In the course of planning for retirement, you may be inclined to focus on how quickly your IRA or 401(k) is growing. But there’s another important piece of your income puzzle to think about — Social Security. Let’s talk about how Social Security could fit into your retirement income strategy and review options for making the most of your benefits.
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How much of your pre-retirement income will Social Security replace?
Social Security was never intended to replace workers’ earnings entirely. Rather, if you earn a pretty typical paycheck, you can expect those benefits to replace about 40% of it. This assumes that benefits aren’t cut in the future, which is a possibility. But because lawmakers have not allowed Social Security cuts to happen before, let’s be optimistic and assume it won’t happen this time around.
With that in mind, let’s assume you earn a $100,000 salary in the years leading up to retirement. Social Security might give you $40,000 a year, assuming you claim benefits on time (more on that in a second). Where does that leave you in terms of savings? Well, that’s up to you.
It’s common for retirees to need about 75% to 80% of their former income to live comfortably. But if you don’t anticipate large expenses, 65% of your former income may suffice. If you plan to live it up in retirement, you may need 100% of your former income, or even more.
Assuming a middle-ground scenario, if you’re used to living on $100,000 a year, you may find that you’re fine with $80,000 a year in retirement. If Social Security provides half of that, the rest will have to come from your savings or other sources. Knowing that as retirement approaches can help you plan effectively.
When should you claim Social Security?
A big part of figuring out Social Security’s role in your retirement income is deciding when you’ll take benefits. If you file at full retirement age, which is 67 for anyone born in 1960 or later, you’ll get 100% of the monthly benefit you’re entitled to based on your earnings history.
Filing early, on the other hand, will reduce your benefits, while a delayed claim will boost them. The earliest age to claim Social Security is 62. On the flipside, you get delayed retirement credits worth about 8% for each year you wait on benefits until age 70. From there, you can’t rack up any more credits.
Now, let’s say you’re eligible for $3,000 a month in Social Security at age 67. Filing at 62 will whittle those payments down to about $2,100. Waiting until 70 to file will boost them to roughly $3,740.
You’ll need to think about how much replacement income you’re looking for in retirement and what your non-Social Security income streams entail to decide when to claim benefits. If boosting those checks by waiting gives you the freedom to enjoy retirement more, it may be worth holding off.
Related: Strategies for claiming Social Security as a couple
Some other factors to consider
Now that you have a basic sense of what to expect from Social Security income-wise, and you understand the implications of filing early versus on time versus late, let’s review some other factors to think about.
Inflation
Social Security benefits are eligible for an annual cost-of-living adjustment. If you invest your savings strategically, they can potentially grow at a rate that beats inflation, too. But there’s no guarantee, whereas with Social Security, there is.
For this reason, if you want more inflation protection, you may want to lean toward a delayed claim. The larger your monthly benefits are to begin with, the more valuable those annual cost-of-living adjustments become.
Longevity risk
Many retirees fear outliving their savings. With a smart withdrawal strategy, you can reduce that risk. Can you get rid of it completely? That’s harder. There are other strategies you can employ to guarantee yourself retirement income for life, like purchasing an annuity. But there can be high costs and fees to set that up.
Social Security pays you your monthly benefits for life. The longer you wait to sign up, the more guaranteed monthly income you get.
Spousal protection
If you’re eligible for Social Security and you pass away before your spouse, they’ll be entitled to survivor benefits worth 100% of your monthly benefits. That’s another argument for claiming Social Security on the later side. If there’s a big age gap between you and your spouse or you have health issues and expect to pass away first, the larger a benefit you lock in, the more stability your spouse might enjoy as they age.
The bottom line
Social Security should not be your only retirement income source, but it’s certainly an important one. Claiming benefits at the right time is crucial if you want your income plan to succeed, so think through your choices carefully before making a decision.
Related: 4 Social Security misconceptions to clear up
This story was originally published by TheStreet on Apr 10, 2026, where it first appeared in the Personal Finance section. Add TheStreet as a Preferred Source by clicking here.
