Social Security Benefits 101

Senior couple with baby

If you're approaching retirement, you've likely spent some time comparing your retirement savings to how much you'll need to maintain your desired lifestyle. The result could leave you either confident or concerned. In either case, many Americans look forward to supplementing their retirement income with Social Security retirement benefits. 

Here's what you should know as you consider how Social Security funds might factor into your retirement planning.

Q. When can you apply for retirement benefits?

A. You can apply for benefits before you're eligible to receive them. If you're at least 61 years and 9 months of age, you can apply for benefits online, by phone at 1-800-772-1213, or by visiting your local U.S. Social Security Administration (SSA) office. While you can apply for retirement benefits before age 62, you aren't eligible to receive those benefits until you reach age 62.

Q. How are your benefits calculated?

A. The SSA uses your lifetime earnings to help determine your retirement benefits. Adjustments are made to ensure your benefit is based on the 35 years you earned the most money. Basic benefit amounts are also a result of a formula associated with your full retirement age, which depends on your birth year. Your estimated benefit amount may change if:

  • You receive benefits sooner 
  • You delay receiving benefits
  • You receive a retirement or disability pension from an employer
  • You're a government worker with a pension 

Q. What is full retirement age?

A. Full retirement age is the age at which you are no longer subject to a reduced retirement benefit. If you start receiving benefits at age 62, you could miss out on as much as 30% of your benefits. But if you wait until your full retirement age, you'll receive your full benefit amount. Use SSA's Retirement Age Calculator to determine your full retirement age. As you'll see in the next question, waiting until age 70 to receive benefits can have a positive impact on your retirement income. 

Q. How much money will you receive in Social Security retirement benefits?

A. The age at which you begin receiving benefits and your lifetime earnings will directly influence how much money you receive each month. It's possible to increase your expected benefit amount by waiting several years to apply for benefits. The longer you wait to retire, the higher your potential benefit amount. 

2021 Maximum Social Security Benefits by Age

  • (Early Retirement) Retire at Age 62 - $2,324
  • Full Retirement Age - $3,148
  • (Late Retirement) Retire at Age 70 - $3,895

Q. How can you learn more about your individual Social Security retirement benefits?

A. You can create a free Social Security account at the SSA website to estimate your future benefits. Since the information will be personalized using your Social Security Number and other factors, it should provide the best estimate for future Social Security benefits. To gain a rough estimate, or if you don't have time to set up an account today, you can use one of SSA's Benefit Calculators to estimate your benefits.

Planning for a comfortable retirement requires an understanding of how timing your exit from the workforce can affect your nest egg. Schedule your no-cost, no-obligation consultation with a trusted LPL Financial Advisor. They can help put together a customized plan to meet your retirement goals.