How you qualify
You earn Social Security coverage through payroll taxes. You and your employer each pay 6.2 percent of your wages, up to an annual earnings cap that rises most years, and the self-employed pay both halves. Work earns you credits, up to four a year, and forty credits, which is about ten years of work, qualifies you for a retirement benefit. The same record also backs disability benefits if you become unable to work and survivor benefits for a spouse and minor children if you die, which makes it a good deal more than a retirement program for a worker of thirty.
How the benefit is figured
The agency adjusts each year of your past earnings for wage growth, takes the highest thirty-five years, and averages them. Any year short of thirty-five enters as a zero, so a career of twenty-eight years is averaged with seven zeros. The formula is progressive. It replaces a larger share of income for lower earners than for higher earners, and for an average earner it replaces roughly forty percent of pre-retirement pay. Benefits then rise with an annual cost-of-living adjustment.
When to claim
Full retirement age is sixty-seven for everyone born in 1960 or later. You may claim as early as sixty-two, at a permanent reduction of about thirty percent, or delay as late as seventy, which adds eight percent for each year past full retirement age. On a full benefit of $2,000 a month, that is the difference between about $1,400 and $2,480 for life. A current or former spouse can receive up to half of a worker's full benefit if that exceeds their own, and a divorced spouse qualifies if the marriage lasted at least ten years.
Whether it will be there
The program's trustees project that its reserves will run out in the early to middle 2030s unless Congress acts. That does not mean benefits go to zero. Payroll taxes would continue to arrive and would cover roughly three-quarters to four-fifths of scheduled benefits. A sensible plan for someone under forty assumes a reduced benefit and not an absent one.
Check your record
Create a my Social Security account on the agency's website and read your earnings history. The benefit is computed from that record, employers make reporting errors, and a missing year is easy to fix with an old W-2 and much harder to fix thirty years later.
Tip If you are self-employed, remember that income you leave off a tax return never reaches your earnings record. Under-reporting to save tax today also shrinks the benefit later.
