Social Security, Explained in Plain English

Where the money comes from

Every paycheck, workers and employers each pay 6.2% of wages into Social Security. In 2026 that tax applies to the first $184,500 of earnings. That money pays benefits to current retirees, not to a personal account in your name.

Medicare runs on a separate 1.45% payroll tax with no wage cap. Social Security and Medicare are separate programs with separate trust funds.

How your benefit is set

SSA looks at your 35 highest-earning years and adjusts them for wage growth. It averages those years, then runs them through a benefit formula. The result is your full monthly benefit at full retirement age.

Fewer than 35 years of earnings means some zero years enter the average, and that lowers the result.

What full retirement age means

Full retirement age is 67 for anyone born in 1960 or later. It is the anchor SSA uses to set your benefit, so filing at that age gets the full amount.

Filing at 62 is the earliest option, and it permanently reduces your monthly check. Every year you wait past full retirement age increases the check, up to age 70. After 70, waiting gains you nothing.

This page explains the mechanics. It is not a recommendation about when you should file.

The 2026 numbers

The Social Security wage base for 2026 is $184,500. Earnings above that are not taxed for Social Security that year.

The maximum monthly benefit at full retirement age in 2026 is $4,152. Reaching it takes roughly 35 years of earnings at or above the wage base. The average retired worker gets $2,071 a month.

Working while collecting

SSA reduces benefits for some workers who earn above a limit before full retirement age. The reduction ends once you reach full retirement age. SSA then recalculates your benefit to credit back the months that were withheld.