10 Social Security Facts Every Pre-Retiree Should Know Before They File

Whether you realize it, Social Security is likely to provide a meaningful chunk of your income in retirement. Therefore, it's a good idea to get familiar with Social Security and how it works, so that you can make smart decisions about it.

Even if you're far from retiring, the more you know, the better you can plan for your future. Here are some important things to know about Social Security benefits.

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1. It's not meant to replace your pre-retirement income

First off, understand that it likely won't replace your pre-retirement income. It was designed to provide only about 40% or so, and the average monthly retirement benefit was just $2,084 as of June -- about $25,000 annually. To get a much clearer estimate of your future benefits, set up a my Social Security account at the Social Security Administration (SSA) website.

2. You need to qualify for it -- which is pretty easy

Social Security benefits are not automatically available to all -- you have to qualify for them. Fortunately, that's not too hard. You need to earn 40 "credits," and you can earn one per quarter, when you earn at least $1,890 in that quarter (for 2026). So 10 years of modest earnings and you're qualified.

3. Your benefits are based on your earnings

Not everyone collects the same benefits. What you receive is based on your earnings history, so those with above-average earnings can expect above-average benefit checks -- up to a point. (The maximum monthly benefit was recently $5,181, or about $62,000 for the year.)

Note, too, that the formula used to determine benefits uses your earnings in the 35 years in which you earned the most. So if your work history is only 30 years long, there will be five zeroes factored into the calculation. We should all aim to work for at least 35 years to get more out of Social Security.

4. When you claim your benefits matters

Another factor that greatly influences the size of your monthly benefit is when you claim it. You can do so as early as age 62 and you can delay up to age 70. Starting early means smaller checks, but you will receive many more of them. Delaying until age 70 will maximize your monthly benefits.

5. Your benefits may be taxed

Social Security benefits, unfortunately, are not completely tax-free. Fully 42 states (and the District of Columbia) do not tax your benefits, but Uncle Sam still has his hand out. The federal government will tax some of your benefits depending on how much "combined income" you have. That's the total of your adjusted gross income (AGI), your non-taxable interest, and half of your Social Security benefits. So, depending on where you live and your income, you may face additional taxes on your benefits.

6. You can look forward to cost-of-living adjustments (COLAs)

Here's a very good thing about Social Security: It aims to help retirees keep up with inflation via nearly annual cost-of-living adjustments (COLAs). (This is another reason to maximize your benefits -- it will also maximize your COLAs.) The next COLA will be announced in October and is expected to be about 3.8%.

7. There are spousal benefits, too

Social Security takes care of spouses who don't have much or any work history, permitting them to claim benefits based on their spouse's work history -- typically about half their spouse's benefit. You have to meet a few conditions, of course, such as being at least 62 years old and having been married for at least a year (with a few exceptions).

Even if you're an ex-spouse, you may not be out of luck -- if you were married for at least 10 years and have not remarried.

8. You're allowed one do-over

Just like golf, Social Security offers you a "mulligan" -- a do-over. If you've claimed your benefits and then change your mind, you can cancel your decision -- within 60 days of having your claim approved.

9. You can work and collect benefits -- with a catch

You're allowed to keep working while you collect Social Security -- with a twist. First, know that each of us has a "full retirement age" (FRA) at which we can collect our "full" benefits. It's 66 or 67 for most folks, and 67 for those born in 1960 or later.

If you haven't reached your FRA and you earn more than a certain limit ($24,480 for 2026), your benefit will shrink by $1 for every $2 you earn over that limit. In the year that you reach your FRA, $1 will be withheld for every $3 you earn above it.

Don't fret, though -- because withheld amounts eventually are added back, boosting your future benefits. You don't really lose anything.

10. Social Security is not going out of business

Finally, for those who have been worrying, this is a big thing to know: Social Security benefits are not set to go to zero. The surplus that used to exist is drying up, though, and if Congress doesn't act to strengthen Social Security (there are multiple ways to "fix" it), retirees may receive only 78% of their benefits within about six years. That is a big deal, but 78% is a long way from zero.

It's smart to keep up with Social Security developments in order to make savvy decisions now or later.

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