Social Security Retirement Benefits

Social Security benefits are a vital part of retirement income for nine out of ten Americans, 65 years of age and older. As you near retirement age, it’s important to understand how to incorporate Social Security benefits into your overall retirement plan and exactly when to claim your benefits.

Terry Turner, Financial writer for Annuity.org
  • Written By
    Terry Turner

    Terry Turner

    Senior Financial Writer and Financial Wellness Facilitator

    Terry Turner is a senior financial writer for Annuity.org. He holds a financial wellness facilitator certificate from the Foundation for Financial Wellness and the National Wellness Institute, and he is an active member of the Association for Financial Counseling & Planning Education (AFCPE®).

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  • Edited By
    Savannah Pittle
    Savannah Pittle, senior financial editor for Annuity.org

    Savannah Pittle

    Senior Financial Editor

    Savannah Pittle is an accomplished writer, editor and content marketer. She joined Annuity.org as a financial editor in 2021 and uses her passion for educating readers on complex topics to guide visitors toward the path of financial literacy.

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  • Financially Reviewed By
    Rubina K. Hossain, CFP®
    Rubina K. Hossain

    Rubina K. Hossain, CFP®

    Client Advisor for MEIRA

    Certified Financial Planner Rubina K. Hossain is chair of the CFP Board's Council of Examinations and past president of the Financial Planning Association. She specializes in preparing and presenting sound holistic financial plans to ensure her clients achieve their goals.

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  • Updated: August 21, 2023
  • 8 min read time
  • This page features 18 Cited Research Articles
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APA Turner, T. (2023, August 21). Social Security Retirement Benefits. Annuity.org. Retrieved May 28, 2024, from https://dev.annuity.org/retirement/social-security/

MLA Turner, Terry. "Social Security Retirement Benefits." Annuity.org, 21 Aug 2023, https://dev.annuity.org/retirement/social-security/.

Chicago Turner, Terry. "Social Security Retirement Benefits." Annuity.org. Last modified August 21, 2023. https://dev.annuity.org/retirement/social-security/.

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Key Takeaways

  • Eligibility for Social Security retirement benefits requires that you earn 40 work credits, equating to 10 years of work and paying Social Security taxes.
  • Benefit amounts vary based on your average lifetime earnings, the age at which you claim them and your work history.
  • Full retirement age varies based on birth year, ranging from 65 to 67 years of age.
  • Delaying retirement up to the age of 70 can increase benefits.
  • Social Security trust funds may run short of cash by 2033; however, potential changes by Congress could secure funding for the future.

What Is Social Security?

The U.S. Social Security Administration (SSA) estimates that more than 67 million Americans receive monthly Social Security benefits. This adds up to more than one trillion dollars annually. As of the end of 2022, nearly 90% of Americans aged 65 and older were receiving Social Security. 

The program was created during the Great Depression and serves four main purposes, according to the SSA:

  • Providing for the material needs of individuals and families
  • Protecting aged and disabled persons against the cost of illnesses that use up their savings
  • Keeping families together
  • Giving children the chance to grow up healthy and secure

“Social Security is the foundation of a sustainable or successful retirement income,” Marguerita M. Cheng, CEO of Blue Ocean Global Wealth said during an Annuity.org webinar. “There’s lifetime income, it’s inflation-adjusted.”

Who Can Claim Social Security Retirement Benefits?

If you’re 62 years of age or older, have a disability or blindness, and have earned sufficient work credits, you can receive Social Security benefits based on your earnings record. 

Your family members who qualify for benefits on your work record don’t require work credits.

Work credits are the building blocks that Social Security uses to determine if you’ve worked enough to be eligible for each type of benefit. In 2023, you earn one work credit for each $1,640 of earnings that you pay Social Security taxes on — up to the limit of four credits per year. 

To be eligible for Social Security retirement benefits, you must earn 40 credits – equating to 10 years of working and paying Social Security taxes.

How Much Does Social Security Pay?

The amount you will receive in Social Security benefits depends on your average lifetime earnings, the age at which you start receiving benefits and your work history – which can vary significantly from person to person. 

You can begin receiving social security benefits when you turn 62 years old. But you’ll receive full benefits if you wait until your full retirement age — which varies depending on when you were born. 

Full Retirement Age

BIRTH YEAR SOCIAL SECURITY FULL RETIREMENT AGE
1937 or earlier 65
1938 65 and 2 months
1939 65 and 4 months
1940 65 and 6 months
1941 65 and 8 months
1942 65 and 10 months
1943 to 1954 66
1955 66 and 2 months
1956 66 and 4 months
1957 66 and 6 months
1958 66 and 8 months
1959 66 and 10 months
1960 or later 67
Source: U.S. Social Security Administration

You’ll draw even higher benefits if you put off your retirement until age 70. However. regardless of age, there is a maximum limit to how much you can draw each month.

Maximum Monthly Social Security Benefits by Age in 2023

AGE MAXIMUM MONTHLY BENEFIT
62 $2,572
Full Retirement (67 for people born in 1960 or later) $3,627
70 $4,555
Source: U.S. Social Security Administration

To get an accurate estimate of your benefits, you can create an account on the Social Security Administration’s website or contact your local SSA office.

Social Security COLAs and Inflation

Social Security relies on cost-of-living adjustments — or COLAs — to help benefits keep up with inflation. For example, the SSA raised Social Security benefits by 8.7% in 2023.

COLAs increase benefit payments as inflation rises, giving retired individuals more purchasing power. This helps safeguard them against the adverse effects of inflation on their fixed income. 

“A $1,000 purchase in 2003 would cost $1,661 today,” Cheng said. “Having Social Security, which provides inflation-adjusted lifetime income, can be really helpful.”

Typically, COLAs are based on the Consumer Price Index for Urban Wage Earners and Clerical Workers — or the CPI-W. But COLAs don’t always keep pace with inflation. The 5.9%  COLA in 2022 fell short of inflation since the beginning of the COVID-19 pandemic by an average of $1,054, according to a study from the Senior Citizens League.

While COLAs may not fully offset the impact of inflation, they remain a crucial mechanism that offers some financial stability to retirees.

When Should You Apply for Social Security

The best time to start drawing Social Security retirement benefits varies from person to person.

“The decision when to take Social Security is financial, but not just financial — there’s also personal circumstances,” Cheng said.

Your health, employment situation, whether you serve as a caregiver to your spouse or any number of other personal factors can impact when you choose to start taking Social Security benefits.

But the sooner you take them, the lower your monthly benefit checks will be. This, Cheng said, is because the Social Security Administration wants to make sure that somebody who’s taking benefits at the age of 62 receives the same amount over their expected lifetime as somebody who defers to their full retirement age.

“So when you start taking benefits at 62, and then you reach full retirement age, your benefit doesn’t just increase, you’re locking into the lower amount,” she said.

How Do You Apply for Social Security Retirement Benefits?

You can apply for Social Security retirement benefits up to four months before you want to start receiving them. 

But there are some things to consider before you start the process that may affect your retirement plans. These include determining the best time for your retirement and how long it will take to process your application. 

8 Steps To Apply for Social Security

Gather Necessary Information 
Collect your Social Security number, birth certificate and other relevant documents.
Review Eligibility 
Check your eligibility for retirement benefits on the Social Security Administration (SSA) website.
Decide on the Timing
Determine the most suitable age to start receiving benefits: early, full retirement age or delayed retirement. This affects how much you’ll receive each month.
Apply Online, by Phone or In Person
Apply for benefits online through the SSA website, call SSA at 1-800-772-1213 (TTY 1-800-325-0778 or visit a local Social Security office. Call the local office to make an appointment before you go in person.
Complete the Application
Fill out the retirement benefits application accurately.
Include Supporting Documents
Submit any required documents (along with the application) such as your birth certificate or a marriage license.
Await Decision
The SSA will process your application and notify you of their decision and benefit amount usually within six weeks.
Start Receiving Benefits
Once approved, you’ll start receiving your Social Security retirement benefits as scheduled.

Social Security for Married Couples

Social Security benefits are a vital consideration for couples who are nearing retirement age and planning their finances. 

In situations where one partner earns less than the other, they may choose to base their benefits on the higher-earning partner, which could provide up to 50% of their benefit amount. 

The timing of claiming these benefits is crucial since claiming too early may result in long-term income reduction. 

It’s important to assess overall retirement savings and other sources of income to determine how Social Security benefits fit into your retirement plan. 

Optimal strategies may involve both partners claiming benefits at full retirement age or utilizing a “split strategy,” where the higher-earning partner waits to claim Social Security for potentially higher benefits.

Delayed retirement credits can significantly increase benefits if both partners are in good health and willing to continue working. 

Seeking guidance from a financial advisor can help navigate the complexities of Social Security and create a personalized strategy based on your individual circumstances and goals.

Social Security for Surviving Spouses

Survivor benefits are designed to maximize Social Security benefits for a widow or widower.

“You can’t collect more than one benefit at the same time, but you can receive a benefit based on your spouse’s working history,” Cheng said.

The amount of the benefit you receive will depend on your age and the amount of your and your spouse’s benefit. If one spouse dies, the surviving spouse is entitled to the larger benefit. 

Cheng used her parents as an example. Her father is 14 years older than her mother and their work histories mean that her father will receive a larger Social Security benefit. Regardless of which parent passes first, one source of income will go away.

“The smaller Social Security check will go away because the only way they can receive both checks is while they are alive on this earth,” she said.

If you have reached full retirement age, you can receive 100% of your late spouse’s benefit, but the amount will be lower if you claim it earlier. Additionally, you may be eligible for a one-time death benefit of $255. 

There are exceptions for military duty-related deaths or if you are caring for young or disabled children. 

You can’t apply for survivor benefits online or over the phone. You must apply in person at your local Social Security office. You will need to call ahead to make an appointment.

When Will Social Security Run Out of Money?

Social Security may run short of cash — but not necessarily out of money — as early as 2033, according to a 2023 report from the Social Security Board of Trustees.

Social Security benefits come from two trust funds: one for retirement benefits and another for disability benefits. But since 2021, more money has been going out than has been coming in. This is due, in part, to a large number of people from the Baby Boom generation reaching retirement age.

If Congress does not make changes to the current funding methods for Social Security, the trust funds will run out of their excess reserves by 2033. Starting in 2034, SSA would only be able to pay 77% of a retiree’s full benefits, according to the trustees.

But Congress could act well before then to shore up funding for Social Security. There are different options Congress may consider, such as bumping the full retirement age to 70. 

Another option would be raising the wage cap. Currently, no one pays Social Security taxes on any income over $160,000. Congress could raise that to bring in more money for Social Security.

It could also raise the FICA tax: the payroll tax deducted from your paycheck to pay for Social Security and Medicare.

Editor Malori Malone contributed to this article.

Please seek the advice of a qualified professional before making financial decisions.
Last Modified: August 21, 2023

18 Cited Research Articles

Annuity.org writers adhere to strict sourcing guidelines and use only credible sources of information, including authoritative financial publications, academic organizations, peer-reviewed journals, highly regarded nonprofit organizations, government reports, court records and interviews with qualified experts. You can read more about our commitment to accuracy, fairness and transparency in our editorial guidelines.

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