For most of the retirees I work with, Social Security is the foundation of their retirement income. It is guaranteed for life, it rises with inflation, and it supports a spouse after you pass away. But it was never meant to cover everything, and the decisions you make about when and how to claim can change the total you receive by a meaningful amount. Here is an overview of how it works in 2026.
How your benefit is calculated
Your benefit is based on your 35 highest-earning years, adjusted for wage growth. If you worked fewer than 35 years, zeros are averaged in, which lowers your benefit. For 2026, earnings up to $184,500 are subject to Social Security tax and count toward your benefit.
The best estimate of your own benefit comes from the Social Security Administration. Create a free my Social Security account at ssa.gov to see your estimated benefit at different ages and review your earnings history. Check that history against your W-2s or tax returns, and report any missing years right away. Errors are much easier to fix while the records are recent.
When you claim matters
- Full retirement age (FRA): 67 for anyone born in 1960 or later. At FRA you receive your full benefit.
- As early as 62: your benefit is permanently reduced, by up to 30% if your FRA is 67.
- After FRA, up to 70: you earn delayed retirement credits of 8% per year. Waiting from 67 to 70 raises your benefit to 124% of the FRA amount.
In 2026, the maximum benefit for someone claiming at full retirement age is $4,152 per month, and $5,181 per month for someone claiming at 70. The average retirement benefit is about $2,000 per month.
There is no single right age. Health, family longevity, other income, and whether you are married all factor in. For married couples, the higher earner’s decision also determines the survivor benefit, which is often the most important number in the plan.
Working while collecting
If you claim before full retirement age and keep working, the earnings test may temporarily reduce your checks. In 2026:
- If you are under FRA for the whole year, $1 of benefits is withheld for every $2 you earn above $24,480.
- In the year you reach FRA, $1 is withheld for every $3 you earn above $65,160, counting only earnings before the month you reach FRA.
Once you reach FRA, the earnings test no longer applies, and your benefit is recalculated to credit you for the months that were withheld.
Benefits for your family
Social Security also pays benefits to family members based on your work record:
- A spouse age 62 or older, or a spouse of any age caring for your child under 16 or a disabled child.
- Unmarried children under 18, or under 19 if still in high school full time.
- A surviving spouse, who can receive up to 100% of your benefit if they claim at their own full retirement age.
- A divorced spouse, if the marriage lasted at least 10 years and certain other conditions are met.
If you and your spouse both have work records, you will generally receive the higher of your own benefit or the spousal benefit. Women Face a Unique Path to Retirement discusses how time out of the workforce affects benefits.
Cost-of-living adjustments
Benefits are adjusted each year for inflation. The adjustment for 2026 is 2.8%. The new figure is announced each October for the following year.
Is Social Security running out?
No, but it does face a shortfall. According to the Social Security Trustees, the retirement trust fund is projected to be depleted around 2032, and the combined retirement and disability funds around 2034. If Congress makes no changes before then, incoming payroll taxes would still be enough to pay about 78% of scheduled benefits. Medicare’s hospital insurance trust fund is projected to be depleted in 2033, at which point it could pay about 89% of scheduled benefits.
Congress has several options, from raising taxes to adjusting benefits, and nobody knows yet which combination it will choose. For planning purposes, I think it is prudent to build a plan that still works if benefits are trimmed, and not to count on Social Security as your only source of income.
Don’t forget Medicare
Medicare eligibility starts at 65, regardless of your full retirement age. If you are not already collecting Social Security, you need to sign up yourself. Your initial enrollment period runs from three months before the month you turn 65 to three months after. If you plan to buy a Medigap supplement policy, the best time is the six months after you enroll in Part B, when insurers cannot turn you down or charge more because of your health.
A few practical tips
- Apply for retirement benefits about three months before you want them to start.
- Keep your name and records up to date with Social Security so your earnings are credited correctly.
- Coordinate your claiming decision with your spouse, your other income sources, and your tax plan, rather than deciding in isolation.
Social Security decisions are hard to reverse once benefits begin. If you are within a few years of claiming, it is worth reviewing your options with a financial advisor who can compare the numbers for your household.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
