Social Security Basics

The Social Security Retirement Benefits Program is an essential component of retirement planning. While it is not designed to fully replace your income after you stop working, it serves as a partial income replacement and offers a reliable source of monthly payments during retirement.

Eligibility for Social Security Benefits

To qualify for benefits, you must work and earn 40 credits, which is typically achieved by working and paying Social Security taxes for at least 10 years. In addition to qualifying through your own work history, you may also be eligible for benefits based on your spouse’s or ex-spouse’s work record.

When Can You Claim?

Once you meet eligibility requirements, you may apply for Social Security benefits anytime between the ages of 62 and 70. However, the age at which you choose to claim your benefits will significantly impact the amount you receive each month.

How Your Benefit Is Calculated

Your monthly benefit amount is calculated based on several factors: your earnings history, your birth year, and the age at which you claim. Specifically, Social Security uses your 35 highest-earning years to determine your benefit. Your birth year is also important, as it determines your full retirement age (FRA).

What Is Full Retirement Age?

Full retirement age is the point at which you are entitled to receive 100% of your calculated benefit. This age varies by birth year. You can confirm your specific FRA by visiting the official Social Security Administration (SSA) website.

Claiming Early or Late

If you claim benefits before reaching your FRA (any time between age 62 and FRA) your benefit amount will be permanently reduced. If you wait to claim benefits beyond FRA (up to age 70), you will receive a higher monthly benefit. Applying at exactly your FRA entitles you to the full benefit amount.

Other Factors Affecting Your Benefit

1. Tax Withholding
2. Continuing to Work After Claiming Benefits
3. Paying for Healthcare

Cost of Living Adjustments (COLA)

To help keep up with inflation, Social Security benefits are reviewed annually and may increase through cost-of-living adjustments, or COLAs. These increases ensure your purchasing power is maintained over time.

Spousal and Survivor Benefits

You may also be eligible to receive benefits based on your current or former spouse’s work record. The benefit amount from a spousal record is highest when claimed at your full retirement age and does not increase if claimed later.
If your spouse has passed away, you may qualify for survivor benefits starting at age 60, or at age 50 if you are disabled.

Get Help from the SSA

To ensure you make the most informed decision, it’s wise to schedule an appointment with a representative from the Social Security Administration. They can help you understand your options, clarify eligibility, and guide you through the process of maximizing your retirement benefit.

It may also be beneficial to consult with a financial advisor to ensure your investment choices align with your personal financial goals.