From Gen Z to Boomers: A Generational Guide to Social Security

A retired mixed race senior woman sits on outdoor furniture on the back patio of her home.
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Social Security is a complicated program, and as familiar as it is to most Americans, it’s one many don’t fully understand. In fact, just 6% of Americans not yet receiving Social Security benefits know the factors that determine the maximum benefits they can receive, according to a recent study by Nationwide Retirement Institute. The study found that even those already collecting Social Security have significant gaps in understanding.

“It’s indisputable that Americans across all generations need more Social Security education,” said Tina Ambrozy, senior vice president of Strategic Customer Solutions at Nationwide. To that end, GOBankingRates has created this generation-by-generation look at what you need to know about Social Security.

Generation Z

Retirement might seem like a long way off, but according to research from Northwestern Mutual, members of Generation Z expect to retire before they hit 60. Early retirement takes good planning, and because Social Security is an important part of that, it’s imperative that you understand how it works.

The program provides a percentage of workers’ pre-retirement income after they retire. Your benefit amount is based on your 35 highest-earning years. The calculation always uses 35 years, so if you work fewer years than that your benefit calculation will have $0 factored in for your non-working years.  However, you will still qualify for Social Security as long as you work at least 40 quarters (10 years).

You contribute to Social Security through Social Security tax withheld from your paychecks. In 2021, workers and their employers each paid 6.2% Social Security withholding on the employee’s first $147,000 of income. Self-employed individuals pay the full 12.4%.

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The current full-retirement age is 67 for people born in 1960 or later — that’s the age at which you can collect your full benefit. However, you can collect a reduced amount beginning at age 62 or increase your regular benefit each year you delay collecting until age 70.


You’d never know it by the doom-and-gloom headlines, but Social Security isn’t going broke. However, there’s a 50-50 chance that Social Security Trust Fund reserves will be depleted by the end of 2034, which means benefits will be reduced by about 24%, according to current estimates, unless action is taken. These actions might include increasing withholding tax, raising the age of full retirement, reducing or eliminating cost-of-living adjustments or raising the cap on the amount of income that’s subject to Social Security withholding. Whichever turn(s) out to be the case, millennials — who, like Gen Zers, plan to retire before age 60 — need to start planning now to keep retirement goals on track regardless of the changes that might affect them.

“It’s clear that plans can unexpectedly change,” said Christian Mitchell, executive vice president and chief customer officer at Northwestern Mutual. “That’s why it’s so important for people to get started early when it comes to retirement planning. Setting a goal and mapping the steps to get there will help with accountability and flexibility.”

Generation X

Social Security is not meant to be your sole source of income in retirement. If you’re a typical worker, you can expect Social Security to replace about 40% of your average earnings. However, experts recommend that your total retirement income equal at least 70% of what you earned immediately prior to retirement. That’s a big shortfall you’ll need to cover with your own savings and investments.

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But as important as it is to be actively saving for retirement by this point in your life, you’re also at the age when shifting responsibilities and priorities often compete for cash. “Planning is not a one-and-done exercise,” Mitchell said. “It requires ongoing upkeep and the flexibility to respond to shifting circumstances.” 

Baby Boomers

Baby boomers’ full retirement age is 66 or 67, depending on the year they were born. You can begin collecting Social Security benefits at age 62, but doing so will permanently reduce your benefit by 25%-30%, depending on your birth year. You’ll take an even bigger hit if you collect spousal benefits.

Spousal benefits are benefits you collect based on your spouse’s work record. You can qualify for spousal benefits — up to 50% of your spouse’s benefit — if you’re at least 62 years old and are ineligible to collect Social Security based on your own earnings, or your own benefit is less than 50% of your spouse’s. You could be eligible for spousal benefits even if you’re divorced, as long as you’re at least 62, you were married at least 10 years and you haven’t remarried. Widows and widowers can collect 100% of their deceased spouse’s benefits at full retirement age or collect reduced benefits beginning at age 60.

Delaying enrollment in Social Security increases your benefits, by 8% for each year you delay collecting, up until you reach age 70, at which time the increases stop.

What if you apply early and realize later that it was a mistake? The Social Security Administration will let you withdraw your application — as long as you do it within 12 months of when you became eligible to collect and you agree to repay any funds you’ve received. If longer than 12 months have passed and you’ve reached full retirement age, you can suspend your retirement benefits up to age 70 and still earn delayed retirement credits.

You can keep working regardless of when you start collecting Social Security. In fact, working will increase your benefits if you’ve worked fewer than 35 years or you’ll earn more now than you did during some or all of the 35 years the Social Security Administration would otherwise use to calculate your benefits. Although working will reduce your benefits by $1 for every $2 you earn above the $19,560 threshold for 2022, if you’ve not yet reached full retirement age, the Social Security Administration will recalculate and increase your benefits based on those months in which you received no benefit or reduced benefits. If you retire in 2022, you’ll lose $1 for every $3 you earn above $51,960.

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Cynthia Measom contributed to the reporting for this article.


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