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How Does Social Security Work?

Read this article to learn about Social Security and its benefits for retirement

Social Security is the name given to a program run by the federal Social Security Administration of the United States made for old, retired, and disabled people. The administration designed the system to be a financial safety net for America’s elderly people.

What Is Social Security?

Social Security is a program dating back to 1935 to support the elderly of America. Now it supports the elderly, their survivors, and those disabled. The program is based on a system where you contribute towards your social security over your employed life and receive benefits once you retire from your job. Contributions are usually automatic and are deducted directly from your monthly salary. For self-employed people, their contributions are made when they file for their tax returns each year.

It works on a credit-based system, where you earn credit for the contributions you make. There is a limit of 4 credits you can earn each year. There is also a requirement of 40 credits to qualify for the retirement benefits. This means you need to work for at least ten years before being eligible for the benefits. These credit requirements are usually much lower for disability benefits.

Benefits of Social Security

Retirement Benefits

After contributing towards the system for ten years, workers can be eligible for retirement benefits from the age of 62. Full retirement age depends on where you were born, but usually is between 65 to 67 years of age. If you choose to retire at 62, it counts as ‘early retirement,’ and the benefits might be lower than if you waited to reach your ‘full retirement age.’

Waiting to reach full retirement age means you get higher monthly benefits. If you still want higher benefits, you can consider delaying your retirement up to the age of 70 to earn higher rewards.

Disability Benefits

People who aren’t able to work due to mental or physical disabilities are also eligible to receive benefits. The Social Security Administration has a strict definition of ‘disabled’. Applicants for disability benefits have to go through a diligent disability determination process before receiving their benefits.

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Survivors’ Benefits

Families of deceased or disabled workers are also eligible to receive benefits based on the worker’s earning history. Surviving spouses above 60 years old and children of deceased workers, as long as spouses don’t re-marry, can continue to receive social security benefits from their deceased working family members. Spouses who are guardians of children younger than 16 are also eligible to receive these benefits too.

How Much Does Social Security Pay?

Social Security benefits depend on how much you earn throughout your working life. The benefits vary from person to person, and the formula can be confusing. You can calculate your benefit by taking an average from your highest-earning 30 years.

The average payment of a person who contributed to the full retirement age is around $1,728.79 monthly. There are many benefit calculators available online that you can use to estimate how much you can get.

Written By

Riley is a finance, lifestyle, and entertainment writer living in San Diego. He received his bachelor's degree in Journalism and Multimedia from the University of Oregon. His work has been featured in many finance and lifestyle publications throughout the US. When he is not writing, Riley enjoys reading and hanging out at the beach with his dog.


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