Social Security Benefits are the lifeline for many people in the country, including retired individuals, disabled workers, and survivors of deceased workers. Social Security Benefits are government-based payments made to eligible individuals based on their work and income history. This comprehensive benefit system is designed to provide exceptional financial assistance to retired people or people with disability, or people whose working family members have died.
The Social Security Administration (SSA) controls and manages these benefit schemes to provide monthly financial support. Understanding the working and another important factor of Social Security Benefits, we are going to start our article.
What Is The Social Security Benefit? -History And Purpose
This program was signed into law in 1935 by President Franklin Roosevelt during the Great Depression. The purpose of designing it comes into play when poverty is at its peak and many Americans don’t have any resources for their retirement, so to empowers the retired people over the age of 65 or older.
Initially, it started as a support to the retired people, but its scope expanded drastically with time. Now, it provides financial assistance not only to retired people over 65 years but also to people with a disability, deceased family members, survivor benefits, and supplemental income for the elderly and disabled with limited financial means.
This system facilitates using a pay-as-you-go factor where their current employee pays taxes from their monthly income, and this tax money will go to the current beneficiary of the program.
Types of Social Security Benefits
Social security benefits are provided in the form of various types available for different purposes and for the different needs of people :-
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Retirement Benefits
This is the focus of this Social Security Program. This benefit is provided to people over the age of 62. An individual can start claiming the benefit amount after the age of 62 years, and the benefit amount increases the longer the person waits before claiming the benefit till the age of 70 years.
The Full Retirement Age (FRA) varies depending on factors like birth, working history, and last working income.
Eligibility: Qualifying for this program requires at least 40 credits from their work history, and the amount paid is calculated from the highest 35 years of income. Also, you must be at least 62 years old.
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Disability Benefits
This is not available at the time of the launch of this program. Social Security Disability Insurance (SSDI) offers financial assistance to people who are living with severe or long-term disability that prevent them from working. The eligibility depends on the work history and the severity of the disability. The medical should last at least one year to qualify for this benefit program.
Eligibility: This plan requires proof of the severity of the disability that prevents them from working. Also, less than the retirement benefits plan, this plan requires some credit to be eligible to avail of such a benefit.
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Survivor Benefits
This is a program designed for the family members of a deceased working individual. The benefits are given to the legal beneficiary who is the surviving member, such as a spouse, children, etc., after the working family member passes away. The benefit amount is based on the individual’s work history and income status.
Eligibility: Survivor security benefits are given to the surviving person legally related to a deceased working individual. The benefits start after 60 or 50 years old if the surviving person is disabled. Also, children under 18 years of age can get this benefit.
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Supplemental Security Income
Unlike other Social Security benefits, SSI is funded through general tax revenues, not payroll taxes. The SSI benefits are provided to people who have very low or no income and are disabled or blind. This involves fulfillment of small needs like food, clothes, etc.
Eligibility: Eligibility for SSI is based on strict income and resource limits. The applicant doesn’t need any work history, but the provider checks the financial needs. All financial assets, savings accounts, and other factors are checked in the review process.
How Social Security Benefits Are Calculated?
The amount of SSB is calculated using a strategic formula that helps determine the monthly amount that should be given to the applicant. The calculation for SSB starts with analyzing your income during inflation to make an Average Indexed Monthly Earnings (AIME). Based on the AIME, the qualified amount is calculated for the person depending on their work history.
The PIA (Primary Insurance Amount) is the benefit amount the beneficiary will get after full retirement age. This progressive formula ensures that high-income and low-income individuals get an equal assigned amount as a benefit from the SSA.
Factors affecting the final benefit amount :-
- You will be locked into a low monthly payment if you start claiming social security benefits early or before the FRA.
- If you significantly delay receiving benefits after the FRA, you will get delayed retirement credit of up to 8% per year till the age of 70.
- Cost-of-living adjustments (COLAs) are also applied annually to account for inflation.
What Is A Social Security Statement?
The Social Security Statement is a useful system that helps you see and review your earning history and estimate of future benefits. SSA always tries to encourage as many worker to create a “my social security” account to frequently manage and control their benefits over time.
This statement includes various financial metrics like a report of your total taxable income, estimates of retirement benefits at various claiming ages, and estimates of disability and survivor benefits. Also, you can get a clear insight into your work credit accumulation.
With frequent reviewing of this information, you can easily check any errors or faults on your side that can lead to a reduction in the benefit amount. The earlier you acknowledge these misconceptions, the quicker you can take action to avoid any profit loss.
Also, you can review your taxation paid and other social security benefits like SSDI and SSI. Plus, it is important to check whether any tax will be applicable to your social security benefits or not.
Application Process For Social Security Benefits
The application process for Social Security Benefits consists of several steps to be followed for a smooth transition. The application process includes :-
- Online Process : Many people apply for SSB online by visiting ssa.gov from a laptop or mobile and completing the application process with proper submission of documents.
- Via Nearest SSA Office : You can also go to the nearest SSA office, where the agent or the officer will help you to fill out the application form easily.
Are Social Security Benefits Taxable?
Social Security Benefits may be subject to taxation from the federal and state income tax departments. The tax on SSB depends on the combined income of an individual or married couple, including gross income, non-taxable income, and half of the social security benefit amount.
If the combined income of an individual exceeds the common threshold of $25,000, then 50% of the benefits are taxable. And if we talk about a couple, then if their combined income exceeds $32,000, 85% of the benefit amount is subject to tax.
These tax norms are applicable in various states of America, including Colorado, Connecticut, etc. So, it is advised to regularly check the tax terms and rules because state taxation norms change frequently according to the new policies and regulations.
To avoid taxes, you must withdraw the income from a Roth IRA, which facilitates functioning. Also, you can distribute your income into multiple withdrawal options at different times to prevent you from unwanted taxation on your Social Security benefit amount. So, consult an expert SSB legal advisor before taking any action.
While Social Security benefits provide a foundational income during retirement, it’s equally important to explore additional savings options like IRAs to ensure financial stability. If you’re wondering What is an IRA and how it complements Social Security, our detailed guide explains everything you need to know.
How Much Social Security Benefits Can I Get?
No exact value is given because the benefit amount depends on various factors. However, after the Full Retirement Age (FRA, typically 67 years), you will get an 8% annual increment until age 70.
An estimation table is given below, where the benefit amount at FRA is $2500, as follows :-
| Claiming Age | % of FRA Benefit | Estimated Monthly Benefit | Notes |
| 62 | ~70% | $1,540 | The earliest age to claim, the most considerable reduction |
| 63 | ~75% | $1,650 | Slightly less reduced |
| 64 | ~80% | $1,760 | Reduction begins to shrink |
| 65 | ~86% | $1,892 | Close to full retirement |
| 66 | ~93% | $2,046 | Near full benefit |
| 67 (FRA) | 100% | $2,200 | Full retirement benefit |
| 68 | ~108% | $2,376 | 8% delayed retirement credit |
| 69 | ~116% | $2,552 | More for waiting |
| 70 | 124% | $2,728 | Maximum monthly benefit |
This is only an expected estimation and can be incorrect. So, consult an experienced legal advisor before taking any action.
How To Maximize Social Security Benefits?
Instead of SSA reviewing the person’s working history and income, it is possible to attain the highest possible social security benefits at the time of claiming :-
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Delaying Withdrawal
The most common and effective way of maximizing the SSB is to delay withdrawing. Generally, social security benefits start after age 62, but you can delay this age and increase the potential of the benefit amount.
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Working Longer
Most of the time, it is seen that with your age and experience, the salary or income also increases. So, as we know that the social security benefits are based on your highest 35 years’ income, working longer can demonstrate a higher monthly income at the time of retirement, which helps in maximizing the SSB amount.
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Spousal Or Survivor Strategy
For a couple, one can start claiming the benefits early, or just after the age of 62 years, and the other spouse will wait for some time to increase the benefit amount. For a widow, if possible, delaying the time will increase the amount of benefit.
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Avoiding Earning Limit
If you start claiming benefits early and keep working, your benefit amount will be locked, and it is possible that, seeing the current working income, your benefits may reduce with time.
Common Myths And Misconceptions
A myth is running in the market that Social Security Benefits are broken. This myth is not true, yes, the funds may run out by extra money by mid-2030, but still, 75-85% benefits will continue. There is room for customization.
Another myth is that you can’t get Social Security benefits while working. This is not true, you can claim SSB while still working, as it may reduce the social security amount, but still, after FRA, no impact on SSB will be seen.
Everyone gets the same amount. This myth is false, because as mentioned, the benefit amount depends on the age and the 35 years of highest income. So, the benefit amount may vary person-to-person.
It is suggested that before assuming anything or making any decision, consult an expert SSB advisor to resolve all related queries.
Conclusion :-
In conclusion, for many people in the nation, including retirees, workers with disabilities, and the surviving family members of workers who have passed away, Social Security benefits are their lifeline. This government-based payment system is intended to give retired individuals, persons with disabilities, and people whose working family members have passed away extraordinary financial support.
Social security benefits are one of the best retirement schemes provided by the government to empower the post-60 life of an individual. Also, the earlier you start claiming social security benefits, the less amount you get. That’s why it is suggested that the claim be delayed to get the maximum benefit amount.
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Frequently Asked Questions
What are the four main types of Social Security benefits?
Four main types of social security benefits are present: Retirement Benefit, Disability Benefit, Survivor Benefit, and Supplemental Security.
Who gets full Social Security benefits?
If you start claiming social security benefits after the full retirement age, then you will get 100% SSB, and if you delay claiming, then you can get 8% increment per year on the benefits.
Who will get Social Security benefits?
People over the age of 62 can start claiming Social Security benefits. The full retirement age for getting 100% benefits is 67 years.
Who pays Social Security benefits?
Social Security benefits come from the taxation applied to the payrolls of currently working individuals. And the people over 62 years are the beneficiaries or the recipients.
How do I get 100% Social Security?
To get 100% social security benefits, you must wait until you attain full retirement age, which is 67 years.
When my husband dies, do I get his Social Security and mine?
If you are a surviving spouse and have a regular retirement benefit, then you can get only one at a time.
How to check Social Security benefits?
You can use the Social Security Statement in my Social Security account, an online SSA portal. You can view your working credits, benefits estimation, yearly statement, and applicable taxation.
Is it better to take Social Security at 62 or 67?
At the age of 62, you can start claiming social security benefits, but the amount will be locked in for life. Instead, if possible, then you can wait till the 67 or longer to get the maximum possible benefit amount.
