Social Security was set up to give retired workers a continuing source of income after retirement, but the average annual Social Security benefit is just over $20,000.¹ That’s not even half of what the average full-time wage and salaried worker in the United States makes each year.² Your Social Security benefit reflects payments you make to the program during your working years, so it’s smart to find out what you may receive and how to factor that into your budget during retirement. 

How much may I get from Social Security when I retire?

The amount you’ll receive depends on a number of factors, 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 have any earnings will count as zero. If you work longer than 35 years, earning more at the end of your career could boost your benefit amount.

When you start taking Social Security. Deciding when to begin receiving retirement benefits affects your monthly benefit amount. Generally, the longer you wait, the more you’ll receive each month. 

• Taking your benefit early can mean as soon as age 62, but your monthly amount will be reduced because you’ll be receiving your benefit for a longer period. 
• Starting at full retirement age allows you to receive your full monthly benefit amount. The monthly payment would be higher than if you’d taken your benefit earlier, but lower 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.)
• Waiting beyond your full retirement age will increase your monthly benefit. The longer you delay starting your benefit—up to age 70—the higher your monthly payments will be. 

Whether you’ll be taxed on your Social Security benefit. It depends on other income you receive—including pensions, 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 benefits.

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 is planning to take benefits. 

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 as well, such as your 401(k) or other retirement accounts. Taking control of your retirement planning today can help you prepare for the future.

^{1 Social Security fact sheet, Social Security Administration, 2022. 2 “Usual Weekly Earnings of Wage and Salary Workers: Second Quarter 2020,” U.S. Department of Labor, July 2020.}