You can start receiving benefits anytime between the ages of 62 and 70, but which option makes the most financial sense?
One of the most important things to understand about Social Security is how your benefits are calculated. Social Security isn't a one-size-fits-all program. The amount you'll receive each month depends on factors like how long you've worked, how much you've earned, and when you decide to claim your benefits. Understanding how your benefits are determined and when you're eligible to collect can make a big difference in your financial future.
Let's take a look at how Social Security benefits are calculated, who qualifies for them, and how to maximize what you receive.
How Are Social Security Benefits Calculated?
Your Social Security benefit is based on your highest 35 years of earnings. If you worked for fewer than 35 years, the Social Security Administration (SSA) will count some years as zero, which can lower your overall benefit. On the other hand, if you've worked for more than 35 years, only your highest-earning years will be counted.
The SSA adjusts your earnings for inflation and averages your top 35 years of income to calculate your Average Indexed Monthly Earnings (AIME). Once that's determined, they use a formula to calculate your Primary Insurance Amount (PIA) - the base benefit you're entitled to at your Full Retirement Age (FRA).
The formula is progressive, meaning lower earners receive a higher percentage of their income as benefits than higher earners. But don't worry about the math - the SSA handles that for you. The key takeaway is that working longer and earning more over your career can increase your benefits.
The Full Retirement Age (FRA)
The age at which you can receive your full Social Security benefit is known as your Full Retirement Age. For most people retiring today, FRA is between 66 and 67, depending on your birth year. If you were born in 1960 or later, your FRA is 67.
But here's the catch: you don't have to wait until your FRA to start receiving benefits. You can claim as early as 62, but your monthly payments will be reduced. For every month you claim before FRA, your benefit is reduced by a fraction of a percent—about 6.67% per year. If you claim at 62, you could see your benefits reduced by up to 30%.
On the flip side, if you delay claiming beyond your FRA, your benefits increase by about 8% for each year you wait, up until age 70. So, while claiming early means you'll get more checks over your lifetime, delaying can significantly boost the size of those checks.
Early Retirement vs. Delayed Benefits
The decision of when to claim Social Security is personal and depends on your health, financial needs, and whether or not you're still working. For some, claiming early makes sense—especially if they need the income or have health concerns. For others, waiting can provide a much larger monthly benefit that will continue to grow the longer they delay.
Here's how it breaks down:
Who Qualifies for Social Security Benefits?
To qualify for Social Security benefits, you must earn enough credits over your working years. In 2025, you'll earn one credit for every $1,810 in wages or self-employment income, and you can earn up to four credits per year. You need 40 credits (or ten years of work) to qualify for retirement benefits.
If you haven't worked enough to earn 40 credits, you won't be eligible for retirement benefits on your own, but you may still qualify for spousal or survivor benefits based on your spouse's work record. This can be particularly important for people who spent much of their lives out of the workforce, whether raising a family or for other reasons.
Estimating Your Benefit Amount
Wondering how much you'll get? The SSA makes it easy to estimate your benefits with its online Social Security Statement tool. By creating a mySocialSecurity account, you can see a detailed record of your earnings, how much you've paid into the system, and an estimate of your monthly benefit at different ages.
The estimate is based on your current earnings and gives you a snapshot of your benefits at age 62, your FRA, and age 70. It's a valuable tool to help you plan for retirement and make informed decisions about when to claim.
Impact of Earnings on Your Benefit
Your benefits aren't just based on how much you earned—they're also impacted by how long you earned that income. Since the SSA uses your top 35 earning years to calculate your benefit, continuing to work longer, especially if you earn more in your later years, can significantly increase your final benefit amount.
If you didn't work for 35 years, each year without income counts as zero, which lowers your average earnings. On the other hand, if you continue working beyond your Full Retirement Age and replace lower-earning years with higher-earning ones, your benefit will increase. This is especially relevant for people who experienced lower earnings early in their careers but are now earning more.
In addition, working longer can help offset the impact of reduced benefits if you claim Social Security before your FRA. In some cases, continuing to earn income can reduce the amount of reduction in your benefits.
Spousal and Survivor Benefits: Eligibility Beyond Your Own Work Record
For married couples, there's another way to maximize Social Security benefits: spousal and survivor benefits. If your spouse earned more than you or you never worked enough to qualify on your own, you may be eligible for spousal benefits. These benefits can provide up to 50% of your spouse's benefit amount if claimed at your Full Retirement Age.
If your spouse passes away, you may also be eligible for survivor benefits, which can allow you to receive the higher of your benefit or your spouse's benefit.
We'll cover this topic in greater detail in "Spousal and Survivor Benefits: Maximizing Your Family's Social Security Income" so you can make sure your household is maximizing every benefit available.
Key Points
The Takeaway
Understanding how your Social Security benefits are calculated and when you're eligible to collect them is critical to maximizing your retirement income. By timing your claim strategically, you can maximize your lifetime benefits and ensure financial stability in retirement.
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