Social Security is a critical part of a person’s retirement income, but it is often misunderstood. It is difficult to understand what Social Security will provide for you in the future because it is a complicated program. 

The most important thing you should know about Social Security is that it does not replace income. Here are some things you should know about Social Security:

How your Social Security Benefits Are Earned

If you worked at least ten years of covered employment and paid the required Social Security contributions, you will get both a retirement benefit and a disability benefit. Your retirement benefit covers the retirement income you will receive when you retire – it’s your regular monthly payment. The disability benefit provides financial support to help pay for living expenses if you cannot work because of a temporary or permanent disability.

How Your Monthly Benefit is Calculated

Your monthly benefit is based on the money you earned in covered employment and how long you worked. Your retirement benefit is based on the highest 35 years of earnings, up to a maximum of 40 quarters of coverage – or 35 years and two months. However, if you did not meet the minimum quarters’ threshold, your retirement benefit will be based on all years of covered employment, up to a maximum of 42 quarters.

How to Increase Your Retirement Benefit

You can increase your retirement benefit by working longer in covered employment, earning additional benefits from other sources such as pension income and other Social Security programs (e.g., Supplemental Security Income (SSI) and Medicare), or applying for Social Security Disability Insurance benefits. A benefit increase is only available if at least 36 quarters of covered employment have occurred.

Social Security’ Full Retirement Age’

When you reach age 66, you can start receiving benefits without considering any benefit reduction for early retirement. This is referred to as the “Full Retirement Age” or FRA.

Social Security Spousal Benefit Reduction

When you file for divorce, your former spouse may be entitled to receive a Social Security spousal benefit to provide their retirement benefit – known as a “reduction.” In general, the higher earner is to receive the more significant reduction. However, that decision is made when each individual applies for Social Security benefits.