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The Basics of Social Security Retirement Benefits

Get the answers to common Social Security questions to better plan and prepare for your retirement.

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If you’ve worked for many years, you might be champing at the bit to start an exciting new phase of your life: retirement. But before you give final notice to your employer, make sure you know all the key details about your Social Security retirement benefits.

What is Social Security?

The Social Security Act of 1935 established federal retirement benefits that are distributed monthly to Americans who paid Social Security taxes and earned Social Security credits during their working years. The Social Security Administration (SSA) also provides benefits to disabled persons and to spouses and other eligible survivors of deceased persons who earned Social Security credits.

How are Social Security credits earned?

Each year, you can earn a maximum of four Social Security credits by working and paying Social Security taxes, which are listed as part of the Federal Insurance Contributions Act, or FICA, withholdings on your paycheck. The amount of income needed to earn a credit changes annually and is published on In 2023, it takes $1,640 in eligible income to earn one credit and at least $6,560 to earn all four allowable annual credits.

To qualify for retirement benefits, you must accumulate 40 credits over your working life. This is the equivalent of 10 years earning the maximum number of credits.

How much will I receive and will it cover all my retirement expenses?

By creating a My Social Security account, you can see a history of your earnings, verify that they are correct and get an estimate of your monthly Social Security retirement benefits based on your earnings.

Bear in mind that Social Security benefits are only meant to make up part of your post-work income. When planning for your retirement, the general rule of thumb is that you will need about 70% of your pre-retirement earnings to maintain your current standard of living.

Social Security retirement benefits generally replace only about 40% of that sum, which means the other 30% needs to come from other sources. This may include a pension if any of your employers offered one, as well as any cash you’ve saved in high-yield savings accounts and term accounts and money you’ve invested in things like 401(k)s, 403(b)s, IRAs, mutual funds, Series I-Bonds or other investments.

When can I start collecting Social Security for retirement?

You have three options for when you can start collecting your Social Security retirement benefits. The age you choose determines how much you get each month. The longer you wait, the bigger your check.

  • Early Retirement: Regardless of your full retirement age, you may start collecting your benefits as early as age 62. However, this can permanently reduce your monthly check by as much as potentially 30% to account for the number of months you receive benefits before you reach your full retirement age.
  • Full Retirement: Full retirement age for people born before 1938 was age 65. Due to greater life expectancies, the full retirement age is increasing gradually and will reach age 67 for those born in 1960 or later. Collecting your Social Security benefits at your full retirement age ensures you receive your full benefits.
  • Delayed Retirement: If you continue to work and wait to collect your benefits until as late as age 70, your Social Security benefit increases by a certain percentage, which depends on your year of birth. Each additional year of work also adds another year of earnings to your Social Security record, and higher earnings may result in higher benefits, although there is a maximum allowable benefit.

Who may receive benefits?

Retirement benefits are for anyone who worked and earned enough credits to qualify as well as for qualifying members of their family. This includes:

  • Widows or widowers
  • Current and former spouses of retirement age
  • Spouses under retirement age (as long as certain criteria are met)
  • Minor children and adult disabled children

Spousal benefits top out at 50% of the other spouse’s benefit amount, meaning if one spouse didn’t work or earn enough Social Security credits to qualify on their own, they can receive a Social Security benefit up to 50% of the working spouse’s benefit amount.

In the case of two qualifying working spouses, each will receive benefits based on their own earnings history, unless one’s benefit amount is less than 50% of the other’s. In that case, the former will receive the 50% spousal maximum benefit instead of their own lower benefit amount.

What is COLA?

Every year, the SSA considers inflation’s effect on retirement benefits based on the federal Consumer Price Index and adjusts them accordingly through a Cost-of-Living Adjustment, or COLA. In years with low inflation, such as 2010 and 2011, there was a 0% COLA, but in 2023 when inflation was high, there was an 8.7% COLA. Toward the end of each year, the SSA announces the COLA for the upcoming year.

How do I apply for my Social Security benefits?

When you’re ready, there are several ways to apply for your Social Security benefits:

You can complete the application process up to four months prior to when you want your Social Security benefits to start. To ensure there is no delay, it pays to take advantage of this proactive option.

Looking for a savings option that lets you lock in a high APY? Check out our top-of-market term savings accounts (similar to CDs).

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CUNA 2023 diamond award trophy icon

CUNA 2023 Diamond Award Winner

Financial Education

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