As of October 2019, 69 million Americans were receiving some form of Social Security benefits — either Supplemental Security Income, Social Security or both.

The average Social Security monthly benefit is $1,358.03.

For many, Social Security benefits are used to augment other income or savings, and it is easy to lose sight of the fact those benefits come with strings attached.

But making good decisions when it comes to your Social Security benefits means you have to know what traps are out there that could cost you money every month.

Here are some social security traps you want to avoid:

Watch Out for Social Security Benefit Taxes

It’s a common misnomer that if you draw Social Security benefits as a retiree, you don’t pay taxes on them — wrong.

Social Security benefits is not free money.

The only time you don’t pay taxes on those benefits is if your adjusted gross income, nontaxable interest and half of your benefits are under $25,000 ($32,000 as a couple).

If your yearly income is between $25,000 and $34,000, you will pay income taxes on half your Social Security benefits. When your income hits $34,000 — here’s the shocker — you will pay income taxes on 85% of your Social Security benefits.

But there is a bright side to that.

“Many retirees are surprised to find that they have to pay taxes on up to 85 percent of the Social Security benefits they receive,” certified financial planner and Sensible Money CEO Dana Anspach told U.S. News & World Report. “The good news is, no matter what, 15% of the Social Security benefits you receive are tax-free.”

While that is good, you also have to understand what it means to earn additional income on top of those benefits and what it means in terms of taxes.

It’s OK to Wait to Collect Social Security Benefits

After working the better part of your adult life, when you hit 62 it’s easy to say: “I think I’ll retire now.”

Well, you certainly can, but you aren’t going to get your full Social Security benefits. In fact, your monthly benefit will be 30% less if you start taking it at 62 than if you wait until you are 67.

The other plus of waiting to collect your social security benefits is the cost of living adjustment (COLA). If you elect to take your Social Security benefits out early, your COLA will be on the lower amount. Waiting means you get a percentage increase of a higher amount.

Year Retired Max benefit at 62 Max benefit at 65 Max benefit at 66 Max benefit at 70
2017 $2,153 $2,542 $2,687 $3,538
2018 $2,158 $2,589 $2,788 $3,698
2019 $2,209 $2,757 $2,861 $3,770
2020 $2,265 $2,857 $3,011 $3,790

Source: Social Security Administration

You also have to understand how your Social Security benefits are calculated. Basically, the government uses your 35 highest-earning years to calculate how much you get. If you retire too soon, you might miss out on additional benefits, especially if your latter years are some of your highest for earnings.

If you happen to retire during your peak earning years and have only worked for a total of 32 years, your benefit calculation would include three years in which you earned $0,” said Dawn Doebler, a senior wealth adviser at The Colony Group, on

Check the Spousal Social Security Benefits

It tends to get overlooked because we think of our Social Security benefits in the individual sense, but there is a positive in drawing your spouse’s benefit.

Especially if your spouse has earned more over their 35 years than you have. You can receive Social Security benefits based on your earnings or one that’s 50% of your spouse’s.

What’s more, your spouse’s benefits won’t be impacted if you elect to collect a spousal benefit.

While Congress eliminated a provision allowing someone who reaches full retirement age from filing a restricted claim for spousal benefits in 2020, people born in 1953 or earlier can still use the strategy.

It means you can still claim half your spouse’s (or ex-spouse’s) full retirement age benefits while your benefits are delayed until you turn 70. At that point, you switch to your benefits, earning the full amount possible. But that’s only if you were born in 1953 or before. After that, you cannot defer your benefits like that.

But you have to remember, if your benefits are less than half your spouse’s, it would make sense to take them. Since you can’t take your benefits and your spouse’s at the same time, it is important to do your research so you know how much your spouse’s Social Security benefits are so you aren’t leaving money on the table.

• You can find all of the latest and most important news about Social Security here on Money and Markets.

For our friends: Anyone who wants to grow and protect their money in retirement needs to hear this. For the first time publicly, Bill O’Reilly comes clean about what happened to his money.