Social Security — The Retirement Safety Net

Social Security is a federal program providing retirement, disability, and survivor benefits funded by payroll taxes (FICA: 6.2% from employee + 6.2% from employer, up to wage base).

How benefits are calculated:

Based on your 35 highest-earning years

Convert to AIME (Average Indexed Monthly Earnings)

Apply bend points formula to get PIA (Primary Insurance Amount)

When to claim:

Earliest: age 62 (reduced benefits — up to 30% reduction)

Full retirement age (FRA): 66–67 depending on birth year

Latest: age 70 (maximum benefit; 8% increase per year after FRA)

Break-even analysis:

Claiming at 62 vs. 70 — break-even is approximately age 82–83

If you expect to live past 83, delay claiming

Married couples: the higher earner should maximize to protect surviving spouse

Social Security's financial status:

The Social Security Trust Fund is projected to be depleted around 2033–2035, after which it can still pay ~80% of benefits from ongoing payroll taxes. Not zero — but potential cuts are a risk for planning.

Reference:

Wikipedia: Social Security

https://en.wikipedia.org/wiki/Social_Security_(United_States)