RETIREMENT READ TIME: 4 MIN
Social Security: Key Facts for Retirement Planning
Introduction
Social Security is a major component of retirement planning, but its rules and options can be complex. Understanding the basics can help you make informed decisions about when to start benefits, potential taxes, and family eligibility. Here are five key facts about Social Security benefits for retirees.
1. Social Security as a Retirement Income Source
Many individuals underestimate the role of Social Security, but research indicates it provides a significant portion of income for most retirees. According to the Employee Benefits Research Institute (EBRI), 66% of retirees rely on Social Security for a substantial share of their income.
Social Security benefits are adjusted annually for inflation through cost-of-living adjustments (COLAs) and are designed to provide lifetime income for both you and your spouse under current law. SSA.gov provides detailed information about these adjustments.
2. Choosing When to Receive Benefits
You can begin receiving Social Security as early as age 62, though benefits are reduced if taken before full retirement age. For individuals born in 1960 or later, full retirement age is 67. Delaying benefits beyond full retirement age can increase monthly payments through delayed retirement credits, which accrue until age 70.
Working While Receiving Benefits
If you continue working before reaching full retirement age, benefits may be reduced depending on your earnings. In 2026, benefits are reduced by $1 for every $2 earned above $24,480 before full retirement age, and by $1 for every $3 earned above $65,160 in the year you reach full retirement age until the month you attain it. Once you reach full retirement age, benefits are no longer reduced due to earnings.
3. Potential Taxation of Social Security
Depending on your income, a portion of your Social Security may be subject to federal income tax. Your combined income—adjusted gross income + nontaxable interest + 50% of Social Security benefits—determines taxation levels:
- 50% of benefits may be taxed if your combined income falls within certain thresholds.
- Up to 85% of benefits may be taxed for higher-income earners.
This can influence decisions about working in retirement, IRA withdrawals, and investments. For more details, visit the IRS Retirement Plans page.
4. Social Security as a Family Benefit
Social Security can provide benefits to family members. Eligible recipients may include:
- Spouses age 62 or older, or any age if caring for your child under 16 or disabled.
- Children under 18, full-time students 18–19, or disabled children 18 and older.
- Surviving spouses and dependent children after a beneficiary’s death.
Family benefits are generally up to half of the retiree’s benefit, with an overall family limit between 150% and 188% of the primary benefit. SSA.gov provides details on eligibility and limits.
5. Benefits for Divorced Spouses
Divorced individuals may qualify for Social Security based on a former spouse’s record if certain criteria are met:
- Marriage lasted at least 10 years.
- Divorced for at least two years.
- Age 62 or older and unmarried.
- Not entitled to a higher benefit based on their own record.
Survivor benefits may also apply if your ex-spouse passes away, provided the marriage lasted at least 10 years and other eligibility rules are met. Maximum benefits are generally 50% of the ex-spouse’s full retirement benefit. SSA.gov Surviving Spouse Benefits explains eligibility.
Conclusion
Social Security can provide essential retirement income, but understanding your options is critical. Key considerations include when to claim benefits, potential taxation, family eligibility, and how work may affect benefits. Reviewing your personal situation and planning ahead can help optimize the role Social Security plays in your retirement.
