8 key Social Security terms every retiree should know

Nearly 70 million Americans depend on Social Security, yet even seasoned savers don’t always understand how it works. That can lead to costly mistakes — like claiming too early or overlooking spousal benefits — that can reduce lifetime payouts by tens of thousands.

Here’s a simple guide to key Social Security terms that shape your benefits — and how to use them to make smarter claiming decisions.

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1. Full retirement age

Often shortened to FRA, your full retirement age is when you can claim your complete Social Security benefit without reduction. If you were born in 1960 or later, your full retirement age is 67 starting in 2026 — the final bump in a process that kicked off in the 1980s.

Claim before your FRA, and you’ll face a permanent lifetime reduction of payments by up to 30%. For example, a $2,000 monthly benefit at 67 drops to about $1,400 at 62.

Don’t confuse FRA with when you stop working. You can retire at any age, but when you claim, Social Security determines how much you’ll receive for life.

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2. Delayed retirement credits

Wait to claim past your full retirement age, and your retirement benefit grows through delayed retirement credits — about 8% for every year you delay, up to age 70. That means a $2,000 benefit at 67 would jump to roughly $2,480 if you wait until 70.

That bigger amount also boosts any future survivor benefit for your spouse down the road.

That said, waiting any longer won’t help: Increases come to a hard stop at 70.

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3. Early retirement reduction

You can claim benefits as early as age 62, but you’ll face an early retirement reduction — a permanent cut of 25% to 30% compared to waiting until your full retirement age. That might not sound like much, yet it can add up to more than $100,000 in lost income over a 20-year retirement.

Once you claim early, that reduced amount is locked in for life except for any annual cost-of-living adjustment (COLA). Your payments won’t increase when you hit your FRA.

🔍 Read more: 2026 Social Security COLA is here — but it won’t be enough for most retirees

4. Earnings test

Still working and planning to claim before your full retirement age? Watch out for the earnings test. This rule limits how much you can earn before affecting your Social Security check.

In 2025, you can earn up to $23,400 before triggering benefit reductions. Beyond that, Social Security withholds $1 for every $2 you earn.

In the year you reach your FRA, the limit jumps to $62,160, and the penalty is only $1 for every $3 you earn over the cap.

Those limits will increase to $24,480 and $65,160 in 2026.

The good news? Once you reach your FRA, the Social Security Administration recalculates your benefit to credit you for those amounts — which means your money isn’t lost forever. Still, if you’re not expecting it, the temporary cut can catch you off-guard.

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5. Spousal benefits

Many retirees don’t realize that they can claim benefits based on their spouse’s work record. This spousal benefit also applies to divorced spouses, as long as the marriage lasted at least 10 years.

The maximum spousal benefit is 50% of the higher-earning partner’s full benefit at FRA. So, if your spouse’s benefit is $2,400, you could get up to $1,200. If your own benefit is already higher than 50% of your spouse’s amount, you’d just stick with your own.

Claim before your FRA and you’ll get less, but you won’t get more if you wait longer. And timing matters: Coordinating when each spouse claims can significantly boost your household’s total Social Security income.

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6. Survivor benefits

This is another benefit people often overlook: When one spouse dies, the surviving partner can collect their spouse’s benefit if it’s higher than their own. These survivor benefits depend on your age and when your spouse originally claimed.

Wait until your full retirement age, and you could collect up to 100% of what your spouse was receiving. Claim any earlier, and the amount drops. Remarrying before age 60 generally ends your eligibility, so timing is important.

Because delayed retirement credits also boost survivor payments, waiting to claim can protect both you and your spouse.

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7. Cost-of-living adjustment

Social Security typically gets an annual bump each year to keep up with inflation — called the cost-of-living adjustment, or COLA. The SSA just announced a 2.8% COLA for 2026 — just a little more than last year’s 2.5% COLA.

While these adjustments help to preserve some purchasing power, they rarely keep up with what retirees actually spend on — especially health care and housing costs.

Bottom line: Plan your budget accordingly, but don’t count on the COLA to cover all your expense increases.

🔍 Read more: 2026 Social Security COLA is here — but it won’t be enough for most retirees

8. Social Security statement

Did you know that you can view your lifetime earnings record and projected benefits at any time through your Social Security account at SSA.gov? It’s a good idea to review your personal Social Security statement for any errors at least once a year. Employer mistakes, incorrect personal information and unreported earnings are more common than you’d think, especially for jobs earlier in your career.

Spot an issue? The window to correct errors is three years, three months and 15 days from the end of the tax year — though the IRS makes exceptions if your employer’s reported wrong earnings, wages are missing or your tax returns don’t match.

Even if retirement is far on the horizon, it’s worth setting up your account. It takes only a few minutes, and there’s no age limit. And once you’re in, you can download your projected retirement benefits and full earnings history, getting a better sense of what you’ll receive if claiming early, at full retirement age or later.

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Bottom line: Putting it all together

Social Security isn’t just a monthly check — it’s a system of rules that can boost your retirement income if you time everything right. Understanding terms like full retirement age, delayed credits and the earnings test can help you make smart choices about when to claim and how to coordinate benefits with your spouse.

Before you claim, log in to your Social Security account and test different claiming ages using the SSA’s calculators. Consider talking to a trusted financial advisor or retirement planner too. The decisions you make today can lead to a more secure, predictable retirement for decades to come.

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About the writer

Michael Kurko is a finance writer and editor who covers investing, real estate, personal budgeting and financial literacy. His expertise has been featured in FinanceBuzz, The Balance, Investopedia, U.S. News & World Report and Forbes Advisor, among other top financial publications. In addition to his work in finance, Michael is also a freelance book editor and fiction writer. He strives to make complex money topics clear and approachable so readers can make informed decisions and build lasting financial confidence.

Article edited by Kelly Suzan Waggoner

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