Social Security is a federal program that provides income to retirees, as well as survivors and people with disabilities. It's funded through payroll taxes, split evenly between employees and employers, under the Federal Insurance Contributions Act, or FICA.
You become eligible for retirement benefits once you've earned 40 credits, which typically takes about 10 years of work. Credits are based on annual earnings, up to a maximum of four credits per year.
Your benefit amount is based on your earnings history, not a flat payment. The Social Security Administration calculates your benefit using your 35 highest-earning years, adjusted for wage growth over time.
Benefits are paid monthly and increase periodically through cost-of-living adjustments, which are tied to inflation. This makes Social Security one of the few retirement income sources that automatically adjusts for rising prices.
The age you choose to start benefits is permanent once selected, apart from limited exceptions. This makes claiming age one of the most consequential decisions in a retirement income plan, since it affects your monthly payment for the rest of your life.