Countless workers pay into Social Security and hope to collect benefits once it's their turn to retire. But unfortunately, most Americans are relatively clueless when it comes to understanding the program's ins and outs. With that in mind, here are three things the average person needs to know about Social Security today.

1. You can boost your benefits by filing strategically

Your Social Security benefits are calculated based on how much you earned during the 35 highest-earning years of your career. But once that base benefit amount is established, the age at which you first file for Social Security can cause it go up, drop, or stay the same.

Social Security card in someone's hand


If you wait until you reach full retirement age to claim benefits, you'll collect the base amount you're entitled to in full. Here's what that age looks like, depending on when you were born:

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




That said, you actually get an eight-year window to file for Social Security. You're allowed to claim benefits as early as age 62, but doing so will result in a 6.67% decrease for the first three years you file early, and a 5% decrease for each year thereafter. This means that if you were born in 1961 but take benefits at 62, for example, you'll slash them by 30%. Worse yet, that reduction will remain in effect for the rest of your life; your benefits will not be restored once you reach full retirement age.

On the other hand, you can boost your benefits by 8% a year if you hold off on filing past full retirement age. You'll accrue what are known as "delayed retirement credits" up until age 70, which means you have an opportunity to increase your payments by 24% to 32% -- for life -- depending on your full retirement age. If you're looking to get the highest possible payout from Social Security, waiting until age 70 to take benefits is your ticket.

2. It won't be enough to cover your bills

Though Social Security might pay for a chunk of your living costs in retirement, don't be fooled into thinking you can live off your benefits alone. The average recipient today collects just $1,360 a month in benefits for a total of $16,320 a year. And that's clearly not enough to sustain you as a senior, especially when you consider that the typical healthy 65-year-old retiree today will spend an estimated $200,000 on medical care in retirement. Over a 20-year period, that's $10,000 a year, which means that if you were to rely on Social Security in the absence of another income source, you'd be left with a mere $6,320 a year, or $527 a month, to pay your remaining bills after tackling healthcare.

That's why it's best to think of Social Security as a means of supplementing your retirement income, rather than depending on it heavily. Better yet, pretend you'll never receive Social Security, save enough money to live without it, and then use your benefits to pay for extras like leisure and travel when you retire.

3. Your benefits may be slashed in the future

There's a lot of uncertainty about the future of Social Security, but contrary to what countless Americans are led to believe, the program is by no means going broke. But it's not in great shape, either. The latest Social Security Trustees Report projects that come 2034, Social Security will deplete its spare asset reserves, and from that point on, it will only have enough incoming tax revenue to pay out 77% of scheduled benefits. This means that future recipients who are counting on those payments may be in for an unpleasant surprise down the road.

Of course, that 23% reduction in benefits is by no means set in stone, and a lot can happen over the next 17 years to change that number. If Congress intervenes with a viable solution, then future recipients could see less of a reduction. Alternatively, we may come to see benefits slashed even further. That's why it's critical to save independently for retirement and think of those payments as gravy.

Whether retirement is quickly creeping up on you or you're planning to work for another 20 years, it pays to read up on Social Security and understand how it works. The more educated you are about this key program, the better it'll serve you whenever it's your turn to collect on it.