While most Americans have heard of Social Security, a recent study found that less than half had a good idea of what their Social Security benefit will be upon retirement — yet hundreds of millions of Americans, including military servicemembers, pay into Social Security and Medicare — and they will receive benefits when they approach retirement age. Knowing the basics of the program and understanding your benefits well in advance can have a profound impact on your retirement planning.
Social Security is a federal program that provides financial support to eligible individuals — primarily retirees, people with disabilities, and survivors of deceased workers. The program is funded through payroll taxes collected under the Federal Insurance Contributions Act (FICA) throughout a person’s working years. Workers and employers each pay 6.2% of wages (up to a yearly limit), while self-employed individuals pay 12.4%. As a servicemember, you can see this payroll tax on your Leave and Earnings Statement or Retiree Account Statement from Defense Finance and Accounting Services (DFAS).
About 10 years of work (you need 40 credits) will qualify you for retirement benefits. In 2026, one credit is received for every $1,890 in earnings, up to four credits per year.
Your Social Security full retirement age is the age at which you’re eligible to receive 100% of your earned Social Security retirement benefit (your primary insurance amount, or PIA). It depends on your birth year. If you were born in 1960 or later, your FRA is 67.
You can start receiving your benefits as early as age 62, but it’s important to note that they will be permanently reduced for both you (and your spouse, if they receive them on your behalf). The reduction to draw early is about 5/9 of 1% for each month before your FRA. Additionally, if you draw benefits before you reach your FRA but you continue to work, there will be a deduction from your benefit payments for every $2 you earn above the annual limit
Alternatively, if you wait until you’ve passed your FRA to begin claiming benefits, you can earn delayed retirement credits — about 8% more per year until age 70. Either way, drawing early or delaying benefits carries lasting implications — and any reduction or increase in your benefit will also affect your surviving spouse.
Benefits are based on your average indexed monthly earnings (AIME) from your highest 35 years of earnings. The formula is progressive — it replaces a higher percentage of income for lower earners. Visit ssa.gov/myaccount to create an account and learn about your benefits, as well as benefits for your spouse and survivors.
Spouses, former spouses (if married at least 10 years), and survivors may qualify for benefits based on your work record, even if they never worked themselves. After your death, your widow(er) could be eligible for 100% of your PIA if they have reached FRA. They can draw it if younger than FRA, but a reduction applies. Age 60 is the earliest a surviving widow(er) can apply for the Social Security Survivor benefit.
If you become unable to work due to a severe disability, you may qualify for Social Security Disability Insurance (SSDI), provided you’ve earned enough work credits and meet certain medical criteria.
Depending on your income, up to 85% of your Social Security benefits may be taxable at the federal level. Some states tax benefits, too, but many do not.
According to recent projections, the Social Security Trust Fund may face shortfalls in the 2030s if no changes are made. There is currently a potential 23% decrease in Social Security benefits looming in the future. However, payroll taxes will continue to fund a large portion of benefits even if reserves are depleted. Understanding the position of the SS Trust Fund underscores the importance for awareness of all your benefits as they impact your financial planning for retirement. The time to make changes is while you’re still young enough to increase earnings, savings, and investments. Be sure to stay up to date on any news that may impact your decision-making.
Once you’ve decided you are ready to begin receiving your Social Security benefits, visit ssa.gov/apply, or also call 1-800-772-1213 to schedule an appointment to apply for benefits. Before doing so, make sure you can provide:
Some of your children may be eligible for benefits based on your work history. You’ll be asked for the first and last name of children who are in any of the following groups:
Medicare is federal health insurance for anyone age 65 and older, as well as for people under age 65 with certain disabilities or conditions.
1. Part A includes hospital insurance and helps pay for inpatient care at hospitals, skilled nursing facilities, and hospice. It also covers some outpatient home healthcare. Part A is free if you worked and paid Medicare taxes for at least 10 years. You may also be eligible because of your current or former spouse’s work.
2. Part B is medical insurance that helps cover doctor and other healthcare provider services, outpatient care, home healthcare, durable medical equipment, and some preventive services. You will pay a monthly premium for Part B, depending on your income level.
Parts A and B are also known as Original Medicare. You can use any doctor or hospital that takes Medicare, anywhere in the US. You can join a separate Medicare drug plan to get Medicare drug coverage (see Part D, below).
3. Part C, or Medicare Advantage, is available through different providers. It’s an alternative to Parts A and B and bundles coverage types including Parts A, B, and usually D. It may include vision, hearing, and dental insurance. You’ll have different out-of-pocket costs than Original Medicare, including an additional premium. Medical providers need to be in the plan’s network to be covered.
4. Part D offers prescription drug coverage. You must sign up for Part A or Part B before enrolling in Part D. If you are a TRICARE beneficiary enrolled in TRICARE For Life (TFL) your wraparound coverage is your supplemental drug coverage. You will have no premiums for prescription coverage.
If you are TRICARE beneficiary, you must sign up for Medicare Part B at age 65 and provide verification of coverage when renewing your military ID card to continue with TFL, which is your wraparound coverage. You’ll pay a Medicare premium but will no longer have a TRICARE premium. Once enrolled in TFL, Medicare is the first payer on claims, then TFL. If you live outside the US, TRICARE will be your first payer as Medicare coverage is only in the US.
If you have health insurance coverage through an employer that you want to continue to use, you can delay signing up for Medicare. First, check with your employer’s Human Resources group to determine if they will allow coverage once you become Medicare eligible.
Once you decide to enroll in Medicare, you will need to submit form CMS L564-R297 for verification of employer-covered health coverage to avoid a 10% late-enrollment penalty for each 12-month period, in addition to your Medicare premium.
The VA typically does not bill Medicare, so you may need to submit claims yourself. Medicare pays for Medicare-covered items and services. The VA pays for VA-authorized items or services in a VA or non-VA facility. If the VA authorizes services in a non-VA hospital but didn’t authorize all the services you get during your hospital stay, then Medicare may pay for any Medicare-covered services the VA didn’t authorize. You may be eligible for drug coverage through the VA. You may also join a Medicare drug plan, but if you do, you can’t use both types of coverage for the same drug at the same time. In addition, you won’t be able to use the Department of Veteran Affairs “Meds by Mail” program.
Three months before your 65th birthday, you can begin the process to sign up for Medicare. You can also call 1-800-772-1213 to sign up. You will need to provide:
If you sign up for Medicare to begin at age 65, but are not yet drawing Social Security benefits, you’ll pay your Medicare premium to Social Security quarterly. Once you begin drawing Social Security benefits, your Medicare premium is deducted from your Social Security benefit. If you decide to draw your Social Security benefit at age 65 so that your Medicare premium can be deducted and eliminate having to pay out of pocket, your Social Security benefit will be permanently reduced for you and your survivors.
For more information on preparing for your retirement years and making the most of your military and government benefits, become a Subscriber for full access to the Armed Forces Mutual Resource Center.