As Americans approach retirement, Social Security stands as a vital lifeline for millions, offering an income stream that many depend on to maintain their quality of life. However, maximizing these benefits is far more complex than simply filing and waiting for checks to roll in. Understanding how the system works and making informed decisions can impact the monthly amount you receive.
- Know Your Full Retirement Age (FRA)
Your Full Retirement Age (FRA) is the age at which you qualify to receive 100% of the benefits you’ve earned over your working life. For those born between 1943 and 1954, FRA is 66, while it gradually rises to 67 for those born in 1960 or later. The key takeaway is that claiming benefits before your FRA can reduce your monthly payout by up to 30%. On the other hand, waiting until age 70 increases your benefit by 8% annually beyond FRA, thanks to delayed retirement credits.
- How do you become eligible for Social Security benefits?
To qualify for Social Security, you need to earn at least 40 credits, with a maximum of four credits per year. In 2024, one credit is earned for every $1,640 in wages, meaning it takes at least 10 years of work to accumulate the credits needed for eligibility. These credits ensure you’re entitled to retirement, disability, or survivor benefits.
- How are your Social Security benefits calculated?
Your Social Security benefit is based on your highest 35 years of earnings. If you worked fewer than 35 years, zeros will be averaged in, reducing your benefit. This formula means that even part-time work during retirement can increase your monthly check by replacing low- or zero-income years with higher earnings. The maximum benefit in 2024 for someone retiring at full retirement age is $3,882 per month, but it can go as high as $4,018 in 2025, depending on inflation adjustments.
- There’s an annual Social Security Cost-of-Living Adjustment (COLA)
Social Security benefits are adjusted annually for inflation through a Cost-of-Living Adjustment (COLA). For 2025, the COLA is projected to be 2.5%, following a 3.2% adjustment in 2024. COLA ensures that your Social Security check retains its purchasing power even as prices for goods and services rise. This adjustment is tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), reflecting broader inflation trends.
- Your monthly Social Security benefits increase the longer you wait to claim
While you’re eligible to claim Social Security as early as age 62, delaying can be financially advantageous. For every year you delay filing past your full retirement age, your benefit grows by approximately 8%, up until age 70. For example, if your full retirement age is 66 and you wait until age 70 to claim, your benefit could be 32% higher than if you had claimed at FRA. This increase, known as delayed retirement credits, can have a huge impact on your retirement finances, particularly if you have a long life expectancy.
- There’s a Social Security spousal benefit
Marriage provides Social Security advantages in the form of spousal and survivor benefits. A spouse can claim up to 50% of the other spouse’s benefit, provided the higher-earning spouse has filed for Social Security. If you’re widowed, you may qualify for up to 100% of your deceased spouse’s benefit. It’s also important to note that divorced individuals can claim spousal benefits if the marriage lasted at least 10 years, and they’re currently unmarried.
- Beware the Social Security earnings test
If you continue to work after claiming Social Security benefits early (before full retirement age), you could face benefit reductions. In 2025, for instance, if you earn more than $23,400 per year, $1 of benefits will be withheld for every $2 you earn over that limit. Fortunately, once you reach full retirement age, this earnings test no longer applies, and Social Security will recalculate your benefits, taking into account any amounts previously withheld.
- You may have to pay taxes on Social Security benefits
Although many think Social Security benefits are tax-free, this isn’t always the case. If your provisional income (your adjusted gross income plus nontaxable interest and half of your Social Security benefits) exceeds $25,000 for single filers or $32,000 for joint filers, up to 85% of your Social Security benefits could be taxed. “About 40% of beneficiaries currently pay taxes on their benefits, and that number is expected to increase as income thresholds haven’t been adjusted for inflation,” according to the Social Security Administration.
- Other pensions might reduce your Social Security benefits
If you’ve worked in a job that didn’t withhold Social Security taxes, such as certain government positions, the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO) may reduce your benefits. WEP reduces your benefits, while GPO impacts spousal and survivor benefits, sometimes by up to two-thirds of the amount of your pension.
- You can undo a Social Security benefits claiming decision
Social Security allows for a rare do-over if you regret filing too early. If you’re within 12 months of filing, you can withdraw your claim, repay all benefits received, and restart later with a higher payout. However, this option is only available once. After the 12-month window, you can still suspend benefits once you reach full retirement age, allowing your future benefits to grow until age 70.
- There are Social Security survivor benefits for spouses and children
When a spouse dies, the surviving spouse can claim a survivor benefit. The amount depends on the age at which the survivor begins claiming the benefit. Children under 18, or disabled before age 22, are also eligible for survivor benefits worth up to 75% of the deceased’s benefit. However, remarriage before age 60 can disqualify you from these benefits, although remarrying after age 60 preserves your eligibility.
- You can claim Social Security benefits earned by your ex-spouse
Divorce doesn’t disqualify you from claiming Social Security based on your ex-spouse’s earnings record. If you were married for at least 10 years and are currently unmarried, you can claim up to 50% of your ex’s benefit. This doesn’t reduce your ex’s benefit, and they don’t need to know you’ve claimed. Interestingly, you can even claim survivor benefits if your ex-spouse dies, provided you haven’t remarried before age 60.
