More than 50 million retirees collect Social Security retirement benefits, and if you're not yet retired, you will likely be joining their ranks at some point. Those benefits will probably be quite important to you as well: Social Security benefits make up nearly a third of the retirement income of those older than 65. Even more sobering, among recipients aged 65 and older, those benefits accounted for fully 90% or more of income for 12% of men and 15% of women.
Thus, even if you're not yet retired, it's nrcessary to keep up with Social Security changes and to understand how it might change further. Here, then, are some things to know.
Image source: Getty Images.
1. Know how much in Social Security benefits you may receive
Though Social Security benefits will be a key part of your retirement finances, there's a good chance that they will deliver far less income than you might have expected. As of December, for example, the average Social Security retirement benefit was only $2,071 per month or about $24,850 per year. Those who have had above-average earnings in their working life will receive more but not a king's ransom more. (The maximum benefit was recently $5,181, or about $62,000 annually -- but it's very hard to qualify for it.)
So as you plan for your retirement, be sure to have realistic expectations.
2. Expect your Social Security benefits to increase over time -- but suboptimally
Here's some good news: Social Security benefits increase over time via nearly annual cost of living adjustments (COLAs). The latest increase, for 2026, was 2.8%.
Unfortunately, these COLAs are not calculated in a way that best helps seniors. They're based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) instead of the Consumer Price Index for the Elderly (CPI-E), which weighs categories such as healthcare more heavily. That's important because healthcare spending in retirement can be substantial. The CPI-W is focused on costs borne by workers more than retirees.
3. You can influence the size of your Social Security benefits
Not everyone realizes this, but there are multiple ways to increase your future benefits.
A major way to do so is by being strategic about when to claim your benefits. Each of us has a full retirement age at which we can start collecting the full Social Security benefits to which we're entitled, based on our earnings record. For most of us, that age is 66 or 67, depending on when you were born. If you start collecting your benefits early (you can start as early as age 62), your benefit checks will be smaller, but you will collect many more of them. Delaying beyond your full retirement age will beef up your benefit checks by about 8% for each year until age 70.
Still, for some people, claiming benefits early is the best move. But according to several studies, most people can maximize their total benefits by waiting until age 70 to claim them.
4. The Social Security surplus is running dry
Although headlines suggesting that Social Security will soon be unable to pay beneficiaries at all are wrong, the program is facing a shortfall. If nothing is done to strengthen it, Social Security's trust funds' surplus will run out within a few years, which will result in benefits shrinking to about 77% of the amount due to beneficiaries.
At the moment, Congress doesn't seem to be focused on fixing Social Security, but when it has the will, there are ways to shore up this vital program. Here are some proposed ways to fix Social Security:
- The payroll tax for Social Security could be increased. It's currently 12.4%, split equally between employee and employer -- 6.2% each. (Your employer contributes as much as you do -- unless you're self-employed, in which case you pay the full 12.4%.)
- Right now, there's an earnings limit beyond which we are not taxed for Social Security. It increases regularly and is currently capped at $184,500. So someone who earns $1,184,500 pays as much into Social Security as someone who earns $184,500. Social Security would benefit if all of everyone's earnings were taxed -- or at least if the cap was raised significantly.
- The full retirement age might be increased -- to 68 or even 70.
- Beneficiaries could be means-tested to exclude wealthy folks from receiving benefits.
If all this has you starting to worry, consider contacting your representatives in Washington to urge them to take action.
