Social Security Retirement Benefits

Eligibility, amount, taxation, and timing of Social Security retirement benefits.

There are many ins and outs to the Social Security retirement benefit system—most of them dependent on factors such as the type of job you hold, the length of time you work, and the age at which you retire. This article provides some basic information on Social Security retirement benefits. For more detailed information, see Nolo's Social Security articles.

Who Is Qualified

As with other Social Security benefits, you will be eligible for retirement benefits only if you have accumulated enough work credits. Work credits are measured in quarters (January through March, April through June, and so on) in which you earned more than the required amount of money. Everyone who reaches age 62 in 1991 or later needs 40 quarters of employment (usually ten years) to qualify for retirement benefits.

In addition, certain dependents of retired workers are eligible for monthly benefits if the worker has amassed enough work credits to qualify for benefits. Dependents who may qualify for these derivative benefits include:

  • a spouse age 62 or older
  • a spouse under age 62 who cares for the worker’s young or disabled children
  • a divorced spouse age 62 or older, if the marriage lasted at least ten years and if at least two years have passed since the divorce
  • children up to age 18 or age 19 for full-time students, and
  • disabled children.

Calculating Your Benefits

Note that when the term “retire” is used by the Social Security Administration, it refers only to the date when you claim your retirement benefits. It does not necessarily mean you have reached a particular age or that you have stopped working.

The average benefit for a person who retires at age 66 is $1,500 per month (in 2020)—a figure that changes based on the total amount of all benefits paid and the number of people receiving them. Whatever the amount of your retirement benefit, you will receive an automatic cost of living increase on January 1 of most years. This increase is tied to the rise in the Consumer Price Index, which measures the cost of basic goods and services.

Even if you have not worked for many years and you did not make much money in the years you did work, check your earnings record. You may be surprised to find you have quite a few quarters of credit from years gone by.

If you want to estimate the amount of Social Security benefits you are entitled to receive after you have retired from your job, you can view your Social Security Statement online by going to www.ssa.gov/mystatement/ (you'll need to create an account first).

Taxes on Your Benefits

Most Social Security retirement benefits are not considered taxable income by the Internal Revenue Service, although you do have to pay income tax on any interest you earn from saving your benefits. But, if your adjusted gross annual income—from a part-time job, for example—plus one-half of your year’s Social Security benefits adds up to $25,000 or more, then you must pay income tax on one-half of your Social Security benefits.

In January of each year, you will receive a statement from the Social Security Administration showing the amount of benefits you received in the previous year and an IRS form explaining how to report this income, if necessary.

Timing Your Retirement

You can start your Social Security retirement benefits as early as age 62, but, if you do decide to jump that gun, the benefit amount you receive will be less than your full retirement benefit amount. If you start your benefits early, they will be permanently reduced based on the number of months before you reach what Social Security defines as your full retirement age.

If your full retirement age is 66, but you begin to claim benefits at 63, they will be reduced by 20%; at age 64, the reduction would be about 13%; and at age 65, it would be about 7%.

If you start your retirement benefits more than three years early (say you start at age 62 when your retirement age is age is 66 or 67), the reduction in your benefit amount will be greater—up to a maximum of 30% (for people born in 1960 and later who retire at age 62).

These days, many people are opting to (or have to) continue working full time beyond retirement age. These industrious souls can increase their Social Security benefit in two ways:

  • Each additional year a person works adds another year of earnings to their Social Security record. Higher lifetime earnings may result in higher benefits at retirement.
  • In addition, a person’s benefit will be increased by a certain percentage (8% a year) if he or she delays retirement. These increases, called delayed retirement credits, will be added in automatically from the time one reaches full retirement age until that individual starts taking benefits or reaches age 70.

Updated December 31, 2019

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