Making Sense of Social Security Retirement Benefits

BY AMY ARTIGA

Social Security is a major part of most Americans’ retirement plans, but most people don’t really understand how it works. Whether you’re young or old, opted out, or still participating, here is some important information that you need to know about Social Security retirement benefits.

Social Security Benefit Calculations

You need 40 credit hours to be eligible for retirement benefits. That means you need to have worked and paid into the system for at least 10 years (in 2026, $1,890 of income earns you one credit, and you can earn up to four credits per year). Yet, only working 10 years won’t leave you with much of a retirement benefit. Your benefits are calculated based on your top 35 years’ worth of earnings (adjusted for inflation). If you have fewer than 35 years, then the remaining years will have zeros for the calculation.

The benefit that you’ve earned is called your “primary insurance amount” (PIA). That is the amount you are eligible to receive at your full retirement age (FRA), which is 67 for those born in 1960 or later. You don’t have to wait until your FRA to start collecting benefits, though. You can start receiving benefits as early as age 62, but they will be reduced. You can increase your benefit by delaying it as late as age 70. A lot of people start collecting benefits early, but often it is wise to do the opposite and let it grow for as long as possible.

Protection Against Retirement Risks

There are three big risks in retirement that Social Security protects against that your 403(b) and other savings don’t. The first is market risk. If the markets do poorly for an extended period of time, it can be detrimental to your savings. Social Security isn’t tied to the markets, so your benefit isn’t affected by a market downturn.

Another risk in retirement is inflation. When inflation is high, your 403(b) becomes less and less valuable as its buying power decreases. Social Security retirement benefits are tied to inflation, so when prices go up, you get a cost-of-living adjustment (COLA). Retirement benefits were increased by 2.8% for 2026 to account for inflation.

The final risk is longevity. You have a limited amount of retirement savings, and one day it will run out, even if you haven’t run out of life yet. Social Security benefits are guaranteed for life, so even if you celebrate your 110th birthday, you’ll keep getting a check.

Because Social Security protects against these three major risks to your retirement savings, it can be a good idea to wait in order to receive the highest benefit possible. Also, when one spouse passes away, the surviving spouse will begin to receive the deceased spouse’s benefit if it is higher than their own. For this reason, I often recommend to my financial planning clients that at least the spouse with the higher PIA wait until age 70 to claim benefits.

What if You Opted Out?

If you opted out of Social Security with Form 4361, that doesn’t necessarily mean you can’t receive retirement benefits. If you have a spouse with earned benefits, you are eligible to receive 50% of their PIA. Form 4361 does not negate spousal benefits. You may also be eligible for benefits from prior or concurrent secular work. The ministerial exemption only applies to ministerial compensation, so you still have to pay into the system (and therefore earn benefit eligibility) for any secular work you do. Opting out does not negate any previous credits earned.

Why You Should Set Up Your Own Social Security Account

Social Security retirement benefits are a valuable resource, so it’s important to understand how they work. I recommend that everyone, even if you’re fresh out of college, set up their own personal account at ssa.gov. There, you can see estimates of the benefits you’ve earned and also your earnings history. I highly recommend checking your earnings history for errors before you file for benefits so that you can get them corrected by the time you need your money. If your earnings record shows $0 when you had income subject to Social Security, you will want to go back and check your tax returns for Schedule SE. Some ministers (and their tax preparers) don’t realize that clergy are supposed to pay their Social Security taxes with Schedule SE rather than through payroll withholding and end up not paying!

Amy Artiga is a Certified Financial Planner (CFP), a Certified Kingdom Advisor™, and author of the clergy personal finance blog PastorsWallet.com. Send questions for Amy to benefits@nazarene.org