Read time: 7 to 8 minutes
Learn what it is, how to qualify for benefits, and when you can start collecting them.
- Your benefit
Find out why it pays to wait to collect your benefit and get an estimate of how much it may be.
- What can increase and decrease your benefit
Your marital status, Medicare, pensions, and more can affect your benefit amount.
- What’s ahead
The future of Social Security and how to apply for benefits.
How do I plan for Social Security?
When to start collecting your Social Security benefit is a big decision. It affects how much money you’ll receive for the rest of your life and how you’ll live your retirement dream.
Making this decision can feel a little overwhelming, but we’re here to help. We’ll walk you through some of the things you need to know so you can make a decision that will work best for your situation.
Let’s get started.
First, what is Social Security?
Social Security is a federal government program that provides a guaranteed monthly income adjusted for inflation for as long as you live.
When creating your retirement plan, be sure to include your monthly Social Security benefit as an income source. It may not replace all your income when you stop working, so it isn’t intended to be your total retirement package.
How do you qualify for Social Security?
When should you begin collecting benefits?
Thinking strategically about when to collect your Social Security retirement benefits is important. You can start collecting anytime between ages 62 and 70. But the longer you wait to claim benefits—up until age 70—the higher your monthly payments will be. If you think you can live comfortably off your savings while letting your benefits continue to increase, it could be advantageous to wait.
To make the best decision for your situation, you’ll need to know your full retirement age (FRA), which is the age at which you’ll be eligible to receive your primary insurance amount (full monthly benefit).
Note: Full retirement age, the age when your Social Security benefits aren’t decreased for retiring early, is based on your birth year. You can find your full retirement age on the Social Security Administration website. The primary insurance amount (PIA) is the monthly benefit that you’d receive if you claimed Social Security at your full retirement age. This amount is based on your highest 35 years of income, with earnings through age 60 indexed to reflect increases in U.S. workers’ average wage levels. You can find a more detailed look at the PIA formula on the Social Security Administration website.
The chart below shows an example of how your monthly benefit increases if you delay when you start to receive benefits.
Monthly benefit amounts differ based on the age you decide to start receiving benefits
This example assumes a benefit of $1,000 at a full retirement age of 67
Other important considerations
While determining when to collect your benefits, you’ll also want to take into account:
- Your marital status. Special rules apply to current, former, and widowed spouses claiming Social Security benefits. And strategies offer married couples; divorced or surviving spouses; and single workers the opportunity to maximize benefits throughout retirement and decrease longevity risk.
- If you plan to work in retirement. If you collect Social Security benefits between ages 62 and your FRA and you earn too much from wages, Social Security may temporarily reduce your benefits. But they won’t be lost. Once you reach your FRA, any benefits that were withheld will be returned to you in the form of higher monthly payments.
You can see the current limits on income here. Or to see how working for pay might lower your benefits, use Social Security’s Retirement Earnings Test Calculator.
Note: Longevity risk—also called “outliving your assets” or “outliving your savings”—is the possibility that you will live longer than the funds in your retirement savings, pensions, annuities or other retirement income stream.*
*Source: RetireGuide.com, August 2022
- Your investment income. If you think your savings can support you comfortably, or you’re still earning enough from working to meet your needs, you can delay claiming your benefits and allow them to increase. And unlike working for pay, money from savings or IRAs won’t directly reduce your benefits, though you’ll want to consider the potential for taxes being due (see below).
- Taxes: Your Social Security benefit amount is pre-tax. However, up to 85% of your Social Security benefits are included in the calculation of your federal adjusted gross income and may be subject to state income tax. Your retirement plan should account for this possible taxation, especially if you’ll be taking required minimum distributions from IRAs or if you’ll withdraw from an employer-sponsored plan during your retirement. We recommend you speak with your tax or financial advisor about your retirement plan.
How much money will you receive from Social Security?
The amount will vary depending on the year you were born, your lifetime earnings, and the age you begin receiving payments.
The easiest way to increase your monthly payment is to delay collecting. But there are other ways you may be able to increase your benefits. And while you’re strategizing ways to increase them, keep in mind there are things that can decrease your benefits as well.
It’s easy to see what your payment might be with Social Security’s Retirement Estimator. It uses your actual work history to estimate your monthly benefit payments at three different ages. You can see how much more you might get if you wait to take Social Security.
Social Security’s long-term prospects
Many people believe that Social Security will fail. Are they right?
Each year, independent experts examine the program’s finances. In their latest audit, they concluded Social Security has enough money to pay all benefits until the year 2037.2 But that doesn’t mean the program would fail. It could still pay approximately 76% of its promised benefits with just the money it collects in payroll taxes.
That would be a hardship for many retirees. But there is no expectation that Social Security payments will stop entirely. And in the meantime, politicians may find a way to fund it fully.
If you’d like more control over your future retirement income, consider saving more in your employer’s retirement plan or an IRA.
How to apply for Social Security
You can file online, over the phone, or in person at a local Social Security Administration office. You may need to produce these documents:
- Your Social Security card.
- An original birth certificate or other proof of your birth.
- A copy of your W-2 form or self-employment tax return for the previous year.
- Your marriage certificate.
- If you weren't born in the United States, proof of U.S. citizenship or lawful alien status.
1Source: Barrons.com, November 2022.
2Source: ssa.gov, May 2023.
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