Even though Social Security enjoys broad popularity among the American public, relatively few people appear to fully understand what it means for their retirement.
A 2024 study from the National Institute on Retirement Security, for example, found that just 11% of working Americans know the exact amount of monthly income they could expect from Social Security — and only 13% understand how taking Social Security early impacts the amount of their monthly benefit.
These statistics are concerning, since Social Security makes up about 40% of the average retiree’s income.
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Thankfully, understanding your projected Social Security retirement benefits is easy. The Social Security Administration provides detailed, personalized statements that you can download instantly.
The Kiplinger Building Wealth program handpicks financial advisers and business owners from around the world to share retirement, estate planning and tax strategies to preserve and grow your wealth. These experts, who never pay for inclusion on the site, include professional wealth managers, fiduciary financial planners, CPAs and lawyers. Most of them have certifications including CFP®, ChFC®, IAR, AIF®, CDFA® and more, and their stellar records can be checked through the SEC or FINRA.
Here’s how it works, what to look out for and how to incorporate this information into your retirement planning — no matter how far off your retirement may be.
Reading your Social Security statement
To access your personal statement, sign in to your SSA account. If you don’t already have an account, you’ll need to create one. Once you’re logged in, you can download your statement.
The retirement benefits information appears at the very top of the document. This includes your retirement age, which ranges from 65 to 67 based on when you were born, along with an available monthly benefit that varies depending on whether you start receiving benefits at 62, known as early retirement, or 70, the latest retirement age available.
Your benefit number is derived from your highest 35 years of earnings, with a minimum of 10 years of work needed to qualify. Remember, this is a benefit you’ve been paying for over the course of your working life.
As of 2025, you pay 6.2% of your annual W-2 salary (up to $176,100) — or 12.4% if you’re self-employed — into Social Security.
Crucially, the estimate on your statement assumes you will continue to earn the same amount of money you are currently making until you start your benefits. Be sure to account for any anticipated decreases in income when planning for the future.
The statement also includes a wealth of information about other Social Security uses, including disability benefits, survivor benefits and Medicare, along with retirement planning resources.
How to maximize your Social Security retirement benefits
With this information in hand, you can weigh when to start using your benefits — a decision that can have a significant impact on the amount of money you receive each month.
The basic rule is that the longer you wait to start receiving your Social Security, the more money you will collect each month for the rest of your life. The degree to which your monthly benefit amount increases over time will change each year, usually between 7% and 9%, annually.
The best-case scenario is to start receiving your benefit only after your retirement age and when you’re no longer working.
However, your decision to start receiving benefits will be influenced by many factors, such as your family’s needs, your lifestyle, your life expectancy and your ability to continue working.
If you need the benefit to cover your expenses, for instance, it may make sense to start as early as possible, at age 62. This is especially true if you no longer work and/or your other income streams are passive, since this means your Social Security benefit won’t be subject to income taxes or reductions.
But there could be serious penalties: If you take your benefit before your full retirement age and are making more than $23,400, your benefit will be reduced by half over that threshold, and that’s before you even account for potential income taxes.
While there are ways to potentially make up this amount when you reach your full retirement age, it’s a complicated process that you should consider carefully before pursuing.
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If you’re still working and take your benefit before your full retirement age, your Social Security could be significantly reduced by income taxes. Half of the benefit for married taxpayers filing jointly with earnings above $32,000 and single taxpayers making more than $25,000 are subject to income taxes.
This taxable share increases to a whopping 85% for married taxpayers earning more than $44,000, single taxpayers making at least $34,000, and married taxpayers filing separately and living together making any amount.
Case study: Making your retirement age count
Take 55-year-old John Smith, who is still working and has enough savings and income to meet his financial needs. According to his benefit statement, if he retires and starts receiving Social Security benefits at 62, he will see $2,747 each month; if he’s still working, that number will be lower due to income taxes.
Alternatively, if he starts receiving benefits at 70 when he’s fully retired, he will enjoy nearly double that amount, or $5,013 every month.
(Image credit: Courtesy of Stephen Dunbar)
But what if John wants to retire somewhere in the middle?
If you look at the increase in his projected benefits for each additional year he waits, you see that there’s a 9.1% jump in the value he receives at age 65 compared to 64. Yet there’s only a 7% increase for ages 69 to 70.
If a significant boost in value is just around the corner, it may make more sense for John to wait until his 65th birthday to start receiving his benefits, instead of starting at 64.
That is, unless he can get a better return by investing his Social Security benefits. Hypothetically, if John believes that he can outperform the benefits increase, it might make more sense for him to consider taking the benefits earlier.
Financial need aside, it’s also important for John to consider the age at which he’ll maximize his Social Security benefits given his health, family history and overall life expectancy.
If all signs point to his living to 83 or older, for instance, he will see more Social Security money over his lifetime if he waits to start receiving his benefits until age 70.
On the other hand, if his health is declining and he is unlikely to live past 75, he’ll make the most money if he takes retirement early at 62.
A financial adviser can work with John on this complex “maximization age” analysis, especially if he’s married and his spouse’s life expectancy needs to be considered, too.
The catch: Social Security’s uncertain future
There’s an important caveat when it comes to Social Security: There isn’t enough money to last forever.
The Old Age and Survivors Income Trust Fund — the account used to hold and distribute the funds for Social Security — only has enough to pay full benefits through 2033. Absent government intervention, recipients will receive only a percentage of their scheduled benefits after that point.
And this doesn’t account for the disruptions said to be now roiling the SSA, from staffing cuts and new anti-fraud measures to a potential temporary shutdown. The unfortunate reality is that Social Security — a financial lifeline for millions of Americans — will have to withstand a number of challenges ahead.
With this in mind, it’s important to work with a financial adviser to help you create a plan tailored to your needs.
Especially if your retirement is more than a decade away, consider creating a retirement strategy that does not include any Social Security income. This could mean leveraging annuities to guarantee an income stream, or even buying a life insurance policy to ensure financial resources will be there for your partner after you’re gone.
The bottom line? Understanding your Social Security benefits is key to a successful retirement. But in today’s day and age, Social Security should not be your only financial security.
Annuities are long-term financial products designed for retirement purposes. In essence, annuities are contractual agreements in which payment(s) are made to an insurance company, which agrees to pay out an income or a lump sum amount at a later date. All guarantees provided by annuities are based solely on the claims-paying ability of the issuing insurance company. There are contract limitations associated with annuities, as well as fees and charges. Annuities are not suitable for all investors, and you should discuss with a properly licensed/registered financial professional whether an annuity may be appropriate for you. Withdrawals from annuity contracts may be taxable as ordinary income, and, if taken prior to age 59½, may be subject to an additional 10% federal income tax penalty. Withdrawals may also be subject to a contractual withdrawal charge.
This article, which has been written by an outside source and is provided as a courtesy by Stephen B. Dunbar III, JD, CLU (AR Insurance Lic. #15714673 ), Executive Vice President of the Georgia Alabama Gulf Coast Branch of Equitable Advisors LLC, does not offer or constitute, and should not be relied upon, as financial, investment, insurance, tax, or legal advice. Equitable Advisors LLC (Equitable Financial Advisors in MI and TN) and its affiliates do not make any representations as to the accuracy, completeness, or appropriateness of any part of any content hyperlinked to from this article. Your unique needs, goals and circumstances require the individualized attention of your own tax, legal and financial professionals whose advice and services will prevail over any information provided in this article. Equitable Advisors LLC and its affiliates do not provide tax or legal advice or services. Stephen B. Dunbar III offers securities through Equitable Advisors LLC (NY, NY 212-314-4600), member FINRA, SIPC (Equitable Financial Advisors in MI & TN), offers investment advisory products and services through Equitable Advisors LLC, an SEC-registered investment adviser, and offers annuity and insurance products through Equitable Network LLC (Equitable Network Insurance Agency of California LLC). Financial professionals may transact business and/or respond to inquiries only in state(s) in which they are properly qualified. GE-7836629.1(04/25)(exp.04/29)
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