What is Social Security?

Social Security is a federal program in the United States that pays monthly retirement, disability, and survivor benefits, funded by payroll taxes on current workers. For most retirees it functions as an inflation-adjusted income floor that lasts for life, no matter how long you live or how markets perform.

You and your employer each pay a 6.2% Federal Insurance Contributions Act (FICA) tax on your wages, 12.4% combined, up to an annual cap. For 2026, that cap, known as the taxable maximum or wage base, is $184,500; earnings above it are not subject to Social Security tax and do not count toward your benefit. Those taxes fund current retirees, and your own earnings record determines what you will eventually collect.

How Social Security Benefits Are Calculated

Your retirement benefit is based on your 35 highest-earning years, indexed for wage growth over your career. If you worked fewer than 35 years, the missing years count as zeros, which pulls the average down. The Social Security Administration averages those 35 years into a monthly figure and runs it through a progressive formula that replaces a larger share of income for lower earners than for higher earners.

The result at full retirement age is your primary insurance amount, the benefit you receive if you claim exactly at full retirement age (FRA). Claiming earlier permanently reduces it; claiming later permanently increases it. Each year, benefits already in payment also rise with a cost-of-living adjustment (COLA) tied to inflation. The 2026 COLA is 2.8%.

The most anyone can collect depends on when they claim. For a worker who earned the taxable maximum throughout their career, the 2026 maximum monthly benefit is about $4,152 at full retirement age, roughly $2,969 for someone claiming at 62, and about $5,181 for someone claiming at 70.

What is the Full Retirement Age?

Full retirement age is the age at which you qualify for 100% of your calculated benefit. For anyone born in 1960 or later, FRA is 67. For those born in 1959 it is 66 and 10 months, stepping down for earlier birth years.

FRA is the pivot point for every claiming decision. Claim before it and your benefit is reduced; claim after it and you earn delayed retirement credits. Knowing your exact FRA is the starting point for deciding when to file.

When Should You Claim Social Security?

You can start benefits as early as age 62 or delay as late as age 70, and the timing changes your monthly check for the rest of your life. There is no universally correct age; the right choice depends on your health, other income, marital situation, and how long you expect to live.

Claiming at 62 gets you income sooner but locks in a permanent reduction, roughly 30% below your full benefit if your FRA is 67. This can make sense if you need the money, have health concerns, or want to preserve a portfolio during a market downturn.

Claiming at full retirement age gives you 100% of your calculated benefit with no reduction.

Delaying past FRA earns delayed retirement credits worth about 8% per year, up to age 70. Waiting from 67 to 70 raises your benefit by roughly 24% in inflation-adjusted terms, and that larger base compounds through every future COLA. After 70 there is no further increase, so there is no reason to wait beyond it.

The tradeoff is longevity. Claiming early means more checks over a shorter expected horizon; delaying means fewer but larger checks. The longer you live, the more delaying pays off, which is why delaying is often framed as insurance against outliving your money rather than a bet on any single break-even age. For married couples, coordinating the two claims matters even more, since the higher earner’s benefit becomes the survivor benefit for whoever lives longer.

This is one of the highest-leverage decisions in a retirement plan, because every dollar of guaranteed benefit is a dollar your portfolio does not have to produce. You can model different claiming ages in ProjectionLab to see how each one offsets your portfolio withdrawals and shifts your long-term plan.

How Social Security Is Taxed

Whether your benefits are taxed depends on your provisional income, sometimes called combined income: your adjusted gross income, plus any tax-exempt interest, plus half of your annual Social Security benefits.

For single filers, none of your benefits are federally taxed if provisional income is below $25,000. Between $25,000 and $34,000, up to 50% of benefits become taxable; above $34,000, up to 85% can be taxed. For married couples filing jointly, the thresholds are $32,000 and $44,000. At most, 85% of your benefits are ever subject to federal income tax, never 100%.

These thresholds were set in the 1980s and 90s and are not adjusted for inflation, so more retirees cross them every year. Because withdrawals from traditional 401(k) and IRA accounts count toward provisional income while Roth withdrawals do not, the mix of accounts you draw from directly affects how much of your benefit is taxed. Some states tax Social Security benefits as well, though most do not.

The Social Security Earnings Test

If you claim before full retirement age and keep working, the earnings test may temporarily withhold part of your benefit. For 2026, if you are under FRA for the whole year, Social Security deducts $1 in benefits for every $2 you earn above $24,480. In the year you reach FRA, the limit is far more generous at $65,160, with $1 withheld for every $3 above it, and only earnings before your birthday month count.

Once you reach full retirement age, the earnings test disappears entirely and you can earn any amount without a reduction. The withheld benefits are not lost, either: Social Security recalculates and credits them back through a higher monthly benefit once you hit FRA. Only wages and self-employment income count toward the test; investment income, pensions, and portfolio withdrawals do not.

Frequently Asked Questions

What is the full retirement age for Social Security? For anyone born in 1960 or later, full retirement age is 67. It is 66 and 10 months for those born in 1959 and phases down for earlier birth years. FRA is the age at which you receive 100% of your calculated benefit, with reductions for claiming earlier and credits for claiming later.

How much will I get from Social Security? Your benefit is based on your 35 highest-earning years and the age you claim. In 2026, the maximum benefit at full retirement age is about $4,152 per month for someone who consistently earned the taxable maximum, but most people receive considerably less. The Social Security Administration’s online statement at ssa.gov shows your personalized estimate based on your actual earnings record.

Is Social Security taxable? Sometimes. Up to 85% of your benefits can be subject to federal income tax if your provisional income (adjusted gross income plus tax-exempt interest plus half your benefits) exceeds $34,000 as a single filer or $44,000 as a married couple filing jointly. Below $25,000 single or $32,000 jointly, none of your benefits are federally taxed. No one ever pays tax on more than 85% of their benefits.

What happens if I work while collecting Social Security? If you are under full retirement age, the earnings test withholds $1 in benefits for every $2 you earn above $24,480 in 2026. Once you reach FRA, the test no longer applies and you can earn any amount with no reduction. Withheld benefits are credited back as a higher monthly payment after you reach FRA, so they are deferred rather than forfeited.

Can I collect Social Security and a pension at the same time? Yes. A private pension does not reduce your Social Security benefit. Only certain government pensions from jobs where you did not pay Social Security taxes historically affected benefits, though the Social Security Fairness Act, signed into law in January 2025, repealed those provisions, restoring full benefits for many public-sector retirees.