Social Security is a federal insurance program that pays monthly benefits to retired workers, disabled individuals, and survivors of deceased workers. In 2026, about 67 million Americans receive Social Security, with the average retirement benefit at $1,976 per month. You qualify by earning 40 work credits — typically 10 years of covered employment.
What Social Security Is (and What It Is Not)
Social Security is not a personal savings account. It is a pay-as-you-go system: today’s workers fund today’s retirees through payroll taxes. When you retire, your benefits are paid by the workers behind you — not from a pot of money with your name on it.
The program was created by the Social Security Act of 1935 under President Franklin D. Roosevelt, originally as a safety net against poverty in old age. Over the decades, it expanded to cover disability, survivors, and dependents.
What Social Security covers:
- Monthly retirement income starting as early as age 62
- Disability payments if you can no longer work
- Survivor benefits for a spouse, children, or dependent parents
- Supplemental income for low-income elderly and disabled individuals (SSI)
What Social Security does not cover:
- Healthcare (that is Medicare, a separate program)
- Guaranteed full replacement of your pre-retirement income (benefits typically replace 40% for average earners)
- Retirement savings invested in your name
How Social Security Is Funded
Social Security is funded by the Federal Insurance Contributions Act (FICA) payroll tax. In 2026:
| Who Pays | Rate | On Wages Up To |
|---|---|---|
| Employee | 6.2% | $168,600 |
| Employer | 6.2% | $168,600 |
| Self-employed | 12.4% | $168,600 |
A worker earning $60,000 pays $3,720 in Social Security taxes annually; their employer pays another $3,720, for a combined $7,440 going into the system each year.
The collected taxes flow into two trust funds: the Old-Age and Survivors Insurance (OASI) Trust Fund and the Disability Insurance (DI) Trust Fund. These funds pay current beneficiaries and hold reserves.
The Four Types of Social Security Benefits
1. Retirement Benefits
The most common benefit, paid to workers aged 62 and older who have earned enough credits. Your monthly amount is based on your highest 35 earning years. See how Social Security benefits are calculated for the full formula.
2. Disability Insurance (SSDI)
Paid to workers who have a severe, long-term disability that prevents substantial gainful activity. SSDI uses the same benefit formula as retirement — your monthly amount is essentially what you would receive at full retirement age. Learn more in our Social Security disability benefits guide.
3. Survivor Benefits
Paid to widows, widowers, dependent children, and sometimes dependent parents of a deceased worker. A surviving spouse can receive up to 100% of the deceased worker’s benefit. See what happens to Social Security when a spouse dies.
4. Supplemental Security Income (SSI)
A separate needs-based program for people with very low income and resources who are aged 65+, blind, or disabled. SSI is funded by general tax revenues, not payroll taxes, and has different eligibility rules.
How You Qualify: Work Credits
To receive retirement benefits, you need 40 credits, earned by working in a job covered by Social Security. In 2026:
- You earn 1 credit for every $1,810 in covered wages or self-employment income
- You can earn a maximum of 4 credits per year
- 40 credits = 10 years of covered work
If you have fewer than 40 credits, you cannot collect your own retirement benefit — but you may still qualify for spousal or survivor benefits based on a spouse’s record.
2026 Key Social Security Numbers
| Metric | 2026 Figure |
|---|---|
| Average retirement benefit | $1,976/month |
| Maximum benefit at 62 | $2,710/month |
| Maximum benefit at FRA (67) | $3,822/month |
| Maximum benefit at 70 | $4,873/month |
| Full retirement age | 67 (born 1960 or later) |
| Early claiming age | 62 |
| Delayed claiming max age | 70 |
| 2026 COLA increase | 2.5% |
| Taxable wage maximum | $168,600 |
| Credits needed to qualify | 40 (10 years) |
| Cost per credit (2026) | $1,810 |
A Worked Example: Estimating Your Benefit
The SSA uses your Average Indexed Monthly Earnings (AIME) and a progressive formula called the Primary Insurance Amount (PIA) to set your benefit at full retirement age.
Example — a worker with an AIME of $4,000/month:
| Portion of AIME | Replacement Rate | Benefit |
|---|---|---|
| First $1,174 | 90% | $1,056 |
| $1,174–$4,000 ($2,826) | 32% | $904 |
| PIA (benefit at FRA 67) | $1,960/month |
If that worker claims at 62 instead of 67, the benefit is reduced by 30% → $1,372/month.
If they wait until 70, the benefit increases by 24% → $2,430/month.
Over a 20-year retirement, claiming at 70 vs. 62 in this example produces roughly $253,000 more in total lifetime benefits (not adjusted for inflation).
When to Claim Social Security
You can start benefits as early as 62 or delay as late as 70. Each year you delay past full retirement age earns an 8% permanent increase in your monthly benefit. The break-even age — where delayed claiming pays off — is typically around age 80.
For a full analysis of early vs. late claiming tradeoffs, see when to claim Social Security.
Will Social Security Be There When You Retire?
The Social Security trust funds are projected to be depleted around 2035 under current law. If no changes are made, ongoing payroll taxes would cover approximately 80% of scheduled benefits. However, Congress has acted to shore up Social Security before (most notably in 1983) and is broadly expected to do so again. Complete elimination of benefits is not among the realistic policy options currently discussed.
For a deeper look at the program’s finances, see Social Security funding solutions.
Next Steps
- Estimate your benefit: Use the SSA’s my Social Security portal to see your projected benefit at 62, 67, and 70
- Understand the formula: Read how Social Security is calculated
- Plan your claiming age: Read when to claim Social Security
- Understand spousal rules: Read Social Security spousal benefits
- Check the full guide: Return to the Social Security master guide for a complete planning checklist
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