The vast majority of us look forward to retirement. However, as retirement age approaches, we’re often met with uncertainty about how to afford it all! Luckily, Social Security can help fund some of your retirement, but how much can vary from person to person.

The amount of Social Security you receive depends on your retirement age and lifetime earnings. You will not get a flat benefit that’s the same as your neighbor. For this reason, calculating your benefit can be a bit complicated.

Below, we’ll explore how your retirement age and lifetime earnings affect your Social Security retirement benefit. We’ll help you estimate your own Social Security payout and help you figure out when to retire. 

How Your Age Affects Your Social Security Benefit

The age at which you begin drawing from Social Security directly impacts your benefits. The age at which you can begin receiving your full Social Security benefit is called your “full retirement age.” However, what exactly counts as your “full amount” depends on your earnings history. 

If you wait until you reach full retirement age, you won’t have any reductions to your monthly payments. What counts as full retirement age depends on when you were born, though:

• Born before 1943: You can already receive your full benefits.
• Born 1943 to 1954: Your FRA is 66 years old.
• Born 1955 to 1960: Your FRA gradually increases from 66 years and 2 months to 67 years old.
• Born 1960 or later: Your FRA is 67 years old.

The full retirement age gradually increases over time to account for life expectancy. This ensures the long-term sustainability of the Social Security program, as we discussed in our Social Security history explainer. 

Knowing your full retirement age is vital, as when you decide to claim, compared to this age, will impact the amount you receive each month. 

How Your Lifetime Earnings History Affects Your Social Security Benefit

Your lifetime earnings are the other side of the coin when determining your Social Security benefit amount. The Social Security Administration considers your “average indexed monthly earnings” (AIME) when calculating your benefit. 

Simply put, the SSA adjusts all your monthly earnings for inflation, which is called “indexing.” Then, Social Security considers your highest 35 earning years. This factor means that your lowest earning years won’t affect your benefit amount if you worked for more than 35 years. If you only worked for 35 years, all your years will be counted. 

Your AIME is determined based on these 35 years. Then, the benefit formula is applied to your earnings. The exact formula is complex, but the basics are easy to understand. The higher your AIME, the more money you can expect per month.

Social Security Benefit Options: Early vs. Late Retirement

Now that we understand the foundation factors that affect your Social Security benefit, let’s explore the different claiming options that are available to you. These options hinge on your full retirement age.

Early Retirement

Everyone can claim Social Security as soon as they turn 62. This may seem appealing, as you can sit back and relax sooner. 

However, there is a catch. Your monthly benefit is permanently reduced if you claim benefits before your full retirement age. The sooner you retire, the lower your benefit payment will be. You basically have to spread the same amount of money over more months, leading to a lower monthly benefit.

Full Retirement Age

Your full retirement age is when you become eligible for full benefits based on your earnings history. Generally, it’s recommended that you wait until full retirement age at the very least!

Delayed Retirement

You also have the option of retiring later than your full retirement age. For each month you delay, your monthly benefit increases slightly. This maxes out at age 70, though. After you turn 70, your monthly benefit no longer increases. 

The reasoning behind this is because those who retire later typically receive fewer payments. Therefore, you can afford to have a bigger monthly payment. 

That said, age 70 is not the best time to claim Social Security. Waiting can leave you with less overall income, as we discussed in our deep-dive article. 

Of course, your individual circumstances matter a lot. Some people will need to retire early due to health reasons, while others may need to maximize their benefits by waiting. It’s important to consider your retirement goals and risk tolerance. 

Estimating Your Social Security Benefit

Even if you figure out your AIME and consider your Social Security age, figuring out your exact benefit is challenging. However, it’s still natural to wonder how much Social Security you can expect, and it’s even necessary for retirement planning. 

While predicting the exact amount is near impossible, there are many ways you can get a pretty accurate estimate. 

For instance, the Social Security website offers an online retirement benefits estimator. This should be your go-to tool if you want an accurate estimate. In 2024, the average monthly check is $1,767.03. Of course, your exact benefits will probably be higher or lower than this. 

You can consult a Social Security specialist if you’re especially concerned about your Social Security benefit. These professionals dive deeper into your situation, considering factors like your life expectancy and your spouse’s potential benefits. They can even help you figure out where Social Security matches up with other factors of your retirement plan. 

Learning how Social Security works can also help you put all the pieces together. We have a Social Security hub full of articles aimed to help you make the best financial decisions for your retirement. 

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