Social Security (SS) benefits are a form of monthly payments that provide income for those who are retired, cannot work due to a disability, or for survivors of workers who have died. Formally known as the Old-Age, Survivors, and Disability Insurance program, Social Security is a federal program that is funded through payroll deductions or individually paid taxes.
In general, there are four types of SS benefits: retirement, survivor benefits, and two types of disability benefits (SSDI and SSI).
Qualifications
You must have a Social Security number, which is available for U.S. citizens, permanent residents, or noncitizen workers.
In general, to receive SS retirement benefits, retirees will need to earn at least 40 work credits, or one credit for each quarter worked for at least 10 years.
SS retirement benefits are a source of guaranteed income during retirement. Benefits are calculated using a formula that evaluates the average monthly earnings of one’s highest-earning 35 years of income. Essentially, higher lifetime earnings mean higher monthly benefits.
Retirees must be at least 62 years old to start receiving benefits, although this is considered early retirement. The monthly income at this age is lower than the income you receive at full retirement age, which was originally established as 65. As life spans have increased, depending on when you were born, the full retirement age has also increased. If your birth year is 1960 or after, your full or normal retirement age is 67. Anyone born between 1955 and 1959 has a normal retirement age between 66 and 67 – that is, 66 plus a certain number of months. For each month you begin taking SS retirement benefits before your full retirement age, your benefits will be reduced by 0.5%.
For example, if you were born in 1961 and start receiving SS benefits at 62 years old, you will only get 70% of your full benefit. This is because you receive SS 60 months before your full retirement age of 67, and are thus subject to a 30% reduction in benefits.
Once you reach your full retirement age, you are eligible for 100% of your SS benefits but delaying distributions until age 70 increases the monthly benefits you earn by 8% annually. There is no financial benefit to waiting past age 70 to begin collecting benefits as you may only delay distributions up until you are 70 years old.
Those who have a disability that prevents them from working at any job 40 hours a week, regardless of age, may be eligible for Social Security Disability Benefits. An application for disability benefits must be reviewed and approved by the Social Security Administration for these benefits to be paid. If approved, the monthly benefit is the amount the individual would receive at their full retirement age. Some conditions, specifically ALS and End Stage Kidney Disease, qualify immediately for disability benefits, but individuals still have to apply and go through the determination process. A listing of other qualified conditions can be found here. To apply, visit the SSA website or call 1 (800) 772-1213 to set up an appointment at your local Social Security office.
Supplemental Security Income (SSI) is a separate Social Security benefits program for disabled individuals who don’t have enough work credits to qualify for Social Security Disability Income (SSDI) referenced above. This separate program is funded by state and federal governments somewhat differently, although the application process is the same. To apply, visit the SSA website or call 1 (800) 772-1213 to set up an appointment at your local Social Security office.
The family of a beneficiary may also receive monthly Social Security benefits after a spouse dies. This includes a single lump-sum payment to a surviving spouse. Those who qualify for monthly benefits include the surviving spouse who is 60 or older, spouses who care for a dependent who is 16 or younger or a dependent who is disabled, and children under the age of 18. Survivors who don't qualify for benefits on their own work record may also be eligible for retirement benefits after age 60 based on their spouse’s earnings record.
If a deceased spouse worked for the government and didn’t pay into Social Security, the surviving spouse’s SS benefits may be deducted by two-thirds of the pension amount.
Social Security and Medicare
If you are receiving Social Security benefits of any kind by the time you turn 65, you will automatically be enrolled in Medicare Part A and Part B. If you are not eligible for SS but are otherwise eligible for Medicare because you paid Medicare taxes, you still may have to manually enroll in Medicare Part A and B at age 65 to avoid late enrollment penalties. There are some exceptions to this rule if you or your spouse are still actively employed.
Social Security Benefits and Taxes
If you file taxes as an individual, your Social Security is taxable only if your total income for the year is above $25,000. Half of that income is taxable if your income is in the $25,000–$34,000 range. If your income is higher than that, then up to 85% of your benefits may be taxable. Numbers differ for those who file under different statuses, such as married filing jointly. Those who are still working and receive benefits before their full retirement age will also see a reduction in their SS benefits since there is a limit to how much one can receive while still employed.
How to Check Your Social Security Benefits
Social Security tracks the number of quarters you have paid into the system from the time you are assigned a Social Security number. When you begin paying into Social Security (when you start working and pay taxes) it is strongly recommended to set up an online SS account at ssa.gov. Otherwise, an online annual statement is generated and mailed to you each year to show what your payment would be depending on which age you elect to begin receiving benefits. If you haven’t worked for at least 40 quarters, this section is blank. If you haven’t signed up for an online SS account by the time you’re 60, you will instead receive a SS statement three months before your birthday.
Learn More:
Understanding the Benefits | Social Security Administration
Last Revised June 6th, 2023
