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Retirement Planning

On average, retirement beneficiaries receive 40% of their pre-retirement earnings from Social Security. As you build your retirement plan, knowing the approximate amount you'll receive in Social Security benefits can help you determine how much other retirement income you'll need to reach your goals.

We want you to know what Social Security can mean to you and your family's financial future. In this section, you can learn how Social Security works, who is eligible for retirement benefits, and what to consider before you apply. Read on to understand how Social Security fits into your retirement plan.

How Retirement Benefits Work

Social Security replaces a percentage of your pre-retirement earnings based on your lifetime earnings. The portion of your pre-retirement wages that Social Security replaces is based on your highest 35-year earnings and varies depending on how much you earn and when you choose to start receiving benefits.

When you work, you pay Social Security taxes. We use tax money to pay benefits to:

  • People who have already retired.
  • Disabled people.
  • Survivors of deceased workers.
  • Dependents of beneficiaries.

The money you pay in taxes is not put in a personal account for you to use when you receive benefits. We use your taxes to pay people who are receiving benefits right now. Any unused money goes into the Social Security trust fund that pays monthly benefits to you and your family when you start receiving retirement benefits.

Retirement Planning

 Planning is the key to creating your best retirement. You will need to plan and save for years to reach your retirement goals. While many factors affect retirement planning, we want you to understand what Social Security can mean for you and your family's financial future.

Social Security should be only one part of your retirement plan.

On average, retirement beneficiaries receive 40% of their pre-retirement earnings from Social Security. As you build your retirement plan, knowing the approximate amount you'll receive in Social Security benefits can help you determine how much other retirement income you'll need to reach your goals.

Are you Eligible?

When you work and pay Social Security taxes, you get “credits” toward Social Security benefits. The number of credits you need to get retirement benefits depends on when you were born. If you were born in 1929 or later, you need 40 credits (usually this is 10 years of work).

If you stop working before you have enough credits to qualify for benefits, the credits will stay on your Social Security record. If you return to work later, more credits may be added. We cannot pay any retirement benefits until you have 40 credits. Visit our retirement benefits webpage to learn more about how Social Security Credits work.

Check your Earning History

The amount of Social Security benefits you or your family receive depends on the amount of income shown on your record. Regularly checking your Social Security earnings history can help make sure there are no surprises when it's time to start receiving benefits. You can find your earnings history with a personal my Social Security account. Create your account now to check your earnings history online.

Calculate your Benefits

Knowing what you will receive each month in retirement benefits will help you plan for retirement. If you have a my Social Security account, you can get an estimate of your personalized retirement benefits and see the effects of different retirement age scenarios. If you don't have a personal My Social Security account, create one at www.ssa.gov/myaccount or you can use our online Retirement Estimator at www.ssa.gov/benefits/retirement/estimator.

Deciding When to Begin Retirement Benefits

Choosing when to start receiving retirement benefits is a personal decision. If you choose to retire and start receiving benefits when you reach your full retirement age, you will receive the full amount of your benefits. We will reduce your benefit amount if you decide to start receiving benefits before you reach full retirement age.

To make an informed decision, consider the following factors when thinking about when to start receiving Social Security benefits.

At What Age Should I Start Receiving Benefits?

The age at which you start receiving your retirement benefit affects the amount of your monthly benefits. There are three important things to know about age when thinking about when to start receiving benefits.

  • full retirement age

Full retirement age is the age at which you can begin receiving the full amount of your retirement benefit. Full retirement age is 66 if you were born between 1943 and 1954. Full retirement age increases gradually if you were born between 1955 and 1960, until you reach 67. For anyone born in 1960 or later, full retirement benefits are paid at age 67. You can find your full retirement age by year of birth in the full retirement age table.

Early Retirement Age

You can get Social Security retirement benefits starting at age 62. However, we will reduce your benefit if you start receiving benefits before your full retirement age. Visit our website to learn how claiming early retirement benefits will affect your benefit amount.

Delayed Retirement Age

When you delay benefits beyond your full retirement age, your retirement benefit amount will continue to increase until age 70. There is no incentive to delay claiming after age 70.

What Else Affects Your Retirement Benefits

Everyone's retirement is unique. Beyond deciding when to start receiving retirement benefits, other factors that can affect your benefits include whether you continue to work, what type of job you had, and whether you have a pension from certain jobs.

Keep working

You can choose to continue working beyond your full retirement age. Doing so may increase your future Social Security benefits. Each additional year you work adds another year of earnings to your Social Security record. Higher lifetime earnings can mean higher benefits when you choose to receive them.

Specific Types of Earnings

Although Social Security earnings are calculated the same way for most American workers, there are some types of earnings that have additional rules.

Types of winnings with special rules include:

  • farm work
  • Federal government employment
  • home employment
  • Military service
  • Religious or non-profit organizations
  • railroad profits
  • self-employment
  • State and local government labor wages
  • Work outside of the United States
  • Pensions and other factors

Pensions and taxes have the potential to affect your retirement benefit. Review the resources below on pensions and other factors to consider:

  • Unexpected Elimination Provision (WEP): If you have a pension from a job for which you didn't pay Social Security taxes, this policy may reduce your retirement benefits.
  • Government Pension Offset (GPO) – This policy affects benefits as a spouse, widow or widower if you have a pension from a government job for which you did not pay Social Security taxes.
  • Income taxes and your Social Security benefits: You may have to pay federal income taxes on your Social Security benefits in certain situations.
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