A portion of the payroll taxes individuals pay after they begin working funds the Social Security Old-Age (retirement) Insurance program. When an individual claims retirement benefits, SSA calculates the benefits they qualify for based on the average income of their 35 highest earning years (with a minimum of 10 highest earning years). Individuals can apply to receive reduced retirement benefits payments as early as age 62 and their full benefits at their full retirement age (between 65 and 67 depending on their year of birth).
An individual’s retirement benefits are indexed to the age they claim, so the amount they receive in benefits will increase up to age 70. Retirement benefit payments are cost-of-living adjusted (COLA).