Social Security retirement benefits are arguably the most valuable of all Social Security benefits. Out of all the beneficiaries who received Social Security in 2018, more than half of these received retirement benefits. The average benefit paid to retirees as of February, 2018 is $1,249 per month, but your benefit amount depends on your age at retirement and your work history.
History of Social Security
When the Social Security Act was passed in 1935, it was intended to support only the elderly who couldn’t work due to age or disability. Though the administration has expanded significantly during the years, its general structure remains the same: workers pay Social Security taxes throughout their years of employment, and they collect their benefits at age 62 (as of 2018) or later.
The average benefit paid to retirees as of February, 2018 is $1,249. With adjustments made for inflation, the average benefit in August 2000 was $1,030, in August 1990 was $950, and in August 1980 was $898. The number of retirement beneficiaries has also drastically increased. In August 1980, 19 million retirees were collecting benefits, and in February of 2018, 63 million were receiving them. That number is expected to rise as the giant Baby Boom generation reaches retirement age. The total costs of Social Security benefits for 2018 is approximately $1 trillion.
How Your Benefit is Determined
Social Security uses your highest-paid 35 years of qualifying work (meaning years you paid Social Security taxes) to determine your benefit amount. Generally, the longer you worked and the more you were paid, the higher your benefit will be. Use the Social Security calculator (see Resources) to estimate your retirement benefit.
Maximizing Your Benefit
If you’ve worked the minimum of 10 years under Social Security, you should be eligible to collect benefits at 62, as of 2018. However, this stretches out the money allotted for your retirement over more years, so you’ll receive a lower monthly benefit than if you waited until full retirement age (or later). You can maximize your benefits by waiting until age 70 to receive them, as waiting that long gives you additional retirement credits.
Your Retirement Age
“Full Retirement Age” means the age at which you can collect your maximum benefit. Retirement age varies depending on when you were born. As of 2018, if you were born in 1942 or earlier, your retirement age is 65. If you were born between 1943 and 1959, your retirement age is 66. If you were born in 1960 or later, your retirement age is 67.
- Social Security Administration: Your Retirement Benefit: How it is Figured
- Social Security Administration: Monthly Statistical Snapshot, August 2010
- Our Documents: Social Security Act (1935)
- Bureau of Labor Statistics: CPI Inflation Calculator
- Social Security Administration: Benefits Paid by Type of Beneficiary
- Social Security Administration: Retirement Benefits by Year of Birth
- Social Security Administration: Fact Sheet