Social Security was never meant to be the only source of income for people when they retire. Social Security replaces a percentage of a worker’s pre-retirement income based on their lifetime earnings.

How Your Social Security Benefits Are Calculated

Your Social Security payments are calculated based on the 35 years you earned the most. If you don’t work for 35 years, zeros are averaged into the calculation – which reduces your benefits.

Social Security Taxes

If you work for an employer you pay 6.2% social security taxes based on your earnings up to $160,200 (for 2023). Your employer pays an additional 6.2%. If you work for yourself, you pay 12.4% social security taxes on your earnings up to $160,200. This means you do not pay Social Security taxes on earned income over $160,200 in 2023.

Where your Social Security Tax Dollars Go

In 2023, when you work, about 85 cents of every SS tax dollar you pay goes to a trust fund that pays monthly benefits to current retirees and their families. About 15 cents goes to a trust for people with disabilities and their families.

How You Become Eligible for Social Security

As you work and pay taxes, you earn SS “credits”. In 2023, you earn one credit for each $1,640 in earnings – up to a maximum of four credits per year. Most people need 40 credits (10 years) of work to qualify for SS benefits.

Full Retirement Age

Your Full Retirement Age (FRA) is based on the year that you were born. Use the following chart to find out your FRA.

Year of BirthFull Retirement Age
195566 and 2 months
195666 and 4 months
195766 and 6 months
195866 and 8 months
195966 and 10 months
1960 or later67

Early Retirement

You may start receiving your benefits as early as age 62. Your benefits are reduced by 0.5% for each month you start collecting your benefits prior to your FRA. For example, if your FRA is 67 and you start collecting at age 62, you would receive approximately 70% of your full benefit.

Delayed Retirement

If you were born after 1943 and you choose to delay receiving your benefits beyond your FRA, your benefits will be increased by 8% each year you delay. For example, if your FRA is 67 and you delay your benefits to age 70 your benefits will be increased by a total of 24%.

If You’re Divorced

If you’re divorced your ex-spouse may qualify for benefits on your earnings. In some situations, they may get benefits even if you aren’t receiving them. To qualify a divorced spouse must:

· Have been married for at least 10 years.
· Have been divorced from you at least 2 years if you have not filed for benefits yet.
· Be at least 62 years old.
· Be unmarried.
· Depending on the circumstances, not be entitled to or eligible for a benefits on their own work that is equal to or higher than half the full amount on your record.

How Can I View my Social Security Benefits?

The most convenient way to view your Social Security benefits is to visit their website at: www.ssa.gov.


Choosing when to start your SS benefits is a very important decision. When deciding when to start your Social Security benefits make sure to consider the following:

· Claiming Options
· Health Status
· Spousal Benefits
· Work Situation
· Taxes
· Break Even Age

Reach out to a Nepsis® Advisor for a Social Security Analysis.

Source: https://www.ssa.gov/pubs/EN-05-10024.pdf

Advisory Services offered through Nepsis, Inc.; An SEC Registered Investment Advisor.

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