Social Security: Only 4% of Americans can name all 5 factors that influence the amount of their benefit

Most retirees will depend on Social Security to some extent during their senior years. In fact, 88 percent of current retirees say their benefits are either a “major” or “minor” source of income, according to a 2024 Gallup poll.

The more you rely on your benefits to make ends meet, the more important it is to maximize those monthly checks.

It’s easier than you think to get the most out of Social Security, but first you’ll need to know the basics of how your benefits are calculated. There are five main factors that affect your benefit amount, but only 4% of U.S. adults they can name them all, according to a 2024 survey from the Nationwide Retirement Institute.

Whether you’re nearing retirement age or have years to go, knowing these five factors can help you get every penny out of Social Security.

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1. The length of your career

Generally, you will need to have worked and paid Social Security taxes for at least 10 years to qualify for retirement benefits. But the harder you work, the more you can earn.

The amount of your benefit is based on your salary over the 35 years that you earned the most. These earnings are averaged, run through a formula and adjusted for inflation. Working less than 35 full years will average zero — which will reduce your benefit.

2. Career earnings

The more you earn, the higher your benefit will be — up to a certain limit. Only your wages earned during your highest earning 35 years count towards your benefit, but also only earnings up to the annual wage limit will affect your benefit amount.

The salary cap is the highest income subject to social security taxes. Once you exceed this limit, that income will not increase your payments. This limit changes from year to year to account for changes in the cost of living, but in 2024, it is $168,600 per year.

3. Your year of birth

The year you were born will determine your full retirement age, which is the age at which you will receive 100% of your career earnings benefit.

Data source: The Motley Fool.

If you were born in 1960 or later, your full retirement age is 67. Those born before 1960 will have a full retirement age of 66 or 66 and a few months, depending on the exact year of birth. To receive the full benefit amount, you will need to wait until this age to start claiming.

4. The age at which you start receiving benefits

While claiming at full retirement age will earn you the full benefit amount, you don’t have to file at that age. You can start receiving benefits as early as age 62, or you can wait a few years. Delay until age 70 and you’ll receive the maximum possible monthly payments.

Your claim age will have a major impact on your benefit amount. By filing as early as possible at age 62, your benefit will be permanently reduced by up to 30%. If you defer until age 70, you’ll receive the full benefit plus a bonus of between 24% and 32% per month, depending on your full retirement age.

5. Your marital status

If you are married, divorced or widowed, you may be entitled to additional benefits each month in the form of spousal, divorce or survivor benefits, respectively.

For spousal and divorce benefits, the maximum payment is 50% of the full value of the spouse’s or ex-spouse’s benefit — or the amount they will receive at full retirement age. If you qualify for survivor benefits, you can collect the full benefit your spouse was receiving before he passed.

Note, however, that if you also qualify for retirement benefits based on your work history, you will only receive the higher of the two amounts. For example, if you currently collect $800 per month in retirement benefits and also qualify for $1,000 per month in divorce benefits, your total benefit would be $1,000 per month — not $1,800 per month .

Social Security is an invaluable resource for millions of older adults. Regardless of how long you expect to depend on your benefits, knowing the factors that affect your benefit amount can make retirement planning much easier.