Which statement describes the role of Social Security in retirement planning?

• A. Provides a baseline of income in retirement; benefits depend on earnings history and claiming age.
• B. It replaces all personal savings for retirement.
• C. Benefits are unaffected by when you claim.
• D. It has no role in retirement planning.

Answer: (A)

Social Security provides a baseline level of income in retirement that comes from your earnings history and the age you choose to start benefits. The amount you receive is tied to what you earned over your working years and is adjusted for inflation, then modified by when you claim. Starting benefits early (before your full retirement age) lowers your monthly payment, while delaying benefits past your full retirement age increases your payments up to age 70. This creates a predictable foundation of income, but it does not replace all personal savings or other retirement income sources. Planning should still include savings, investments, pensions, or other assets, since Social Security alone typically won’t cover all expenses.