Social Security
Ins & Out of Social Security
Social Security retirement benefits are based on your work history and earnings record and form an important part of your overall retirement income. As you work and pay Social Security taxes, you earn “credits” that determine your eligibility for retirement benefits.
Understanding how credits are earned, how benefits are calculated, and when to start can help you plan a more secure retirement.
How Credits Work
Credits are the foundation of your Social Security eligibility and determine whether you qualify for retirement benefits:
You earn credits when you work and pay Social Security taxes.
You need 40 credits (typically about 10 years of work) to qualify for retirement benefits.
The amount you need each year to earn one credit increases over time based on national wage levels.
How Benefits Are Calculated
- Your benefits depend on your lifetime earnings and work history:
Social Security calculates your benefit amount using your highest 35 years of earnings; more years or higher earnings can increase your benefit.
Credits determine eligibility, but your monthly benefit depends on your average indexed earnings over your career.
When You Can Start Benefits
- The age you choose to begin benefits directly affects how much you receive each month:
You can begin receiving Social Security retirement benefits as early as age 62, but benefits are permanently reduced if you start before your full retirement age (FRA).
Your full retirement age depends on your birth year and is generally between 66 and 67.
Waiting past your full retirement age (up to age 70) increases your monthly benefit through delayed retirement credits.
What “Full Retirement Age” Means
Full retirement age (FRA) is the age at which you can begin receiving your full Social Security benefit without reductions. FRA varies by birth year, typically between 66 and 67, and serves as a key milestone in retirement planning. Claiming benefits before FRA reduces your monthly payments, while delaying past FRA increases your retirement income.
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