Social Security provides critical benefits to millions of older Americans. But how much do you really know about Social Security? Here are five common questions -- and answers -- that can shed some light on this important program.

1. How are my Social Security benefits calculated?

Your Social Security benefits are based on how much money you earned in your lifetime. Specifically, your highest 35 years of earnings are averaged to come up with your base benefit amount. The age at which you first file for Social Security, however, will determine whether that base benefit amount will decrease, increase, or stay the same.

Older man with a serious smile

Image source: Getty Images.

2. When am I allowed to claim Social Security?

The earliest age you're allowed to claim Social Security is 62, but if you file for benefits before reaching your full retirement age, your base payments will be reduced. Your full retirement age is the age at which you get to collect your base benefit amount in full, and it's determined by your year of birth, as follows:

Year of Birth

Full Retirement Age




66 and 2 months


66 and 4 months


66 and 6 months


66 and 8 months


66 and 10 months



Data source: Social Security Administration.

For every year you claim Social Security prior to reaching full retirement age, you'll face a reduction in benefits equal to 6.67% for the first three years, and 5% for each year thereafter. So if, for example, your full retirement age is 66 and you take benefits at 62, you'll lower your payments by 25%. Furthermore, this reduction will remain in effect for life.

On the other hand, if you wait past your full retirement age to collect Social Security, you'll accrue delayed retirement credits that will boost your payments by 8% for each year you hold off. Though this incentive runs out at age 70, at which point you might as well file for benefits, if your full retirement age is 66 and you don't take Social Security for another four years, you'll increase your payments by 32% -- for life.

3. Can I work and collect Social Security at the same time?

Though you are allowed to work and collect Social Security simultaneously, you could face a reduction in benefits if you haven't yet reached full retirement age. Currently, you can earn up to $16,920 a year without losing a portion of your benefits, but for every $2 you bring in above that threshold, you'll lose $1 in Social Security income. If you're working, collecting Social Security, and reaching full retirement age this year, that limit increases to $44,880, and you'll lose just $1 for every $3 of earnings above that threshold.

Keep in mind, however, that the money that's withheld from your Social Security benefits will be added back into your payments down the line. In other words, you're not giving up that money, but rather, postponing it. Just as importantly, once you reach full retirement age, your Social Security payments won't be impacted by your earnings if you work and collect benefits at the same time.

4. What can I do to raise my Social Security benefits?

There are two things you can do to increase the amount of money you get out of Social Security. The first option is to hold off on filing until age 70 so that your base benefit amount can grow 8% a year. The other option is to work a bit longer if your salary is higher today than it was at the beginning of your career, which tends to be the case for most people. By putting in a little extra time at a higher income level, you can replace some of your lower-earning years with more significant earnings. This strategy can be particularly valuable if you took time off during your career (say, to raise children or care for a family member), as any year of $0 in earnings will be replaced by an actual salary in that Social Security formula.

5. Will Social Security be around when I retire?

Because Social Security is facing a looming deficit, many workers fear that it won't be around once it's their turn to collect benefits. The good news, however, is that the program is in no danger of completely going away. Although it's true that Social Security's trust funds, which are needed to sustain benefits, are set to run out by 2034, even if Congress doesn't implement a fix, the program will still have enough incoming tax revenue to pay out approximately 79% of scheduled benefits. So while future recipients might face a reduction in payments, they'll still get to collect the majority of what they're due.

The more you know about Social Security, the better positioned you'll be to make smart decisions that could impact your benefits. It pays to read up on how Social Security works, no matter how many years you have left until you're set to retire.