What You Need to Know About Social Security

The 2025 Bank of America Workplace Benefits Report revealed that only one in three employees say they understand their Social Security benefits, down from nearly half just three years ago. Among Baby Boomers, who are set to retire soon, only two in ten reported fully understanding their benefits. Despite this limited knowledge, 75 percent of employees still expect Social Security to be a main source of retirement income. The gap between expectation and understanding highlights the need for better education on how the program works.

Social Security is a government program that provides monthly income to qualified retirees, their families, and survivors. To qualify, workers need at least 40 credits, which equals about 10 years of employment. Benefits are based on lifetime earnings that were subject to Social Security tax, with the calculation using the 35 highest-earning years.

The age at which benefits are claimed has a significant effect. Benefits can begin as early as age 62, but doing so can reduce monthly payments by up to 30 percent. Waiting until full retirement age (between 66 and 67, depending on birth year) allows retirees to receive the full benefit. Delaying further, up to age 70, increases the monthly benefit by about 8 percent for each year waited.

Social Security also provides annual cost-of-living adjustments, survivor benefits, and partial tax advantages. However, it was never designed to replace all income in retirement. On average, Social Security replaces about 40 percent of pre-retirement earnings (Center on Budget and Policy Priorities), while financial planners often recommend replacing closer to 80 percent to maintain a similar standard of living.

The best approach is to understand how Social Security fits into a broader plan. Employees should review their personalized statements at SSA.gov, consider their health and life expectancy, and coordinate claiming strategies with a spouse if applicable. Social Security remains a cornerstone of retirement income, but additional savings through 401(k) plans, IRAs, or investment accounts are essential to cover the gap and provide comfortable security.

With understanding declining and confidence shaken, gaining a clear view of how Social Security works will be very helpful to the current workforce. The sooner employees become familiar with the basics, the better positioned they will be to make informed decisions and prepare for a secure retirement.

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“Retirement Benefits.” Social Security Administration (2022). EN-05-10035 - Retirement Benefits - January 2022. ssa.gov (PDF)

“Top Ten Facts About Social Security.” Center on Budget and Policy Priorities (March 4, 2022). cbpp.org

“Top 10 Ways to Prepare for Retirement.” Employee Benefits Security Administration, U.S. Department of Labor (September 2021). dol.gov (PDF)

“What is the maximum Social Security retirement benefit payable?” Social Security Administration (January 3, 2023). ssa.gov

“What Is The Best Age To Start Your Benefits?” Social Security Administration. Benefits Planner: Retirement | Important Things to Consider When Planning for Retirement. ssa.gov

2025 Workplace Benefits Report. Bank of America. September, 2025. PDF