How Does Social Security Work? Benefits, Retirement Age, and More

Nicolas Cesare  | 

If you’ve ever gotten a paycheck, then you’ve probably seen how much of it you’re putting into Social Security. As you near retirement, you’re probably starting to ask some more questions about all that money that went to the government.

At what age does Social Security start to pay out you? How much Social Security retirement money will you get? How does Social Security work anyway? This article will answer those questions, taking a deep dive into how Social Security will affect your retirement so that you can plan for the future effectively.

How Social Security Works

If you ever want to finish working and enjoy a well-funded retirement, then you’ll need to save for retirement. Usually this is done through a pension plan or a 401(k) account — both of which are investment funds that your beef up over the course of your career and cash in on after you retire.

However, people don’t always save up as much as they should. Sometimes it’s because we don’t have careers that pay well enough to fund our lifestyles in the present and save for the future at the same time. At other times, the temptation to put money towards improving your life right now is more powerful than the voice of reason telling you to save for retirement instead.

Whatever the reason, people don’t always save for retirement as well as they need to. This is where Social Security comes in. Instead of waiting for people to either have enough income to save on their own or make the difficult choice to save, the government will take a portion of each paycheck and put it into the Social Security fund.

While you’re still in the workforce, the money that you put into the fund goes to people who are currently in retirement. The expectation is that, when it comes time for you to retire, the money in the Social Security fund will start to return to you in amounts that correspond to how much you put in.

Social Security Retirement Age

Social Security is a government program. That means that it tries to stick to very general rules. You will not start to reap the full benefits of your Social Security contributions the minute you leave the office for the final time and retire. Instead, you will need to reach the Social Security retirement age as determined by the federal government.

Unfortunately, figuring out the age for Social Security benefits isn’t clear cut. If you retire early, you can start to receive Social Security payments at age 62. However, your benefits will be reduced depending on how many months there are between your early retirement date and the day you reach the age of full retirement, as determined by the Social Security Administration (SSA).

Full Retirement Age

Figuring out the age of full retirement isn’t straightforward either. If you were born before 1937, then 65 was the age of full retirement. However, in order to account for longer lifespans and changing economic conditions, the SSA gradually raised the full retirement age little by little depending on year of birth. Now, if you were born after 1960, the age of full retirement is 67 for you.

Partial Benefits

If you retire before your full retirement age, then you can expect to receive partial benefits until you reach full retirement. The SSA has provided a calculator tool to help you determine exactly how much you will receive in Social Security benefits depending on your income and how early you’re retiring. However, remember that you must be age 62 or older to receive any benefits at all.

Spousal Benefits

Spouses also have the option to receive benefits from their partner’s Social Security. If you are a current spouse or an ex-spouse from a marriage that was over 10 years long and you did not remarry before turning 60, then you can choose between your own Social Security benefits or 50% of the value of your partner’s benefits.

Who Social Security is For

Social Security was envisioned as a means of making sure that everyone has the potential to live out a dignified retirement. To that end, most Social Security recipients are people who are over 62 years old and retired. However, Social Security also helps to allow people who cannot work live a dignified life as well. Social Security benefits for disabled people help to cover the living expenses for people who cannot reasonably be expected to hold an ordinary job and collect a livable wage.

The Real Purpose of Social Security

Although the original purpose of Social Security was to provide a livable wage for retirees and the disabled, this is not always the case today. Changing economic conditions have rendered Social Security benefits as a drop in the bucket for seniors who want to retire comfortably. Social Security benefits will certainly not cover the cost of a mortgage in retirement, nor will it cover other senior living situations such as a retirement community or nursing home.

Instead, you should treat Social Security like a modest contribution to a more comprehensive retirement plan, such as a pension or a 401(k). Even though you’re paying into Social Security, saving for retirement should still be a priority throughout your career.

Don’t Count on Social Security

The Social Security program is constantly changing. In fact, some generations are beginning to suspect that they may never retire. In its current form, Social Security relies on the working population to subsidize the retired. After all, the money that a 70 year-old put into the fund when they were 25 has long since been distributed.

For young people who are currently in the workforce, this leads to a common worry: will there be enough people paying into Social Security when I turn 67 to pay for my benefits? If there aren’t, then there’s no money to be distributed. This is why you should not count on Social Security. Instead, focus on more reliable retirement funds when planning for your future.

Social Security is a useful safety net for those who really need it. However, no one who plans on retiring should use Social Security as their only source of income in retirement. By learning how Social Security works and the full retirement age at which you can receive the most benefits, you can plan for a better retirement for you and your family.


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Nick Cesare is a writer from Boise, ID. In his free time he enjoys rock climbing and making avocado toast.

This post was updated May 18, 2018. It was originally published May 21, 2018.