Making Sense of Social Security: The Basics and Key Considerations

Social Security plays an important role in retirement strategies, but knowing when and how to claim benefits can make a meaningful difference over time. This month’s newsletter breaks down the basics: key claiming ages, how benefits are calculated, and important considerations for individuals and couples as they plan for retirement income.

You’ll also find a timely market update, including how recent global events have contributed to increased volatility and what those developments may mean for the broader economy and investors.

If you have questions about how Social Security fits into your overall retirement strategy or would like to review your goals, please don’t hesitate to reach out. 

Making Sense of Social Security: The Basics and Key Considerations

By Charles Sherry, MSc

“Social Security is one of the most effective poverty-prevention programs in history. According to the U.S. Census Bureau, it keeps nearly 29 million Americans from sliding into poverty each year,” BlackRock CEO Larry Fink wrote in his 2025 letter to investors.

Nonetheless, while it provides a basic level of income, we’re also mindful that Social Security, by itself, is rarely enough to ensure a comfortable retirement.

What is Social Security?

Social Security is a federal program that provides income to eligible people who are:

• Retired
• Spouses or dependents of eligible workers
• Disabled
• Survivors of a deceased worker

Our focus will be on Social Security’s primary mission, providing monthly benefits to those in or near retirement. But let’s briefly touch on the other aspects of the nation’s largest safety net that accounts for about one in every five dollars spent by the federal government.

Social Security Disability Insurance (SSDI), or “Disability,” provides monthly payments to people who have a disability that stops or limits their ability to work.

You may be eligible if you have a disability that affects your ability to work for one year or more, or will result in death, or you are blind.

Generally, you must have worked for at least five of the last 10 years to qualify for SSDI. People under the age of 24 may not need to have worked as long.

Survivor benefits provide monthly payments to eligible family members of those who worked and have paid Social Security taxes before they died.

You may be eligible if you:

• Are age 60 or older, or age 50–59 if you have a disability, and
• Were married for at least nine months before your spouse’s death, and
• Didn’t remarry before age 60 (age 50 if you have a disability).

A child of someone who died may be eligible if they’re unmarried and are 17 and younger, or 18–19 years old and in school full time (K–12), or any age if they developed a disability at age 21 or younger.

Now, let’s turn our attention to the retirement benefits that Social Security provides.

When can I start receiving Social Security retirement benefits?

You can claim retirement benefits as early as age 62, but your benefit will be permanently reduced.

Key ages:

• 62 is the earliest you are eligible.
• Full Retirement Age (FRA) is between 66 and 67 and depends on the year you were born. If you were born in 1960 or later, FRA is 67.
• 70 provides the maximum benefit (no further increases after this).

Practically speaking, how does this work? Here’s a broad overview.

If you were born in 1960 or later, you’ll receive:

• 70% of your full benefit at age 62
• 100% of your full benefit at age 67
• 124% of your full benefit at age 70

Every month you delay between birthdays adds a prorated increase to your benefit. At age 70, you’ll have maximized out at 124%.

For example, based on his earnings history, Tom is entitled to $1,000 per month at age 67. If he claims early at age 62, his benefit would be reduced to $700 per month. By waiting until age 70, his benefit rises to $1,240 per month.

Keep in mind, this does not include cost-of-living adjustments, which are required by law and will gradually increase Tom’s benefit over time.

The breakeven: Claim now or wait

A common question that arises is, “If I claim benefits at age 62 and receive a smaller monthly amount over a longer period, when might I break even versus waiting until age 67?”

In this case, the breakeven is roughly about 79 years old.

The breakeven between claiming Social Security at 67 versus 70 is around 82 years of age, and the breakeven between claiming at 62 and waiting until 70 is around 80.

Claim early?

Simply put, you need income today. You’ve retired (or have been subjected to a layoff), your savings are limited, and Social Security provides you with a stable income.

Health concerns or a shorter life expectancy, based on family history, are also important reasons some choose to claim benefits earlier.

Others simply value income today. They want the freedom and the income while they are still healthy.

But if you are still working, be aware that earnings limits apply before FRA, but withheld benefits are not permanently lost—more in a moment.

Claim later?

The future is unknown, but you enjoy working, you are in good health, your family history suggests a longer life expectancy, and you don’t need the money today.

Besides, you have other sources of income, such as rental properties, a pension, or a part-time gig. But once you reach 70, there’s really no reason to delay. Your benefit is maxed out, and you’ll be leaving money with the government.

Working and receiving Social Security

You may or may not be aware of this, but you can receive Social Security retirement benefits and work at the same time. There are a lot of nuances to this topic, so if you’re considering Social Security while still working, your financial professional would be glad help you make an informed decision.

Here are the main highlights.

If you are under your FRA for the entire year:

• 2026 earnings limit is $24,480.
• Social Security withholds $1 in benefits for every $2 you earn above the limit.

If you reach FRA during the year:

• 2026 limit (before your birthday month) is $65,160.
• SSA withholds $1 for every $3 you earn above the limit.

Starting the month you reach FRA, there is no earnings limit and no benefits reduction.

What counts as income? Wages, bonuses, commissions, and vacation pay from a job in the year they’re earned, not paid. For example, bonuses may be earned in one year but paid the following year. In some cases, severance pay is counted.

Income that’s excluded includes capital gains, pension payments, annuity income, 401(k) or IRA withdrawals, rental income (if not a business), Social Security benefits, veterans benefits, and other government benefits.

There’s one other matter I’d like to point out. And it’s probably the least understood part of the earnings test: Benefits withheld are not lost forever.

When you reach full retirement age, Social Security recalculates your benefit to give you credit for the months when benefits were withheld. But the payback isn’t immediate. You won’t receive a lump sum for benefits that were withheld. Instead, your monthly benefit is increased. Over time (typically 12–15 years) you recover the full amount that was withheld.

What about your spouse?

Your spouse may claim Social Security benefits based on a husband’s or wife’s earnings record as long as the spouse is age 62 or older and the higher-earning spouse is already receiving Social Security retirement benefits.

However, the lower-earning spouse may claim Social Security based on their own work record at age 62 even if the other spouse has not yet claimed.

So, if income is needed earlier, the lower-earning spouse can begin receiving benefits based on their own earnings record, allowing the higher-earning spouse to hold off filing and earn delayed retirement credits.

Once the higher earner begins collecting benefits, the lower-earning spouse may become eligible for a higher spousal benefit, assuming the spousal benefit exceeds their own.

At most, a spousal benefit can equal up to 50% of the higher-earning spouse’s benefit at FRA. If you claim spousal benefits before reaching your own full retirement age, that benefit is permanently reduced.

Importantly, the spousal benefit is always calculated using the higher earner’s FRA benefit (age 67 if born in 1960 or later), not the amount they actually receive. Delayed retirement credits do not increase spousal benefits.

For example, if the higher-earning spouse’s FRA benefit is $2,000 per month, the maximum spousal benefit is $1,000 (50%). Even if the higher earner delays claiming until age 70, the spousal benefit is capped at $1,000.

Final thoughts

Your decision will be influenced by a range of considerations, and you don’t have to navigate them alone.

I recognize the complexities involved, and the goal this month was to provide an overview. But your financial professional can help you explore various options based on your circumstances. While the final decision rests with you, they’d be happy to support you and address any questions along the way.

March comes in like a lion

Traders who had donned their Dow 50,000 hats in February watched the oldest and best-known index slide into correction territory last month, shedding 10%.

Since its year-to-date peak, the tech-heavy Nasdaq retreated by about 12% at its lowest point.

The S&P 500 Index has yet to enter an official stock market correction, with a total decline of 9.1% (10% is widely regarded as the threshold for an official market correction).

But given the gravity of the situation, losses have been modest.

From purely an economic perspective, let’s review three important commodities that originate in the Persian Gulf and examine how they could affect the global economy if the currently blocked Strait of Hormuz remains closed.

1) Not surprisingly, the hostilities in the Middle East have dominated trading, especially as it relates to the price of oil.

According to the Energy Information Administration, about 15% of global oil and 5% of the world’s refined products exit the Persian Gulf through the Strait of Hormuz. Travel through the Gulf has slowed to a trickle, and prices reacted accordingly.

During March, the International Energy Agency estimated a shortfall of about 8 million barrels per day in March.

Some supply in the Gulf can be re-routed, non-OPEC production may rise, and emergency drawdowns from global stockpiles can bridge some of the gap.

Today, the U.S. is much less dependent on oil from the Persian Gulf (about 3–4%). Still, oil is priced globally, and the U.S. cannot fully escape the economic consequences from rising prices.

2) While attention has been focused on oil, the world is also dependent on the Persian Gulf for fertilizer.

Countries exposed to disruptions account for nearly 50% of global exports of urea—a widely used nitrogen fertilizer—and about 30% of global ammonia exports, according to the U.S. Farm Bureau.

Though the U.S. does not directly import large quantities of fertilizer from the Middle East, fertilizer markets, like oil, respond to price movements in the region.

Lower global yields would likely lift food prices if the Strait remains blocked for an extended period.

3) About one-third of the world’s helium comes from Qatar. It’s not simply party balloons that are affected. Helium is essential in the production of computer chips.

A prolonged shortage could have a significant impact on semiconductor manufacturing. The U.S. is the world’s top producer but would be affected by a shortage of chips.

In summary, March was marked by higher volatility yet modest losses rather than panic-driven selling, leaving markets cautious but still fundamentally supported heading into April.

Expectations that the conflict would be limited in duration helped stabilize sentiment, while a resilient U.S. economy and upbeat Q1 estimates (LSEG) provided support.

Investors also took comfort in the perception that the Federal Reserve was unlikely to overreact to a supply-driven rise in oil prices and a near-term resolution of the war. Any unwanted escalation or a prolonged conflict would likely heighten market volatility.

As the month came to a close, stocks rallied amid optimism that hostilities might soon end.

We understand the events in the Middle East may be concerning. As always, we encourage you to reach out if you have questions, concerns, or simply want to talk through what this means for your personal financial goals.

We’re here to provide clarity, perspective, and guidance, especially when the news feels overwhelming.

I trust you found this review to be insightful. If you have any questions or simply want to talk through your portfolio or other financial goals, please don’t hesitate to reach out to me or anyone on our team.

The views stated in this letter are the opinion of the author and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change with or without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results. Investors cannot invest directly in indexes. The performance of any index is not indicative of the performance of any investment and does not take into account the effects of inflation and the fees and expenses associated with investing.

The return and principal value of stocks fluctuate with changes in market conditions. Shares when sold may be worth more or less than their original cost.

Crypto-Currencies, Digital Assets and other Block-Chain related technology (such as Bitcoin, Ethereum, NFTs and others) are not securities, not regulated, and not approved products offered by Cetera. Crypto-currencies and other block-chain related non-securities products cannot be recommended, offered, or held by the firm.

Mutual funds are sold only by prospectus. Investors should consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the investment company, can be obtained directly from the company or from your financial professional. The prospectus should be read carefully before investing or sending money.

The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ.

The NASDAQ Composite Index includes all domestic and international based common type stocks listed on The NASDAQ Stock Market. The NASDAQ Composite Index is a broad based index.

The S&P 500 is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

The Russell 2000 Index includes 2000 small-cap U.S. equity names and is used to measure the activity of the U.S. small-cap equity market.

The MSCI World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets. The MSCI World Index represents 23 developed market countries.

The MSCI Emerging Markets Index is a free float-adjusted market-capitalization-weighted index designed to measure the performance of global emerging market equities.

The Bloomberg Barclays US Aggregate Bond Index, or the Agg, is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States. Investors frequently use the index as a stand-in for measuring the performance of the US bond market.

The hypothetical investment results are for illustrative purposes only and should not be deemed a representation of past or future results. Actual investment results may be more or less than those shown. This does not represent any specific product or service.

A diversified portfolio does not assure a profit or protect against loss in a declining market.

The return and principal value of stocks fluctuate with changes in market conditions. Shares when sold may be worth more or less than their original cost.

The return and principal value of bonds fluctuate with changes in market conditions. If bonds are not held to maturity, they may be worth more or less than their original value.

Distributions from traditional IRAs and employer sponsored retirement plans are taxed as ordinary income and, if taken prior to reaching age 59½, may be subject to an additional 10% IRS tax penalty. A Roth IRA offers tax free withdrawals on taxable contributions. To qualify for the tax-free and penalty-free withdrawal of earnings, a Roth IRA must be in place for at least five tax years, and the distribution must take place after age 59½ or due to death, disability, or a first time home purchase (up to a $10,000 lifetime maximum). Depending on state law, Roth IRA distributions may be subject to state taxes.

Before rolling over your retirement account, consider all available options, which include remaining with your current retirement plan, rolling over into a new employer’s plan or IRA, or cashing out the account value. When deciding between an employer-sponsored plan and IRA, there may be important differences to consider—such as range of investment options, fees and expenses, availability of services, and distribution rules (including differences in applicable taxes and penalties). Depending on your plan’s investment options, in some cases, the investment management fees associated with your plan’s investment options may be lower than similar investment options offered outside the plan.

^{Copyright © 2026 by Horsesmouth, LLC. All rights reserved.}

^{IMPORTANT NOTICE: This reprint is provided exclusively for use by the licensee, including for client education, and is subject to applicable copyright laws. Unauthorized use, reproduction, or distribution of this material is a violation of federal law and punishable by civil and criminal penalty. This material is furnished “as is” without warranty of any kind. Its accuracy and completeness is not guaranteed and all warranties expressed or implied are hereby excluded.}

^{This communication is designed to provide accurate and authoritative information on the subjects covered. It is not however, intended to provide specific legal, tax, or other professional advice. For specific professional assistance, the services of an appropriate professional should be sought.}