How Does Social Security Work 12 Questions Answered
Social Security isnt just a retirement program. It also provides for people who are disabled, the survivors of workers who have died, and the dependents of recipients.
However, because retirees are by far the largest group of people to receive benefits, were focusing on Social Security retirement benefits in this article.
Who Is Eligible For Social Security
To receive benefits from Social Security, you must:
- Meet eligibility requirements. You must be 62 or older, disabled or blind to qualify for Social Security benefits.
- Have earned at least 40 credits of work. You gain a credit for each three-month period that you earn at least $1,470, as of 2021. This means you generally must have at least 10 years of work history. Family members, spouses and former spouses may also qualify under certain circumstances without meeting work credit requirements. In addition, those who are younger and become disabled may be eligible before reaching this credit requirement.
- Meet legal requirements. Applicants for Social Security benefits must either be U.S. citizens or lawfully present aliens.
Starting Your Application Process With The Ssa
Not only does the SSA handle all claims, but it recognizes Social Security advocates or attorneys as resources available to help claimants. The SSA sets limitations on how much an attorney or advocate can earn from a settlement, so there is no harm in speaking win an attorney or advocate about your claim today.
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Taking A Social Security Mulligan
If you file for Social Security and then change your mind, dont fret. You can withdraw your application within 12 months of filing. You must, however, pay back the benefits, without interest, youve already received.
So, lets say you claim Social Security at age 62, which means your benefit is permanently reduced by 25%. Suppose a few months later you decide you dont need the money right now and would rather not have the reduction that comes with claiming your benefit early. You can notify the Social Security Administration, pay back all the money you have received and then apply for Social Security again later. Your payments then will be in the amount youre due at that age.
Who Receives Social Security Benefits
Retired workers account for 71 percent of the programs beneficiaries. Disabled workers make up another 13 percent of beneficiaries. The remainder are the survivors of deceased workers as well as spouses and children of retired and disabled workers.
Social Security is a major source of post-retirement income for low-income seniors. For seniors at the bottom of the income distribution, benefits make up over 80 percent of their total yearly income. However, the benefits received by low-income retirees are modest. Workers who earned an average of $26,600 per year before retirement would receive only $14,200 per year in Social Security benefits if they retired in 2021 at the full retirement age.
Support With You Through Life’s Journey
Social Security is committed to helping maintain the basic well-being and protection of the people we serve. We pay to about 64 million people including retirees, children, widows, and widowers. From birth, to marriage, and into retirement, we are there to provide support throughout life’s journey.
How The Social Security Do
There arent many things in life that offer second chances. One, surprisingly, is filing for Social Security.
We all have past events that we would love to have the opportunity to do over. As a light example, the times you think of the perfect remark to say to someone, but only hours or days later. The wish is to apply lessons youve learned from experience or new information obtained to create a better outcome.
That desire to rewind the clock and do things differently exists in the finance realm, too. Sometimes we make mistakes or discover a strategy that would have been more successful. Fortunately, there are some options available to help rectify your financial missteps. Just think of all the times you have thankfully been able to return impulse buys you didnt really need.
What you may not know is that a second-chance option exists for Social Security. This Social Security do-over allows you to withdraw your application and then re-apply later. It can come in handy if your financial situation unexpectedly changes.
However, there are several important rules you should know first.
When To Claim Your Social Security Benefits
I can hear what some of you are thinking: “I can work 10 years and get benefits? Sign me up.”
Not so fast.
Even if you’ve accumulated your 40 credits, you can’t start claiming retirement benefits until you’re aged 62 or older, and the longer you wait to start collecting those benefits, the bigger the payout will be. If you wait to claim Social Security until you reach your “full retirement age” — which is determined by the SSA and is 67 if you were born in 1960 or later — then you’ll receive your “primary benefit amount,” which is the full monthly benefit you’re entitled to based on your earnings record.
The earlier you claim your Social Security benefits, the lower your monthly payment will be. For example, if your full retirement age is 67 and you opt to claim benefits at age 62, then you’ll get just 70% of your primary insurance amount. If you begin collecting at 65, you’ll get 86.7% of your monthly benefit. On the flip side, you can earn delayed-retirement credits for waiting past your full retirement age. For every extra year you wait to claim Social Security benefits, your eventual payout will increase by 8%. Your benefits max out at age 70, though, so there’s no reason to delay benefits beyond that point.
If you’re receiving Social Security disability benefits at the time you reach your full retirement age, then your disability benefits will automatically convert to retirement benefits, but the amount won’t change.
The Mechanics Of Social Securitys Trust Funds
Income is credited to the funds and disbursements for benefits and administration are counted against the funds balances. The Social Security Administration has the legal authority to spend any accumulated balances plus any incoming revenues. However, once a trust fund balance reaches zero, spending cannot exceed incoming revenues.
As with other trust funds, Social Securitys surpluses are credited with securities issued by the Treasury that excess income is used to reduce the amount of new federal borrowing necessary to finance governmental activities. The reverse happens when revenues for the trust funds fall short of their expenses.
The balance of the trust funds is a measure of the historical relationship between receipts dedicated to the programs and their expenditures. Therefore, it is important to understand that securities held by the funds are essentially bookkeeping mechanisms to track cash flows in and out of the accounts. However, trust funds have an important legal meaning in that a balance is required to permit spending from a fund.
Between 1984 and 2009, Social Security ran significant cash surpluses . Such surpluses were primarily the result of program reforms enacted in 1983. Those reforms slowly raised the retirement age and increased payroll taxes, which produced substantial trust fund reserves during the 1990s and early 2000s.
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What Is The Lowest Social Security Payment
DEFINITION: The special minimum benefit is a special minimum primary insurance amount enacted in 1972 to provide adequate benefits to long-term low earners. The first full special minimum PIA in 1973 was $170 per month. Beginning in 1979, its value has increased with price growth and is $886 per month in 2020.
How Much Social Security Will I Get
The simplest way to calculate your anticipated Social Security retirement benefits is to create an account at SSA.gov and use the SSAs online tools to estimate your benefits.
Because each persons benefits will be tied to their age and salary history, it can be very hard to estimate Social Security benefits on your own. That said, the average single retiree received $1,543 per month and the average married retired couple got $2,596 as of Jan. 1, 2021. The most someone retiring at Full Retirement Age in 2021 can receive is $3,148.
Generally speaking, Social Security benefit calculations are weighted so that lower- and middle-earning workers will receive a higher percentage of their average wages, says Larry Gatz, President of Copperwood Financial and National Social Security Advisor . These benefit calculations are then adjusted regularly by the SSA to accommodate the cost of living and keep pace with inflation.
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When Will I Receive My Social Security Check
The Social Security Administration’s payment calendar helps recipients plan for payments. If you were born in the first 10 days of your birth month, then you receive payments by the second Wednesday of the month. Those born on the 11-20 receive payments by the third Wednesday. Those born on the 21-31 receive payments by the fourth Wednesday. However, those who began receiving payments before May 1997 receive payments by the third day of each month.
If You’re Not Sure Why You Received A Payment
If you receive a check or direct deposit payment from the Treasury Department and do not know what its for, contact the regional financial center that issued it.
If you received a check, look for the RFCs city and state at the top center. Then contact that RFC to find out which federal agency authorized the payment. It will be one of these:
If you received payment byelectronic funds transfer , or direct deposit, follow the directions under Find Information About a Payment.
Use the Treasury Check Verification System to verify that the check is legitimate and issued by the government.
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Social Security Vs Supplemental Security Income
Sometimes people confuse Social Security and Supplemental Security Income . While both programs are administered by the Social Security Administration, they are intended for different groups of people and are financed in different ways.
Social Security, for example, pays out benefits to individuals, their families, and their survivors based on how long that individual worked without respect to need.
SSI, on the other hand, is needs-based and not based on an individuals work history.
While Social Security is funded by special payroll taxes deposited into the two Social Security trust funds, SSI is funded by general tax revenues.
Policy Basics: Top Ten Facts About Social Security
Social Security provides a foundation of income on which workers can build to plan for their retirement. It also provides valuable social insurance protection to workers who become disabled and to families whose breadwinner dies.
Eighty-five years after President Franklin Roosevelt signed the Social Security Act on August 14, 1935, Social Security remains one of the nations most successful, effective, and popular programs.
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Coronavirus Stimulus Checks And Social Security
On April 3, 2020, the federal government began sending eligible Americans stimulus checks as part of a relief package to help workers and the economy during the COVID-19 pandemic. Senior citizens and retirees who receive Social Security benefits are eligible for coronavirus stimulus checks as long as they meet the basic eligibility requirements.
The maximum stimulus payment is $1,200 for eligible adults who file separately and $2,400 for eligible married couples who file jointly. There is also an additional $500 payment per qualifying child.
In December 2020, an additional $600 stimulus check was sent out to every eligible adult and child.
Everyone who has a Social Security number and filed a tax return in the last two years generally qualified for both stimulus checks if their income falls within the governmentâs limits. Income is based on your 2019 federal tax return.
However, if you receive Social Security benefits and donât usually need to file a tax return, donât worry â you donât have to start now. You should still receive the stimulus payment, if you havenât already the government will use the information on file with the Social Security Administration to send you your payment. You can expect to receive the stimulus check the same way you get your Social security payment.
Beneficiaries of Supplemental Security Income can now check the status of their payment on the IRS website.
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Social Security Administration: Actions Needed By Ssa To Ensure Disability Medical Consultants Are Properly Screened And Trained
The Social Security Administration pays benefits to eligible people who are unable to work due to disability. State agencies review claims for disability benefits, and use “consultants” to determine if claimants are medically eligible.
SSA requires state agencies to ensure consultants meet its employment and training standards. While most states we surveyed reported meeting the requirements, several did not. As a result, SSA risks using consultants who are ineligible or not fully trained.
We recommended that SSA take further steps, such as periodic reminders for states, to ensure states properly screen and train consultants.
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Understanding The Social Security Administration
The SSA administers the Social Security program. Social Security is a vital part of the retirement income planning strategy of many Americans, particularly as savings rates remain low7.1% in October and 6.9 percent in November 2021. The drop reflects the winding down of pandemic-related assistance programs, according to the Bureau of Economic Analysis .
However, the breadth of services the SSA provides spans many vital areas of the U.S. social safety net. In December 2021, for example, nearly 70 million Americans, including retired workers, disabled workers, and survivors, received Social Security benefits, according to the SSA. Social Security is one of the largest government programs in the world.
The benefits are funded with payroll taxes of employers, employees, and the self-employed. The tax revenue goes into two Social Security trust fundsthe Old-Age and Survivors Insurance Trust Fund for retirees and the Disability Insurance Trust Fund for disability beneficiarieswhich pay benefits to people eligible for them.
Unlike the majority of U.S. federal government agencies, the SSA is not headquartered in Washington, D.C. Instead, the agency is based in the city of Woodlawn, Md., which is a suburb of Baltimore. In all, the Social Security Administration has 10 regional offices, six processing centers, and approximately 1,230 field offices in cities across the country. It employs over 60,000 workers.
‘it’s Taken Too Long’
Field offices are slated to reopen to the public in early April.
In the meantime, the Social Security Administration is emphasizing that people who need help start with the agency’s website.
“As we expand in-person availability, we strongly encourage the public to continue to go online at ssa.gov, call us for help if they cannot complete their business online, and schedule appointments in advance,” a spokesperson said.
But for people like Erica Ellis, 43, of Virginia Beach, Virginia, who has been trying to help her sister claim disability benefits, there are no immediate answers.
Her sister, Dorothy Pritchette, 48, a schoolteacher from Newport News, Virginia, has been unable to work since she had a stroke in August. She applied for disability benefits shortly thereafter. While the Social Security Administration website shows that the benefits have been approved, her sister has yet to receive a payment.
“Here we are going into March, and she still doesn’t have her money,” Ellis said. “It’s taken too long.”
The experience, along with Ellis’ own stalled pursuit for her own disability benefits, has made her question the sincerity of the program.
“I really think that they want you to be dead,” Ellis said. “That way, they don’t have to give it at all.”
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Social Security Number Theft
Because Social Security Numbers have become useful in identity theft and other forms of crime, various schemes have been perpetrated to acquire valid Social Security Numbers and related identity information.
In February 2006, the Social Security Administration received several reports of an email message being circulated addressed to “Dear Social Security Number And Card owner” and purporting to be from the Social Security Administration. The message informs the reader “that someone illegally is using your Social Security number and assuming your identity” and directs the reader to a website designed to look like Social Security’s Internet website.
“I am outraged that someone would target an unsuspecting public in this manner,” said Commissioner Jo Anne B. Barnhart. “I have asked the Inspector General to use all the resources at his command to find and prosecute whoever is perpetrating this fraud.”
Once directed to the phony website, the individual is reportedly asked to confirm his or her identity with “Social Security and bank information”. Specific information about the individual’s credit card number, expiration date and is then requested. “Whether on our online website or by phone, Social Security will never ask you for your credit card information or your PIN,” Commissioner Jo Anne B. Barnhart reported.
What Programs The Ssa Provides
Nearly every American worker pays federal taxes. A portion of these taxes goes toward Social Security. While most people are familiar with the retirement benefit of Social Security, there are other benefits that its important to be aware of. These benefits include insurance programs and health services benefits.
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How To Receive Federal Benefits
To begin receiving your federal benefits, like Social Security or veterans benefits, you must sign up for electronic payments with direct deposit.
If You Have a Bank or Credit Union Account:
- Call the Go Direct Helpline at .
If You Don’t have a Bank or Credit Union Account:
- Direct Express debit card – a pre-paid debit card. Get help by calling the Go Direct Helpline at .
Make Changes to an Existing Direct Deposit Account:
Learn how to make changes to an existing direct deposit account. You also may contact the federal agency that pays your benefit for help with your enrollment.