Are you thinking about your financial future? Most people are. Understanding how Social Security benefits work can be complex, so let’s explore the basics to make things easier. This can include retirement benefits, Supplemental Security Income, and other assistance programs. This knowledge lets you plan with more confidence and less stress. It is your money you’ve likely been paying into it your entire life.
What are Social Security benefits?
Social Security benefits are more than just retirement checks. The program also provides social security for those with disabilities. Additionally, there are survivor benefits for families, and Supplemental Security Income (SSI) for those with limited income and resources.
These different kinds of security benefits give you a safety net at different times of your life.
Retirement Benefits
These are payments you get monthly after you retire. This amount is based on your earnings history, so the more you earned, the higher the monthly benefit might be.
The age you retire matters, too. You can start as early as 62, but your benefit will be lower than if you wait until your full retirement age.
- Full retirement age is 66 for those born from 1943 to 1954.
- It gradually increases to 67 for those born in 1960 or later.
Waiting until age 70 can increase your payments even more.
Disability Benefits
If you become disabled and cannot work, you could get social security. To qualify, your disability has to keep you from working, and this social security needs to last at least a year, or result in death. It’s important to gather and present sufficient medical evidence when you apply for disability benefits.
The definition of disability used by the Security Administration is strict. However, this security is important.
Some examples of qualifying disabilities may include:
- Musculoskeletal System disorders.
- Special Senses and Speech.
- Respiratory Disorders.
- Cardiovascular System.
- Digestive System.
- Genitourinary Disorders.
- Hematological Disorders.
- Skin Disorders.
- Endocrine Disorders.
- Neurological Disorders.
- Mental Disorders.
- Neoplastic Diseases – Malignant Tumors.
Survivor Benefits
If a family member passes away, you might be able to collect survivor benefits. This may include spouses, children, and sometimes dependent parents. This help is designed to ease financial strain after losing a loved one who paid social security taxes.
The amount depends on the deceased’s earnings and your relationship to them. These are monthly payments. However, keep in mind the exact guidelines, eligibility, and any reduction for early collection, differ from retirement benefits.
The Riverbend Wealth Management website has resources about how to maximize social security benefits as a surviving spouse.
Supplemental Security Income (SSI)
Supplemental Security Income is for those with very little income and few resources who are also disabled, blind, or age 65 or older. In general, adults who qualify for SSI do not have monthly wages above $2,019. These payments are designed to help meet basic needs like food, clothing, and housing.
Unlike other social security benefits, SSI is not based on your prior work. About 7.4 million Americans get monthly SSI benefit payments.
Family Benefits
Certain family members may also be able to receive a monthly payment if a person is getting social security retirement or disability benefits. This can include a spouse, child, and even some grandchildren.
For instance, a spouse may get security depending on the retiree’s amount.
Understanding Your Social Security Statement
Your Social Security statement is a detailed summary of your earnings history and estimates of your future payments. To access it, create an account on the Social Security Administration’s official website. Be sure the website belongs to a trusted source when you manage benefits.
Check it at least once a year to make sure your earnings are correct and to update your benefit estimates.
How to Check your Eligibility
To know where you stand, you can use the check eligibility tool. To see if you might be eligible for benefits, use the Benefits Eligibility Screening Tool on the Security Administration website.
The eligibility for these benefits vary.
When to Claim Social Security benefits: Weighing Your Options
Deciding when to start receiving Social Security benefits is a personal decision. But, it can depend on things like health, financial needs, and your expectations of when you may need medicare benefits in retirement.
There’s a big question everyone asks, should I take my benefits at 62 or wait? What about delaying Social Security until age 70?
Early Retirement (Age 62)
Taking social security early, at age 62, gives you access to funds sooner. But remember, benefits are reduced significantly if you start early. Benefits are reduced by about 30% compared to your full retirement age amount. Consider this option if you need the income now, or expect to have a shorter lifespan.
It’s your right, but know you are starting off at a disadvantage if you do that.
Full Retirement Age (FRA)
This is between 66 and 67, depending on your birth year. By waiting until your FRA, you get 100% of your security benefits. If you can wait, this option gives you a good balance between getting payments and not reducing them.
Many consider it the smart thing to do and many encourage doing that. Are you doing enough research before making this kind of life decision?
Delaying Until Age 70
Waiting until age 70 boosts your benefits substantially. Your security goes up by about 8% for each year you delay, after your FRA. Delaying payments ensures the highest possible benefit.
The increased payments from waiting will compound in the years ahead, potentially by 24%. Are you really able to go on without claiming social security? Then waiting until 70 may be something to do.
Understanding the Social Security Payment Schedule
The Security Administration has a set schedule for payments each month. Your birthdate determines when you’ll receive your payment. The Social Security Administration’s calendar has dates for 2025.
The schedule for payments can get tricky, so this HTML table explains it a little better. Birthdate Payment Date 1st – 10th of the month Second Wednesday of the month 11th – 20th of the month Third Wednesday of the month 21st – 31st of the month Fourth Wednesday of the month
Those who may be eligible for SSI can begin the application process online, in person at your local Social Security office, or by calling 1-800-772-1213 (TTY 1-800-325-0778) from 8 a.m.
If your security payment is more than 3 days late, contact the Social Security Administration to report a missing payment.
Common Myths About Social Security benefits
There are several misunderstandings about security benefits that could affect planning your future.
Myth 1: Social Security is Going Bankrupt
The program faces challenges, but won’t disappear completely. Changes may happen to make it stable.
Myth 2: Social Security is Only For Retirement
There are multiple types of programs to offer security to people who meet the right circumstance. Payments exist to provide for people under disability, as well as families that qualify as survivor benefits.
Myth 3: Claiming Early Doesn’t Impact Anything Other Than The Amount
When one collects retirement before the “normal” retirement date (which depends on when one was born), you may not be able to work without impacting benefits. Benefits could be temporarily reduced.
Also if you collect early, benefits become further reduced if you also collect other state and local payments.
How to Maximize Your Social Security benefits
Maximizing security is about understanding the rules and creating a smart claiming strategy. The Finger Financial Five from Riverbend Wealth Management shares information about how to maximize security benefits.
Also, think about the effects that collecting certain funds has when it comes to taxes. The information on TurboTax can also further your knowledge and expertise here.
Work History Matters
Your work history is what they use to calculate benefit payments. To maximize those numbers, work steadily for at least 35 years. You want to get rid of those low earning years to ensure a better retirement or help other people who manage medicare benefits. Every dollar helps.
Coordinating Spousal benefits
If married, coordinate with your spouse to figure out the right way to approach social security. One strategy involves one spouse claiming spousal payments. But there are considerations on both sides to evaluate before coming to any life changing conclusions about managing medicare or financial independence.
Consider Other Retirement income
Balance claiming Security payments alongside savings, investments, and pensions. The Administration will evaluate financial reports, performance reports, and civil rights compliance.
How do your 401ks and IRAs fit with collecting funds? Do you also receive dividends or other passive income sources?
Also see if you qualify for “kickbacks.” Seniors receiving less than $2,384 a month, might be eligible for “kickbacks.” To find out if you can claim your 12 “kickbacks” talk to the social security administration
Stay Informed About Social Security Updates
The Administration makes constant adjustments to retirement benefits based on data they are required to analyze and report. Stay on top of changes by going to official gov websites and signing up for updates. USA Today newsletters can deliver updates and stories straight to you.
What to Do If You Think You’ve Been Defrauded
If you think someone has stolen your security number or you have fallen for a social security phone scam or email phishing scheme, there are steps you can take. Report it to the FTC or the Social Security Administration depending on what it may be. Visit report fraud on the Social Security Administration website for more information on steps to take and actions you can expect from the inspector general.
FAQs about Social Security benefits
How much does the average person get on Social Security per month?
The exact amount varies based on work history, earnings, and when they choose to start receiving benefits. In 2024, the average benefit was around $1,900 a month.
Is it better to withdraw Social Security at 62 or 67?
That depends on a person’s personal situation. Taking benefits at 62 results in a lower monthly amount but you receive payments for a longer time. Delaying until 67 gives you full retirement payments.
When a husband dies, does his wife get his Social Security?
Yes, a widow can often collect security based on her deceased husband’s record. There are specific rules that she would have to adhere to.
At what age is Social Security no longer taxed?
There isn’t a specific age when Security payments stop being taxed. Taxes on payments depend on your combined income, which includes security, adjusted gross income, and nontaxable interest.
Conclusion
Understanding Social Security benefits can be confusing. You can get payments after you retire. You can even get payments if you can’t work because you are disabled. A financial advisor can explain all of your benefits further if needed. Educate yourself and start financial planning. You can also consult government agencies or read financial reports to deepen your financial literacy and increase your odds of qualifying.
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