The Social Security retirement program pays monthly benefits to workers who have reached retirement age. U.S. workers who have worked a minimum amount of time and paid Social Security taxes are eligible for Social Security benefits once they reach age 62.
Continue reading to learn more about Social Security benefits, including eligibility guidelines, how benefits are calculated and other important details about the program.
How Social Security Retirement Works
More than 96 percent of American workers are covered by a Social Security retirement plan. As you go through your working life, you will be taxed a certain amount from your salary or wages. These Social Security taxes go toward the Social Security program to fund people who are currently receiving benefits. As you pay this tax, you will be rewarded with Social Security credits.
If you were born after 1928, you will need to earn 40 credits or more to become eligible for retirement benefits. This equates to ten years of work if you have earned the maximum of four credits per year.
In addition to earning credits for your own Social Security retirement benefits, you will also be earning credits for Social Security survivors benefits. These benefits can be paid to your spouse and dependent children after you die. In order to get these benefits, eligible survivors must report the death to the Social Security Administration.
Additionally, you may also have the option of claiming spousal Social Security benefits. This benefit applies to Social Security beneficiaries who are currently married or who were previously married for more than ten years. To qualify, the spouse must be at least 62 years of age. In the event of your death, your spouse may be entitled to a one-time Social Security death benefit payment of $255.
Social Security income may be taxable in certain situations. Generally, beneficiaries will pay taxes on a percentage of their Social Security retirement benefits if they earn a substantial income in addition to their benefits. Around 40 percent of Social Security recipients pay taxes on their retirement benefits.
When should you claim Social Security?
When you begin to claim Social Security retirement benefits will depend on your personal circumstances and financial needs. However, you are eligible to start claiming retirement benefits as early as 62 years of age. If you are a survivor of someone else claiming Social Security, you may be eligible to start claiming their benefits at an earlier age.
Although you can start receiving your own Social Security benefits at 62 years of age, you cannot receive your full benefits amount unless you begin claiming benefits at your full retirement age. For the Social Security Administration, the full retirement age depends on the year you were born. For example, someone born in 1955 has a full retirement age of 66 years and 2 months. If you were born in 1960 or after, your full retirement age is 70 years old.
It is important to consider your decision about when to claim Social Security. If you begin claiming Social Security before your full retirement age, your overall benefit amount will be reduced. Additionally, if you wait until your full retirement age, you will be eligible for delayed retirement credits. For someone born in 1943 or later, the delayed retirement credit can be as much as an additional 8 percent increase to their benefits.
Social Security Retirement Versus Supplemental Security Income (SSI)
Supplemental Security Income (SSI) is a benefit offered to those who have little to no income. These benefits are designed to help people meet their basic needs, such as food, clothing and shelter costs.
Although both programs are administered by the Social Security Administration (SSA), there are clear differences between the two programs. Unlike Social Security retirement, which you must work to earn, SSI is available to eligible beneficiaries regardless of their employment history. If you are disabled or 65 years of age or older, you may be entitled to SSI benefits.
Unlike Social Security retirement benefits, SSI is not funded by Social Security taxes. Instead, it is funded by general tax revenues. In 2023, the SSI benefit rate for individuals is $914. For couples, the SSI benefit rate is $1,371.
How much will you get in retirement benefits?
You have likely asked yourself “How much Social Security will I get?” The answer depends on a number of factors, including your age when you begin claiming, as well as your work and earning history.
Since your Social Security benefits are calculated by how much you have earned throughout your working life, a higher income and more work history will translate into more Social Security benefits in retirement. In 2023, the average Social Security benefit for a retired person works out to be a little over $1,827 each month. For many beneficiaries, this payment is supplemented with their own retirement savings. There is a maximum Social Security benefit that currently sits at $3,627 per month.
There are several other factors that can affect your Social Security benefits amount. If you continue to work beyond your retirement age, you will increase your future Social Security retirement benefits. Additionally, certain types of work, including self-employment or military service, may have special rules for earning credits and receiving benefits.
You can use a Social Security calculator to give you a clearer idea of what you will be entitled to. The Social Security Administration provides online Social Security calculators to help you estimate your benefit rate. Keep in mind, however, that future changes to the Social Security program or cost of living adjustments may result in a different amount of benefits than the calculation.
How do I apply for Social Security benefits?
Once you have decided to apply for Social Security, you can apply for benefits online, by phone or in person at a Social Security office. At the time you apply, you will need information, including:
- Dates of any marriages.
- Military service dates.
- Employer names and dates.
- Self-employment information.
- Bank information for direct deposit.
- Information about your family members.
Additionally, you may need documents, including:
- Certified birth certificate or other proof of age.
- Proof of U.S. citizenship.
- Copies of last year’s W-2 tax form or self-employment tax return.
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