“They bill you for it and tell you they’re willing to take it out of future payments,” Haas says. And if you report it, it can take the Social Security Administration, or SSA, some time to make the adjustments, he says.

Social Security is taxed

Alas, Social Security benefits aren’t tax-free – and you have to ask Social Security to withhold taxes for you.

Nicholas Bunio, a CFP in Downingtown, Pennsylvania, recalls a client who forgot to have anything withheld from their Social Security benefits. “When they did their taxes, they realized they owed $10,000 to the feds and $2,000 to the state,” Bunio says.

Federal taxes come into play if the combination of 50% of your Social Security benefit plus any other earned income is more than $25,000 a year if you’re filing individually, or $32,000 a year if you’re filing jointly, the SSA explains. To have taxes withheld, submitForm W-4V, Voluntary Withholding Request, to the Social Security Administration.

When one spouse dies

If your spouse dies and their Social Security check was larger than yours, survivors benefits mean you can start collecting their higher payment. But you don’t get to keep both checks.

“The survivorship is really just collecting the higher benefit, but that means you have to forgo the lower benefit,” Bunio says. “There is going to be a loss of income.”

For this reason, planners often recommend that the higher-earning spouse wait as long as possible to claim. “Because that’s the benefit that’s going to remain when one of you passes away,” says Michael Dunham, a CFP in Dallas.

Business owners and benefits

Entrepreneurs sometimes try to claim as little earned income as possible to pay as little in income tax as they can. But Social Security bases your benefits on your income over your best 35 earning years, and the lower your income in those years, the smaller your Social Security benefit will be in retirement.

“Business owners say, ‘Reduce my tax, I pay too much in taxes,’” says Catherine Valega, a CFP in Winchester, Massachusetts. People tend to overvalue the tax break now versus the long-term consequences of a smaller benefit later, she says.

To keep an eye on your Social Security numbers, create an account on SSA.gov. You’ll be able to review (and potentially correct) your earnings history.

No best time to collect

Although starting Social Security at age 70 nets you the highest benefit, it’s not the only answer to the when-to-claim question. Like a lot of planning, it depends on your circumstances.

“We had a client where no one in her family had lived longer than age 76,” said John Scherer, a CFP in Middleton, Wisconsin, in an email. “She wasn’t super interested in making sure her income was robust into her nineties.”

That said, the longer you wait (to a maximum age of 70), the greater your check will be – for the rest of your life.

“I think of it as longevity insurance,” Haas says. “I just went to somebody’s 100th birthday party. People are living longer.”

The right age for claiming Social Security benefits will depend on your health, family history, marital status and financial circumstances. Talking to a financial professional can help.

“Everybody is different,” Bunio says. “It’s all the more reason to really plan and think about: How much do you need for retirement?”

Kate Ashford is a columnist at NerdWallet. Email: [email protected]. Twitter: @kateashford.