Clark County Credit Union (Las Vegas, NV)

The Basics of Social Security Retirement Benefits

Although most people understand Social Security benefits to be something you can receive when you retire, it is important to have a clear understanding how they work so you can begin planning for the future. The following is an overview of how you can become eligible for these benefits, the amount you can receive and the additional income you will need to ensure you can retire comfortably:

How Social Security Retirement Benefits Work

Social Security taxes are deducted from each paycheck, and you earn Social Security credits. On average, most people earn four credits a year, which is the maximum number that can be earned. In order to receive Social Security retirement benefits, you need to earn a certain number of credits, which is based on one's birthdate. As of 2018, for each $1,320 earned, one Social Security credit is earned. However, this figure changes every year.

Additional Retirement Income
While Social Security retirement benefits contribute to your income during retirement, you cannot rely solely on this. When working toward retirement, bear in mind your retirement income should be approximately 70 percent of the amount you were making while working. Your Social Security retirement benefit should comprise approximately 40% of this amount. Your 401k, IRA or other savings, in addition to a pension plan (if offered by your employer) should make up the remaining 30 percent. 

Retirement Age
The age in which you retire affects your monthly benefit amount. The older you are at retirement, the higher your benefit amount. As of 2018, the following regulations apply:

  • Full Retirement
    • If your birth year is between 1943 and 1954, you can fully retire at age 66. This will give you the maximum amount of Social Security benefits.
  • Early Retirement
    • You can retire at 62, but the amount you'll receive is 75% of what you would have received had you waited until full retirement age. If you wait until age 65, you'll receive 93.3% of the full retirement benefit.
  • Delayed Retirement
    • Delaying your retirement past full retirement (up to the age of 70) equates to a larger benefit amount. The increase in benefit amount is based on birth year and each additional year of work. Current figures can be found on the SSA website.

Benefit Amount
Your benefit amount varies based on your earnings over the years. The more you have earned, the higher your benefit amount. Every year, SSA sends out a benefit estimate to everyone who is employed. 

Beneficiaries
Your Social Security retirement benefits are not only profitable to you, but they can also assist qualifying members of your family. This might include a widow or widower, disabled adult children, children under the age of 18, a spouse who has not yet reached retirement age, or a spouse of retirement age. 

Social Security retirement benefits are not guaranteed to every American, so it is important to begin saving for retirement today. For more information on proper financial planning, visit our BALANCE section for various financial tools and resources, such as workshops and webinars, counseling services, debt management, and more.

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