The three primary types of Social Security benefits are:
- Retirement benefits: Available to workers 62 and older who have earned at least 40 credits.
- Disability benefits: For those 18 and older who cannot work due to disability that is expected to last 12 months or result in death.
- Survivors benefits: Available to family members of deceased workers who qualified for Social Security.
How to get the most out of Social Security
Getting the most out of Social Security is based on three factors: your annual income, the age at which you claim Social Security benefits, and the number of years you worked.
- Income: If your income reaches or exceeds the maximum taxable earnings for Social Security purposes, you’ll qualify for the maximum benefit in the future. That number changes every year. In 2024, it is $168,600. For 2025, it will be $176,100.
- Age: Each birth year corresponds to a full retirement age, which determines when you are eligible for the standard Social Security benefit. If you retire before that age, your benefits are reduced. If you wait past your full retirement age, you earn delayed retirement credits that increase your benefit by 8% per year, until age 70, when you can no longer receive credits.
- Years of work: Social Security benefit amounts are based on your 35 highest-earning years. The Social Security Administration considers nonworking years as $0 years for the benefits formula, which lowers your monthly check.
While there are ways to maximize Social Security benefits, the program was never designed to replace the average salary. A well-rounded retirement plan includes diversified investments, savings, and a good idea of when you want to retire and how much income you’ll want every month.
Planning for retirement can feel daunting, but it’s a crucial part of the journey toward financial freedom in your later years.
