Social Security Benefits Explained
Social Security is the foundation of retirement income for most Americans, providing benefits to over 67 million people. Yet many workers don't fully understand how it works or how to maximize their benefits.
How Social Security Works
Social Security is funded through payroll taxes (FICA). Workers and employers each pay 6.2% of wages up to the annual taxable maximum ($168,600 in 2026). You need 40 credits (roughly 10 years of work) to qualify for retirement benefits.
How Your Benefit Is Calculated
Your benefit is based on your highest 35 years of earnings, adjusted for inflation. If you worked fewer than 35 years, zeros are averaged in for missing years, reducing your benefit.
Full Retirement Age (FRA)
- Born 1960 or later: FRA is 67
- Born 1955-1959: FRA is between 66 and 67
- Born 1954 or earlier: FRA is 66
When to Claim
Claiming Early (Age 62)
Benefits are permanently reduced — by up to 30% if your FRA is 67. May make sense if you need income or have health concerns.
Claiming at Full Retirement Age
You receive 100% of your calculated benefit.
Delaying Past FRA (Up to Age 70)
Each year you delay past FRA increases your benefit by 8%. Waiting from 67 to 70 boosts your benefit by 24%.
Spousal Benefits
Married spouses may receive up to 50% of their spouse's benefit. Divorced spouses may also qualify if the marriage lasted at least 10 years.
Survivor Benefits
A surviving spouse can receive up to 100% of the deceased spouse's benefit, depending on claiming age.
Taxation of Benefits
- Individual income under $25,000: No tax on benefits
- $25,000 - $34,000: Up to 50% may be taxable
- Over $34,000: Up to 85% may be taxable
Strategies to Maximize Benefits
- Work at least 35 years to avoid zeros in your calculation
- Delay claiming if you can, especially until 70
- Coordinate with your spouse — one might claim early while the other delays
- Continue working — higher recent earnings can replace lower earlier years
- Check your statement at ssa.gov annually for errors
The Future of Social Security
The trust fund is projected to be depleted around 2035, after which the program could pay about 80% of scheduled benefits from ongoing revenue. Benefits likely won't disappear, but some combination of reductions, tax increases, or age changes is likely. Don't count on Social Security as your only retirement income.
