Social Security Explained

CW By the CalcWise team · Reviewed for accuracy · Updated Sep 2026 · 7 min read

Social Security will likely be a meaningful chunk of your retirement income — but the claiming-age decision alone can swing your monthly check by 75% or more in either direction.

How Your Benefit Is Calculated

Your benefit is based on your 35 highest-earning years (adjusted for wage growth over time), averaged into a monthly figure, then run through a formula that replaces a higher percentage of income for lower earners than for higher earners — the program is intentionally weighted to help lower-income retirees more.

If you worked fewer than 35 years, zeros get averaged in for the missing years, which can meaningfully lower your benefit — one reason working even a few extra years can help if your early career years were low-earning ones.

Claiming Age: 62 vs. 67 vs. 70

You can start claiming as early as 62 or as late as 70. Your full retirement age (67 for most people born in 1960 or later) is the baseline; claiming earlier permanently reduces your check, waiting later permanently increases it.

Age 62 ~70% Age 67 (Full) 100% Age 70 ~124%
Approximate percentages of your full benefit — exact figures depend on your specific birth year, but the shape of the trade-off is consistent.

There's no universally "right" answer — it depends on your health and family longevity, whether you have other income sources, and whether you're still working (earning too much before full retirement age can temporarily reduce your benefit). Married couples have extra strategic options too, since a surviving spouse can eventually step into the higher of the two benefits.

Tip The "break-even" age for delaying — the point where cumulative payments from claiming later catch up to claiming earlier — typically falls in your late 70s to early 80s. If you expect a longer-than-average lifespan or want a form of longevity insurance, delaying tends to make more sense.

Will Social Security Even Be There?

This deserves a direct answer: the trust fund reserves are projected to be depleted at some point, but that does not mean benefits stop — it means that, absent legislative changes, incoming payroll taxes would still cover a large majority (roughly three-quarters, by current projections) of scheduled benefits. Congress has adjusted the program multiple times before, and most policy discussions center on adjustments (tax changes, benefit formula tweaks), not eliminating it outright.

The realistic planning takeaway isn't "it'll disappear," but "don't assume it covers 100% of your needs" — treat it as one reliable income layer among several, which is exactly how the earlier lessons on retirement accounts (Lesson 8) and retirement planning have framed it.

Key Takeaways

  • Your benefit is based on your 35 highest-earning years — working fewer years can lower it.
  • Claiming at 62 permanently reduces your check; waiting until 70 permanently increases it, relative to your full retirement age.
  • The right claiming age depends on health, longevity expectations, other income, and marital status.
  • Projected funding shortfalls would likely reduce, not eliminate, benefits absent changes — plan around it as one income layer, not your whole plan.

Retirement Readiness Planner (models claiming age)

Check Your Understanding

Three quick questions — no grades, just a gut check before you move on.

1. What is your Social Security benefit primarily based on?

2. What happens if you claim Social Security at 62 instead of your full retirement age?

3. If trust fund reserves are depleted with no legislative changes, what's the realistic outcome?

Do This This Week

Reading is step one. Here's what actually moves the needle: