Article by Jay Tyner, RFC®
Social Security is a government-run program in the United States that provides financial support to eligible individuals and families. It was established in 1935 as part of the New Deal, and it has since become one of the largest social insurance programs in the country. The Social Security Administration (SSA) is responsible for administering the program and determining eligibility for benefits.
In this article, we will cover the basics of Social Security, including who is eligible for benefits, how the program is funded, and what types of benefits are available.
Who is eligible for Social Security benefits?
To be eligible for Social Security benefits, you must have earned enough credits by working in a job that is covered by Social Security. You earn credits by paying Social Security taxes on your earnings, and you can earn up to four credits per year. The number of credits you need to be eligible for benefits depends on your age and the type of benefit you are seeking.
In general, you must have earned 40 credits to be eligible for retirement benefits, and you must have earned at least six credits in the three years before you become disabled to be eligible for disability benefits.
How is Social Security funded?
Social Security is funded by payroll taxes paid by workers and their employers, as well as by taxes on the benefits received by higher-income beneficiaries. The payroll taxes are split evenly between employees and employers, and they are calculated as a percentage of the worker’s earnings, up to a certain amount known as the taxable maximum. The taxable maximum is adjusted each year to account for inflation.
What types of benefits are available through Social Security?
There are several types of benefits available through Social Security, including:
- Retirement benefits: These benefits are available to eligible workers who have reached their full retirement age, which is between 65 and 67, depending on the year of birth. The amount of the benefit is based on the worker’s average lifetime earnings.
- Disability benefits: These benefits are available to eligible workers who are unable to work due to a physical or mental condition that is expected to last at least one year or result in death. The amount of the benefit is based on the worker’s average lifetime earnings.
- Survivors benefits: These benefits are available to the surviving spouse and children of a worker who has died. The amount of the benefit is based on the worker’s average lifetime earnings.
- Supplemental Security Income (SSI): This program provides financial support to eligible individuals who have a limited income and resources. It is funded by general tax revenues, rather than by payroll taxes.
When can I start receiving Social Security benefits?
The age at which you can start receiving Social Security benefits depends on the type of benefit you are seeking. For retirement benefits, you can start receiving benefits as early as age 62, but the amount of the benefit will be lower than if you wait until your full retirement age. For disability benefits, you can start receiving benefits as soon as you become eligible, which is usually after you have been unable to work for at least five months. For survivors benefits, the eligible spouse and children can start receiving benefits as soon as the worker dies.
How do I apply for Social Security benefits?
You can apply for Social Security benefits online at the Social Security Administration’s website, by phone, or in person at a local Social Security office. When you apply, you will need to provide information about your work history, earnings, and any disabilities or medical conditions that may be relevant to your eligibility for benefits. You may also need to provide documentation, such as birth certificates or medical records, to support your claim.
Conclusion
Social Security is a complex program, but using an advisor can increase your opportunity of income maximization based on your other sources of income.
The information contained herein is for educational purposes only. It is not intended to provide, and should not be relied on for, any tax, legal or investment advice. You are advised to seek the advice of a qualified professional prior to making any decision based on any specific information contained herein.
Insurance Products guarantees are subject to the financial strength and claims‐paying ability of the issuing company, and may be subject to restrictions, limitations or early withdrawal fees. Annuities are not FDIC insured.
Links are provided strictly as a courtesy. We make no representation as to the completeness or accuracy of information provided at these websites. When you access one of these websites, you are leaving our website and assume total responsibility and risk for your use of the website to which you are linking.
