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What can I expect from Social Security?

Social Security and retirement

Most current retirees rely heavily on Social Security in their retirement -- despite pessimism among younger generations that the government program may not be there when they reach retirement age. 

A recent study by the Center on Budget and Policy Priorities found that nearly 70 percent of middle-income beneficiaries say Social Security is their main source of retirement income. So it pays to understand just how this vital program works. Here are some essential things to know: 

What you put in

Taxes for the government retirement plan are taken out of every paycheck you make. This so-called payroll tax maxes out at an annual income of around $127,000.

To qualify for benefits in retirement, you'll need to have worked and contributed for a minimum of 40 quarters, or 10 years. Keep in mind, the years worked don't have to be consecutive, so if you take time off to care for children or an elder and return to the workforce later, you can still qualify.

When you can claim benefits

The youngest age you can start taking Social Security benefits is 62, but that's considered "early." So your check will be reduced based on how many months away from "full retirement" you are.

"Full retirement" is the age when you qualify for unreduced Social Security benefits. If you were born after 1960, that's age 67. If you delay benefits until age 70, you may be eligible to receive a credit of up to 8 percent per year, depending on your birth year.

If you haven't contributed for the 40 qualifying quarters, you may qualify to receive half of your spouse's benefits, if you were married 10 years or more -- even if you became divorced.

How much can I count on receiving?

As of 2017, Social Security maxed out at $2,687 per month for a "full" retiree, and $3,538 for a "delayed" retiree.

Depending on your expected retirement spending needs, financial experts recommend saving in alternative retirement accounts as well. If you have substantial income outside of Social Security, up to 85 percent of your benefits may be subject to federal income tax. And keep in mind: 13 states also impose income taxes on the Social Security benefits retirees collect.

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