Top Five Things You Need to know about Social Security
Social Security is one of the most important retirement benefits available to Americans, yet it remains one of the most misunderstood. Whether you’re decades away from retirement or it’s just around the corner, understanding how Social Security works can help you make better financial decisions today. Below are the top five things everyone should know about Social Security—plus a bonus look at what the future might hold.
1. You Need 40 Credits to Qualify
Let’s start with the basics: To receive Social Security retirement benefits, you need to earn 40 work credits. These credits are earned through paying into the system via payroll taxes (FICA) or self-employment tax.
In 2025, you earn one credit for every $1,730 of earnings, and you can earn up to four credits per year. So, if you earn at least $6,920 in a single year, you’ll receive the maximum four credits.
The good news? These 40 credits don’t have to be earned consecutively. You could work part-time for several years or have breaks in your career and still qualify for benefits as long as you hit the 40-credit mark.
That’s why it’s critical to ensure that your income is reported correctly to the IRS, especially if you are self-employed or have multiple income sources.
2. Check Your Social Security Statement at SSA.gov
You don’t have to guess where you stand. The Social Security Administration (SSA) provides a helpful online tool to check your earnings record, track your accumulated credits, and estimate your future benefits. Just visit www.ssa.gov and create a My Social Security account.
Once logged in, you can:
Confirm your earnings history (important: report errors early!)
See how many credits you’ve earned
View estimated benefits for different claiming ages
Access calculators to model different scenarios
This should become a regular check-in—similar to reviewing your credit report. It's especially important to review after life events like job changes or extended career breaks.
3. Claiming Age Impacts How Much You Receive
Many people know you can start claiming Social Security at age 62, but fewer realize just how much your claiming age affects your monthly benefit.
Here’s the breakdown:
Claim at 62: Your benefits are reduced—by as much as 30%—for the rest of your life.
Full Retirement Age (FRA): For those born in 1960 or later, FRA is 67. Claiming at this age gives you your full monthly benefit.
Delay until 70: Your benefit increases by 8% per year for every year you delay past your FRA. By 70, you could receive up to 124% of your full benefit.
📊 Example: If your full benefit at 67 is $2,000 per month:
Claim at 62 → ~$1,400
Claim at 70 → ~$2,480
That’s a significant difference, and it's why many people consider delaying if it supports the rest of their retirement strategy.
4. Be Strategic About When You Claim
Timing isn’t just about maximizing your monthly payment—it should be a personalized strategy that accounts for several factors:
Health and longevity: If you expect a shorter lifespan, claiming earlier might make sense. If you’re in good health and have a family history of longevity, waiting could pay off.
Are you still working? If you claim benefits before FRA and earn over a certain amount ($22,320 in 2024), your benefits could be temporarily reduced.
Marital status: Spouses, divorcees (married 10+ years), and survivors may be entitled to benefits based on a partner’s record.
Taxes: Depending on your overall income, up to 85% of your Social Security benefits may be taxable.
The “right” claiming strategy depends on your life, your needs, and your long-term goals—not just a one-size-fits-all formula.
5. What’s the Future of Social Security?
You’ve likely heard warnings about Social Security running out of money. Here’s the truth: Social Security is not going bankrupt, but changes are expected.
Currently, the Social Security Trust Fund is projected to be depleted around 2034–2035. After that, payroll taxes will continue to fund the system, but benefits may need to be reduced—potentially to 75–80% of scheduled payments.
What does this mean for you?
· An optimistic approach assumes you’ll receive your full benefit.
· A conservative approach plans for 70–80% of that number and supplements the rest with personal savings or investments.
Either way, staying informed and proactive in your planning is the best defense.
Final Thoughts
Social Security will likely be a foundational part of your retirement plan, but how much it supports you depends on the decisions you make today. Know your credits, understand your options, check your account regularly, and don’t leave it to chance.
If you haven’t already, take five minutes this week to set up your My Social Security account at www.ssa.gov. It’s the best starting point for building your strategy with confidence (and to prevent fraud on your account).
Are you a public sector employee who also has a pension? Find out what the end of the Windfall Elimination Provision means for you!
*Disclaimer: This is for informational and educational purposes only. It is not intended to constitute investment, legal, tax, or financial advice. The model does not provide specific recommendations for any individual and should not be relied upon as the sole basis for making investment decisions. Past performance is not indicative of future results. The projections and calculations presented in this model are based on certain assumptions, which may not materialize. Actual investment results may vary significantly from those illustrated.Investing in securities involves risks, including the potential loss of principal. The model does not consider individual risk tolerance, financial situation, or investment objectives. Participants should assess their own financial circumstances before making any investment decisions.
