Social Security allows almost all Americans to get access to a monthly income once they reach retirement age, for as long as they live. It’s an important safety net that accumulates during your working life based on your income, marital status, and years worked.

The benefit amount you can get depends on a number of factors, but the more you learn about Social Security, the easier it will be for you to maximize it. Read on to learn more about how Social Security works, how much you can get, how to apply, and strategies to maximize your benefits.  

What Is Social Security?

Social Security is run by the Social Security Administration (SSA), which is a federal government agency. It refers to a program known as Old Age, Survivors, and Disability Insurance (OASDI), which was made possible by the Social Security Act, which was signed into law by Franklin D. Roosevelt on August 14th, 1935. The program offers retirement benefits, income for disabled workers, and survivor benefits.

Over 71 million people in America will collect Social Security benefits in February 2024. Other than being a retirement program, it also offers disability insurance and a modest amount of life insurance protection through Social Security Disability Insurance (SSDI).

How Social Security Works

Workers pay into the Social Security program, either by paying taxes when they file their federal tax return or through payroll withholding. You can earn up to four Social Security “credits” each year you are employed or self-employed. In 2024, you can earn one credit for every $1,730 you earn. You can get four credits for the year by earning $6,920.  

Credits are based on your income during the year, no matter when you did the actual work during the year. You might work all year to earn four credits, or if you’re lucky, you might earn enough for all four credits just by working in your summer job.  The maximum number of credits you can earn per year is limited to four (4), and you will need 40 credits in total to qualify for full benefits under the program, so you will need to work for at least ten years before you will be eligible for retirement benefits.

The money you contribute goes to the Disability Insurance Trust Fund (DI) and Old Age and Survivors Insurance Trust Fund (OASI). People who are currently eligible to receive benefits from these programs receive monthly payments through these two funds.

The earliest you can start collecting Social Security benefits is at age 62, and the latest age to which you can delay claiming Social Security retirement benefits and still receive an additional increase in your benefit by doing so is age 70. The average Social Security check as of February 2024 is $1,772.51 per month. 

The actual benefit amount you will receive depends on a number of factors, such as when you begin collecting benefits. Retirement benefits are progressive, and they keep up with the rise in the cost of living through an annual cost-of-living-adjustment (COLA), which is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

Keep in mind, the Social Security Administration doesn’t award bonuses or extra money to retirees. It's important to explore other financial options to supplement your retirement funds.

How Much Can You Get in Social Security Benefits?

Social Security benefits are calculated based on your “average indexed monthly earnings” or your “AIME.”  This means that the more you earn and pay into the system during your working years, the higher your benefit amount can be. If you’re a high earner throughout your career, your benefit amount can be higher.

The maximum amount of benefit you can get is $3,911/month if you claim benefits at your full retirement age (FRA), which is age 67 for those born after 1960, or $4,873/month if you start collecting at age 70 for the fiscal year 2024. If you delay benefits till you’re 70, your benefit amount will be higher based on your AIME. You receive no increase in monthly amount by choosing to delay beginning your benefits past the age of 70.

For example, let’s say that you’re eligible to receive $22,170 a year if you claim benefits at your full retirement age (FRA) of 66. If you wait to start collecting benefits until age 70, you may be able to get around $28,000 each year.  

For every year you delay beginning your Social Security retirement benefits past your Full Retirement Age, you will receive an increase of 8.0% in your monthly benefit (a 0.67% increase for every month you delay).  The maximum benefit you can receive by delaying the start of your benefits is 124% of your FRA benefit.

How To Apply for Social Security Benefits

Whether you’re facing financial hardship or not, applying for Social Security benefits (if you’re eligible) can help provide a comfortable retirement. Here’s how to determine your eligibility and apply for the benefits.

Know if You Are Eligible

Most employers withhold Social Security from your paycheck through payroll taxes so you can qualify for the program’s benefits when you retire. However, some employees, such as railroad workers and those working in city and state government positions, don’t pay Social Security taxes.

You may be eligible if:

  • You are a U.S. Citizen, a Lawful Permanent Resident (Green Card holder), or a nonresident with an eligible work authorization, such as an H-1B or J-1 visa
  • You have a U.S. Social Security number (an SSN) or Individual Taxpayer Identification Number (an ITIN) 
  • You’re at least 62 years old
  • You’ve paid Social Security taxes for ten years or more
  • You’ve earned at least 40 credits

Gather All the Required Documents

Once you’ve determined your eligibility, you’ll need to create a mySocialSecurity account and verify your Social Security number and other details. You’ll need to provide documents to apply for the benefits, such as:

  • Your original birth certificate or a copy of the birth certificate certified by the issuing agency or other proof of birth
  • Proof of U.S. citizenship, proof of Lawful Permanent Residence (Green Card), or proof of lawful nonresident alien (your visa) status
  • Social Security card or ITIN card
  • A copy of your self-employment tax return or W-2 form for last year
  • A copy of your military service papers, such as Discharge from Active Duty or Certificate of Release

Complete the Application Process

You can complete the application process in multiple ways:

  • Online
  • Visit a local Social Security Office
  • Call 1-800-772-1213 or TTY 1-800-325-0778
  • Contact your nearest U.S. Embassy, U.S. Social Security Office, or consulate if you don’t live in the U.S.

You can use the online calculator on the SSA website to estimate your benefit amount.

Spousal Social Security Benefits

In some cases, you can apply for Spousal Social Security benefits to receive up to 50% of your spouse’s benefits. You must meet some eligibility requirements to claim this benefit:

  • Your spouse must have filed for disability or Social Security benefits first.
  • You must be at least 62 years old. If you’re caring for your spouse’s child who is disabled or under 16, this age limit doesn’t apply.

Social Security Disability Insurance Benefits

Social Security also pays benefits to those who are disabled, aka Social Security Disability Insurance (SSDI) benefits. If your disability has lasted one year or more, you may be able to apply. You must have worked long enough and have a condition that meets the SSA’s definition of disability. To qualify, you must go through an SSDI medical exam, and your medical condition must be certified by a licensed physician.

The amount of your monthly SSDI benefit will depend on your AIME and the other income sources you already have.  The average amount of the monthly benefit varies by state, but the average SSDI payment as of Q1 2024 was about $1,719/month. You’ll usually be able to get Social Security disability benefits until you’re able to work regularly again. If you’re receiving benefits when you reach the full retirement age, the benefits will convert to retirement benefits automatically.

Will Social Security Be There for You When You Retire?

Over a third of millennials are worried about the viability of Social Security benefits due to the aging population in America, increases in cost of living, and fewer workers supporting a larger number of retirees.  

Many Americans are concerned about whether they’ll still receive Social Security and Medicare when they retire due to the Old Age and Survivors Insurance (OASI) Trust Fund solvency report and press release in 2023 stating that it only has enough to pay 100% of benefits until 2023. The OASI predicted that its reserve funds would be exhausted but that the SSA should be able to cover 77% of the benefits going forward through the program income.

Congress may find ways to bridge the gap through higher taxes, higher age requirements for senior citizens, or lower benefits, but it’s likely that compared to older generations, millennials and those younger may receive less in Social Security benefits when they go to claim their benefits. For this reason, retirement planning is even more important now than ever before.

Maximize Your Social Security Benefits

There are many things you can do to maximize your Social Security benefits, such as earning more money during your working years, waiting until full retirement age or until you’re 70 to start collecting benefits and applying for spousal benefits if you are eligible.

Estimate your anticipated retirement expenses and consider building your investments in addition to your Social Security contributions so you can comfortably enjoy your retirement years.  Increase your contributions to your company retirement account (i.e., your 401(k) or 403(b) account) and/or contribute the maximum annual amount to your IRA/Roth IRA each year through monthly contributions.

Keep in mind that there are many financial assistance programs for seniors if you’re facing hardship or need extra help bridging the gap between your retirement income and expenses. Check to see if you qualify for Supplemental Security Income (SSI) if you’re disabled or a low-income individual.