Social Security Information
How and when you begin taking Social Security Income can impact the total amount you and your spouse will receive over your lifetimes by tens of thousands of dollars. The Social Security Administration will allow you to begin taking Social Security Income at age 62. If you wait, your payments, will be higher, but you’ll take the over less time. What about taxes? Social Security Income is taxed at lower rate than regular income, but the rate can vary depending on a few factors. A Social Security Advisor will analyze your case and recommend a strategy to maximize your lifetime Social Security Benefits.
Table of Contents
Social Security Benefits
- Introduction to Social Security
- When can I sign up for Social Security Benefits?
- What is included with Social Security Benefits?
- Benefit Calculators
- How do I sign up?
Introduction to Social Security
Who is it For?
Social Security helps older Americans, workers who become disabled, and families in which a spouse or parent dies.
What is its Purpose?
Social Security was never meant to be the only source of income for people when they retire. Social Security replaces about 40 percent of an average wage earner’s income after retiring, and most financial advisors say retirees will need 70 percent or more of pre-retirement earnings to live comfortably. To have a comfortable retirement, Americans need more than Social Security. They also need private pensions, savings, and investments.
Q: How Does it Work?
A: The current Social Security system works like this: when you work, you pay taxes into Social Security. That tax money is used to pay benefits to:
- People who already have retired
- People who are disabled
- Survivors of workers who have died
- Dependents of beneficiaries.
Q: Is The Amount I Pay in Social Security Held in My Account?
A: The money you pay in taxes isn’t held in a personal account for you to use when you get benefits. SSA uses your taxes to pay people who are getting benefits right now. Any unused money goes to the Social Security trust funds.
As you work and pay taxes, you earn Social Security “credits.” You can earn a maximum of 4 credits per year. The amount of money needed to earn one credit usually goes up every year. Most people need 40 credits (10 years of work) to qualify for benefits. Younger people need fewer credits to be eligible for disability benefits or for their family members to be eligible for survivors benefits when the worker dies.
Choosing when to retire is one of the most important decisions you’ll make in your lifetime. If you choose to retire when you reach your full retirement age, you’ll receive your full benefit amount. SSA will reduce your benefit amount if you retire before reaching full retirement age.
Q: What is full retirement age?
A: If you were born from 1943 to 1960, the age at which full retirement benefits are payable increases gradually to age 67. If your birth year is 1948 or earlier, you already are eligible for your full Social Security benefit. Use the following chart to find out your full retirement age:
|Year of Birth||Full Retirement Age|
|1955||66 and 2 months|
|1956||66 and 4 months|
|1957||66 and 6 months|
|1958||66 and 8 months|
|1959||66 and 10 months|
|1960 or later||67|
(NOTE: Although the full retirement age is rising, you should still apply for Medicare benefits three months before your 65th birthday. If you wait longer, your Medicare medical insurance (Part B) and prescription drug coverage (Part D) may cost you more money.)
- If you choose to delay receiving benefits beyond your full retirement age, SSA will increase your benefit a certain percentage, depending on the year of your birth. SSA will add the increase automatically each month from the time you reach full retirement age, until you start taking benefits or reach age 70, whichever comes first. For more information on delayed retirement credits, click here.
Early Retirement: You may start receiving benefits as early as age 62. SSA reduces your benefits if you start early -- about one-half of 1 percent for each month you start your Social Security before your full retirement age. For example, if your full retirement age is 66, and you sign up for Social Security when you’re 62, you would only get 75 percent of your full benefit.
(NOTE: The reduction will be greater in future years as the full retirement age increases.)
If you work and get benefits: You can continue to work and still receive retirement benefits. Your earnings in (or after) the month you reach full retirement age won’t reduce your Social Security benefits. In fact, working beyond full retirement age can increase your benefits. SSA will reduce your benefits if your earnings exceed certain limits for the months before you reach your full retirement age. (NOTE: People who work and receive disability or Supplemental Security Income payments have different earnings rules. They immediately must report all of their earnings to Social Security no matter how much they earn.)
Retirement benefits for widows and widowers: If you’re receiving widow’s or widower’s benefits, you can switch to your own retirement benefits as early as age 62, assuming your retirement benefit is more than the amount you receive on your deceased spouse’s earnings.
Often, you can begin receiving one benefit at a reduced rate and then switch to the other benefit at the full rate when you reach full retirement age. The rules are complicated and vary depending on your situation, so talk to a Social Security representative about the choices available to you.
Your benefits may be taxable: Some people who get Social Security will have to pay taxes on their benefits.
About 40 percent of current SSA beneficiaries pay taxes on their benefits. You’ll have to pay taxes on your benefits if you file a federal tax return as an “individual” and your total income is more than $25,000. If you file a joint return, you’ll have to pay taxes if you and your spouse have a total income that is more than $32,000.
For more information, call the SeniorLeaf Help Desk at 1-844-335-5323
Call the Internal Revenue Service’s toll-free number, 1-800-829-3676
Q: When Can/Should I Sign Up for Social Security Benefits?
A: You may start receiving benefits as early as age 62 or as late as age 70.
Before you apply for retirement benefits, there are certain Social Security "basics" you should know about:
- Your " full retirement age" - Depending on your date of birth, that may be between age 66 and 67. This could affect the amount of your benefits and when you want the benefits to start. Check out SSA’s Full Retirement Age Calculator: Benefit Calculators
- Benefits are reduced for age - Your monthly benefits will be reduced if you start them any time before "full retirement age." See Benefit Calculators
- Working while you receive benefits - If you elect to receive benefits before you reach full retirement age, you should understand how continuing to work can affect your benefits. See Benefit Calculators
- Delayed retirement credits - Delayed retirement credits may be added to your benefits if they start after your full retirement age. See Benefit Calculators
- Life expectancy - If you live to the average life expectancy for someone your age, you will receive about the same amount in lifetime benefits whether you choose to start receiving benefits at age 62, full retirement age, age 70 or any age in between. However, many of us will live much longer than the “average” retiree, and most women live longer than men. More than one in three 65 year olds today will live to age 90, and more than one in seven will live to age 95. Social Security benefits, which last as long as you live, provide valuable protection against outliving savings and other sources of retirement income. Again, you’ll want to choose a retirement age based on your circumstances so you’ll have enough income when you need it. See Life Expectancy Calculator at: Benefit Calculators
- We urge you to use SSA’s Retirement Estimator to get a personal estimate of how much your benefits will be at different ages and "stop work" dates before you begin the application. See Benefit Calculators
- You may also want click here to review “Other Things to Consider”** for more information to know before signing up for Social Security Benefits.
- Check out SSA’s Application Checklist by clicking here
What is included with Social Security Benefits?
Benefits for Yourself: Social security provides retirement benefits to help supplement your income. The Social Security Administration bases your benefit payment on how much you earned during your working career. Higher lifetime earnings result in higher benefits. If there were some years you didn’t work or had low earnings, your benefit amount may be lower than if you worked steadily. The age at which you decide to retire also affects your benefit. If you retire at age 62, the earliest possible Social Security retirement age, your benefit will be lower than if you wait.
Social Security Benefit Calculators
Check out Social Security benefit calculators by clicking here.
Retirement Estimator: Estimates monthly benefits based on your actual Social Security earnings record. You must have enough credits to qualify for benefits and not be eligible for a pension from work not covered by Social Security.
Quick Calculator: Rough estimate of your benefits in today's dollars or future dollars when you input your date of birth and this year's earnings. Does not include WEP reduction. You must be 21 or older for this calculator to work correctly.
Life Expectancy Calculator: Rough estimate of how long you (or your spouse) may live. This gives you an idea of how long your benefits may need to last.
Retirement Age Calculator: Calculate full retirement age and see how monthly benefits may be reduced if you retire before your full retirement age.
Online Calculator: Estimates of your retirement, disability and survivors benefits when you input your date of birth and your complete earnings history. You may project future earnings until your retirement date.
Detailed Calculator: Get the most precise estimate of your retirement, disability and survivors benefits. Includes WEP reduction. Must be downloaded and installed on your computer. Mac version also available.
WEP Calculator: Get estimates for yourself if you are eligible for a pension based on work that was not covered by Social Security. Your benefit amount may be reduced by the Windfall Elimination Provision (WEP). Also, click here to see the WEP Factsheet to see if you might be affected.
GPO Calculator: Estimates of spouse benefits for yourself if you receive a pension from a government job in which you did not pay Social Security taxes. Your benefit may be offset by the Government Pension Offset (GPO).
Earnings Test Calculator: See how your earnings may affect your benefit payments if you are currently working and are eligible for retirement or survivors benefits this year.
Benefits for Spouses Calculator: Compute the effect on your wife’s or husband’s benefits if you file for early retirement.
Early or Late Retirement Calculator: Compute the effect on your benefit amount if you file for early or delayed retirement benefits.
Benefits for Your Family: When you start receiving Social Security retirement or disability benefits, other family members also may be eligible for payments. For example, benefits can be paid to your husband or wife:
- If he or she is age 62 or older; or
At any age if he or she is caring for your child (the child must be younger than 16 or disabled and entitled to Social Security benefits on your record). Benefits can also be paid to your unmarried children if they’re:
- Younger than 18;
- Between 18 and 19 years old, but in elementary or secondary school as full-time students; or
- Age 18 or older and severely disabled (the disability must have started before age 22). If you become the parent of a child (including an adopted child) after you begin receiving benefits, let us know about the child, so we can decide if the child is eligible for benefits.
- Younger than 18;
Q: How much can family members get?
A: Each family member may be eligible for a monthly benefit that is up to half of your retirement or disability benefit amount. However, there is a limit to the total amount of money that can be paid to you and your family. The limit varies, but is generally equal to about 150 to 180 percent of your retirement or disability benefit.
Q: What if you’re divorced?:
A: If you’re divorced, your ex-spouse may qualify for benefits on your earnings. In some situations, he or she may get benefits even if you aren’t receiving them. To qualify, a divorced spouse must:
- Have been married to you for at least 10 years
- Have been divorced at least two years in cases where you have not filed for benefits
- Be at least 62 years old
- Be unmarried
- Depending on the circumstances, not be entitled to or eligible for a benefit on his or her own work that is equal to or higher than half the full amount on your record.
When you die, your family may be eligible for benefits based on your work. Family members who can collect benefits include a widow or widower who is:
- 60 or older (or 50 or older and disabled) or
- Any age if he or she is caring for your child who is younger than 16 or disabled and entitled to Social Security benefits on your record.
Your children can receive benefits, too, if they’re unmarried and:
- Younger than 18 years old or
- Between 18 and 19 years old, but in an elementary or secondary school as full-time students; or
- Age 18 or older and severely disabled (the disability must have started before age 22).
- Additionally, your parents can receive benefits on your earnings if they were dependent on you for at least half of their support.
One Time Payment after Death:
If you have enough credits, a one-time payment of $255 also may be made after your death. This benefit may be paid to your spouse or minor children if they meet certain requirements.
Q: How much will your survivor’s get?
A: Your survivors receive a percentage of your basic Social Security benefit — usually in a range from 75 to 100 percent each. However, there is a limit to the amount of money that can be paid each month to a family. The limit varies, but is generally equal to about 150 to 180 percent of your benefit rate.
Q: How Does the Social Security Administration Pay Benefits?
A: You must receive your Social Security payments electronically. One of the ways you can choose to receive your benefits is through direct deposit to your account at a financial institution. Direct deposit is a simple and secure way to receive your payments. Be sure to have your checkbook or account statement with you when you apply. We will need that information, as well as your financial institution’s routing number, to make sure your monthly benefit deposit goes into the right account.
If you don’t have an account with a financial institution, or if you prefer to receive your benefits on a prepaid debit card, you can sign up for the Direct Express® card program. With Direct Express®, payments go straight to the card account. Another payment choice you can consider is an electronic transfer account. This low-cost federally insured account lets you enjoy the security and convenience of automatic payments.
Q: What is the Supplemental Security Income (SSI) Program?
A: If you get Social Security benefits, but have limited income and resources (things you own), SSI may be able to help. SSI financing comes from general revenues, not Social Security taxes. SSI makes monthly payments to people who are age 65 or older or who are blind or disabled. Contact SSA for more information about eligibility.
How do I sign up?
You should apply for benefits about three months before the date you want your benefits to start. If you aren’t ready to retire, but are thinking about doing so later, you can use the Social Security Administration’s informative retirement planner by clicking here.
To file for disability or survivors benefits, you should apply as soon as you’re eligible. You can apply for benefits on the Social Security Administration website by clicking here
Q: What do you need to apply?
A: When you apply for benefits, SSA will ask you to provide certain documents. The documents you’ll need depend on the type of benefits you file for. Providing these documents to the SSA quickly will help them pay your benefits faster. You must present original documents or copies certified by the issuing office — they cannot accept photocopies. Don’t delay filing an application just because you don’t have all the documents you need. SSA can help you get them. Some documents you may need when you sign up for Social Security are:
- Your Social Security card (or a record of your number)
- Your birth certificate
- Your children’s birth certificates and Social Security numbers (if you’re applying for them)
- Proof of U.S. citizenship or lawful immigration status if you (or a child) weren’t born in the United States
- Your spouse’s birth certificate and Social Security number if he or she is applying for benefits based on your earnings
- Your marriage certificate (if signing up on a spouse’s earnings or if your spouse is signing up on your earnings)
- Your military discharge papers if you had military service
- Your most recent W-2 form, or your tax return, if you’re self-employed. SSA will let you know if you need other documents when you apply.
Apply Online by clicking here. Select the appropriate link whether you are applying for your own retirement, Spouse’s Benefits, Medicare, or Disability. If you do not wish to apply online, call 1-800-772-1213 (TTY 1-800-325-0778), or find your local Social Security Office by clicking here.
After you Apply, you can Manage your Account Online
You can now easily set up a secure online my Social Security account to access your Social Security Statement to check your earnings and get your benefit estimates. You may also be able to use your online my Social Security account to request a replacement Social Security number card (available in some states and the District of Columbia). If you currently receive benefits, you can also:
- Get your benefit verification letter
- Change your address and phone number
- Request a replacement Medicare card
- Request a replacement SSA-1099 or SSA-1042S for tax season; or
- Start or change your direct deposit.
You can create a my Social Security account if you’re age 18 or older and have a Social Security number, valid email, and U.S. mail address.
To create an account, click here. You will need to provide some personal information to confirm your identity, and then choose a username and password.
Additional Resources: https://www.ssa.gov/ SeniorLeaf SSA Advisors? http://maximizemysocialsecurity.com/ (recommended by a Forbes article)
Disclaimers: Much of this information was compiled from SSA.gov