What Is Social Security?

Social Security is a federal program that provides retirement income, disability insurance, and survivor benefits funded by payroll taxes (FICA). Workers and employers each pay 6.2% of wages up to the taxable maximum ($168,600 in 2026). You earn credits based on your work history, and you need 40 credits (roughly 10 years of work) to qualify for retirement benefits.

Your retirement benefit is based on your highest 35 years of earnings, adjusted for inflation. The full retirement age (FRA) is 67 for people born in 1960 or later. You can claim as early as 62 (with permanently reduced benefits -- about 30% less) or delay until age 70 (with permanently increased benefits -- about 24% more than FRA). The optimal claiming strategy depends on your health, finances, and life expectancy.

The Social Security trust fund is projected to be depleted around 2033-2035, after which incoming payroll taxes would cover only about 75-80% of scheduled benefits. This does not mean benefits will disappear, but they may be reduced unless Congress acts. Some combination of higher taxes, reduced benefits, and higher retirement age is likely.