Social Security was set up to give retired workers a continuing source of income after retirement, but the average annual Social Security benefit is only $23,016.¹ That’s not even half of what the average full-time wage and salaried worker in the United States makes each year.² Figuring out how much you may receive can help you plan your retirement budget.

Key factors that affect your Social Security benefits     

Your Social Security benefits depend on several things, including:

Whether you have enough credits. To be eligible for Social Security, you must have paid into the system and earned at least 40 credits over your lifetime. Most people meet that requirement after working 10 years since you can earn up to 4 credits per year.

What you earn during your working years. Your monthly benefit is based on your highest 35 years of earnings. If you haven’t worked at least 35 years, your monthly benefit will be lower, as the years you didn’t work will count as zero. If you work longer than 35 years, earning more at the end of your career could boost your payments.

When you start taking Social Security. The age you begin receiving benefits affects your monthly amount, if you:

• Take benefits early (as soon as age 62)—Your monthly benefit will be reduced because you’ll be receiving payments over a longer period. You generally only want to consider this option if you need income to help cover your living expenses.
• Start at your full retirement age—You’ll receive your full monthly benefit, which will be more than if you started earlier but less than waiting until age 70. (Full retirement age is age 66 if you were born from 1943 to 1954. The age gradually increases if you were born from 1955 to 1959, until it reaches age 67. If you were born in 1960 or later, your full retirement age is 67.
• Wait beyond your full retirement age—Your monthly benefit generally increases each year you delay taking Social Security up to age 70.

Whether you’ll be taxed on your Social Security benefit. Your payments may be taxable depending on your other sources of income—including retirement accounts, your pay (if you’re still working), dividends, and other taxable income. If you need to pay federal taxes, you can have them withheld from your Social Security benefits. Some states also tax Social Security payments. Given the complexity of the rules, you may want to contact a tax advisor for assistance.

When you’re weighing your options, also consider:

• Life expectancy—A 65-year-old today is likely to live another 20 years.¹ That’s a lot of years to consider when determining if you’ll have enough income in retirement.
• Marital status—If you’re married, factor in when your spouse plans to take Social Security.

Taking the next step

Social Security is a great way to supplement your income in retirement, but it was never intended to be your only source of income. That’s why it’s important to save as much as you can through other sources, such as your 401(k) or other retirement accounts. Planning today can help you enjoy the future you want in retirement.

1 Social Security fact sheet, U.S. Social Security Administration, June 2024. 2 ^“Usual Weekly Earnings Summary Q2 2024,” U.S. Bureau of Labor Statistics, July 2024.