It’s never too early to plan for retirement, and part of the process is learning the basics of Social Security. That means familiarizing yourself will eligibility requirements, understanding how to maximize your benefit, and estimating how much money you will receive each month.
Here’s what you should know.
Are you eligible for Social Security retirement benefits?
Eligibility for Social Security retirement benefits is determined by two things: credits and age.
You must have 40 credits in order to receive Social Security, which is generally equivalent to 10 years of work. That being said, credits are actually doled out based on wages. For example, employed persons will earn one credit for each $1,510 they earn this year, up to a total of four credits for $6,040. The maximum is always capped at four credits per year, but the per-credit dollar amount increases slightly each year.
If you can check that first box, the next criterion is age. You can start receiving Social Security retirement benefits at age 62, even if you are still working. To be more precise, you can start receiving benefits during the first month in which you are 62 years old for the entire month, and you can apply for Social Security up to four months before you want the benefits to start.
Importantly, the age at which you claim retirement benefits has a big impact on how much money you receive each month.
How can you maximize your monthly Social Security benefit?
The first step in deciding when to claim Social Security is knowing your full retirement age (FRA). That is the age at which you are eligible to receive your full benefit. The chart below shows the FRA for individuals born after 1942.
Full Retirement Age (FRA)
66 years and 2 months
66 years and 4 months
66 years and 6 months
66 years and 8 months
66 years and 10 months
If you claim Social Security prior to your FRA, your monthly benefit will be permanently reduced by a certain percentage. The extent of the reduction varies based on how far in advance of your FRA you start receiving benefits. The largest reductions are imposed on individuals who claim benefits at age 62.
The chart below illustrates that concept for an individual born in 1960.
Age When Claiming Social Security
Monthly Benefit Reduction
62 years old
63 years old
64 years old
65 years old
66 years old
67 years old
The system works similarly in reverse. If you claim Social Security retirement benefits after your FRA, your monthly payout will increase based on how long you delay benefits. For individuals born after 1942, the monthly benefit jumps 8% per year, which means waiting three years beyond your FRA to claim Social Security would increase your monthly payout by a hefty 24%. In that scenario, you would receive 124% of your full benefit.
With that in mind, maximizing your Social Security check is a straightforward process: You simply need to wait until age 70 to claim retirement benefits.
How much Social Security income should you expect each month?
Social Security income is based on lifetime earnings. Your monthly benefit will be calculated using wage data from the 35 years during which you made the most money. That means the payout will vary from person to person. However, because there is a limit on the income subject to Social Security tax — in 2022, the max is $147,000 — there is also a limit on monthly benefits.
This year, the maximum monthly payout is $3,345 for individuals who claim benefits at FRA. But that figure drops to $2,364 for individuals who claim benefits at age 62, and it increases to $4,194 for individuals who claim benefits at age 70. Remember, those numbers represent the maximum monthly payout, and to be eligible for the top payout, your income would have to exceed the taxable limit for 35 years.
It’s also worth considering another metric. The average benefit paid to retired workers was $1,670 in July 2022, which works out to roughly $20,000 per year. But if you want an exact figure, the best way to get that information is to use the benefits calculators made available by the Social Security Administration.
As a final thought, Social Security alone is not a sufficient retirement plan, at least not if you want to live comfortably. So it’s important to understand how much money you need to retire before making any big decisions.
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