Authored by Kenji Noguchi

Key Takeaways

• Your Social Security benefit is based on your highest 35 years of earnings and the age at which you claim. Understanding both factors can help you maximize your lifetime retirement income.
• Claiming age matters more than many retirees realize. Benefits can be reduced by up to 30% if claimed early at age 62, while delaying until age 70 can significantly increase your monthly payment.
• Social Security should be viewed as part of a broader retirement income strategy. Coordinating benefits with retirement accounts, pensions, healthcare costs, and other assets can improve long-term outcomes.
• 2026 updates include a 2.8% COLA adjustment, higher payroll tax wage limits, and updated earnings-test thresholds. Staying informed about annual changes can help you make more confident claiming decisions.

For many retirees, Social Security represents one of the largest sources of guaranteed income they will ever receive. Understanding how your benefit is calculated and when to claim can make a meaningful difference in your long-term retirement income.

Planning for Social Security? Download our Social Security Planning Guide for a deeper look at claiming strategies, spousal benefits, survivor benefits, and how Social Security fits into a broader retirement income plan.

Social Security is a federal retirement program funded primarily through payroll taxes. During your working years, both you and your employer contribute to the system. In retirement, eligible workers receive a monthly benefit based primarily on their earnings history and the age at which they choose to claim benefits.

For 2026, employees and employers each contribute 6.2% of wages to Social Security, up to the annual taxable wage base of $184,500.

(Source: SSA COLA Notice, 2026)

The Social Security Administration (SSA) calculates your retirement benefit using your highest 35 years of inflation-adjusted earnings. If you worked fewer than 35 years, the remaining years are counted as zeros, which is why working a full 35 years helps maximize your benefit.

Those earnings are then used to calculate your Primary Insurance Amount (PIA), the monthly benefit you would receive if you claim at your Full Retirement Age.

Check Your Estimated Benefit

Before making any claiming decision, create or review your free account at ssa.gov/myaccount. Your account allows you to:

• Review your earnings history
• See estimated benefits at different claiming ages
• Verify that your reported earnings are accurate
• Explore retirement planning tools provided by the SSA

Reviewing your earnings record periodically can help you catch any errors before they affect your retirement income.

Full Retirement Age (FRA) is the age at which you become eligible to receive 100% of your Social Security retirement benefit. For individuals born in 1960 or later, Full Retirement Age is 67.

(Source: SSA, ssa.gov)

The increase in Full Retirement Age was established through reforms enacted in the 1980s and has been gradually phased in over time.

You can begin collecting Social Security as early as age 62. Waiting until Full Retirement Age means receiving 100% of your benefit. Claiming earlier permanently reduces that amount, by as much as 30% for those with an FRA of 67. Delaying benefits past Full Retirement Age increases your monthly amount through delayed retirement credits, growing approximately 8% per year until age 70.

In 2026, the maximum monthly benefit for someone who earned at or near the taxable maximum for 35 years is:

• $2,969 at age 62
• $4,152 at Full Retirement Age
• $5,181 at age 70

Most retirees will receive less than these maximum amounts, but the relationship between claiming age and benefit size applies to everyone.

(Source: SSA FAQ, ssa.gov)

Social Security benefits are adjusted annually to help keep pace with inflation. The 2026 Cost-of-Living Adjustment (COLA) is 2.8%, following a 2.5% adjustment in 2025. For the average beneficiary, that translates to approximately $56 more per month starting in January 2026.

It is also worth factoring in Medicare costs when estimating your net benefit each year. In 2026, the standard Medicare Part B premium increased from $185 to $201.90 per month, and this premium is automatically deducted from most Social Security checks.

(Sources: SSA COLA Notice, 2026; Centers for Medicare and Medicaid Services, 2026 Part B Premium Announcement)

Many people continue working while collecting Social Security benefits. If you claim before reaching Full Retirement Age and continue to work, an earnings test may temporarily adjust your benefit.

In 2026:

• If you are under Full Retirement Age for the entire year, $1 is withheld for every $2 earned above $24,480
• In the year you reach Full Retirement Age, $1 is withheld for every $3 earned above $65,160, but only for earnings before reaching FRA

Once you reach Full Retirement Age, the earnings limit no longer applies. You can earn any amount without any reduction to your Social Security benefit.

(Source: SSA, ssa.gov/benefits/retirement/planner/whileworking.html)

The decision of when to claim Social Security deserves careful thought. Before claiming, consider:

1. Do I Need the Income Right Away?
   If you have other income sources available, delaying benefits may provide a larger guaranteed income stream later in retirement.
2. How Long Do I Expect to Work?
   Continuing to work may give you the opportunity to delay benefits while adding to your future retirement income.
3. How Does Social Security Fit With My Overall Retirement Plan?
   Social Security is most valuable when evaluated alongside retirement accounts, pensions, taxable investments, healthcare costs, and other income sources. The right claiming strategy often depends on how all of these pieces work together.

Social Security is one of the few sources of guaranteed lifetime income available to retirees, making it a foundational part of many retirement income plans. The right strategy depends on your financial goals, health, family situation, income needs, and broader retirement plan.

This information does not constitute legal advice. Prime Capital Financial and its associates do not provide legal advice. Individuals should consult with an attorney regarding the applicability of this information for their situations.

Advisory products and services offered by Investment Adviser Representatives through Prime Capital Investment Advisors, LLC (“PCIA”), a federally registered investment adviser. Tax planning and preparation services are offered through Prime Capital Tax Advisory. PCIA: 6201 College Blvd., Suite 150, Overland Park, KS 66211. PCIA doing business as Prime Capital Financial | Wealth | Retirement | Wellness | Family Office | Tax Advisory.