What to Do if Someone Else Has Your Social Security Card
If you're thinking about retiring soon or are nearing your 60th altogether, y'all're probably as well starting to wonder more nearly Social Security benefits. At that place's a lot to learn and some of the rules can become complex, which can make understanding how and when to get benefits — and what they include — somewhat of a challenge. Earlier you lot brainstorm the process of applying for Social Security, get started by reviewing some of the basics nigh the plan to answer some mutual questions you might accept.
The Background and Purpose of Social Security
Get-go things get-go: What is Social Security? Originally signed into police by President Franklin D. Roosevelt in 1935, what we call Social Security actually refers to what's officially known as Old Age, Survivors and Disability Insurance. Information technology'due south funded by payroll taxes — money paid out by employees via paycheck deductions and by employers — and is a form of social insurance administered by the U.S. federal authorities. This ways that it's a program that involves the government participating in the insurance market to provide extra assistance to sure groups and protect them against fiscal problems that arise after emergencies.
Perhaps the best-known and largest component of Social Security is the retirement benefits it pays out. In that case, these payments are intended to go along people who worked lower-wage jobs throughout their lives from living in relative poverty when they exit the workforce as they age. Even so, the Social Security Administration (SSA) too makes payments to people with disabilities who cannot work and to survivors of workers who've died. According to the SSA, the purposes of these payments are "to provide for the material needs of individuals and families, "to protect aged and disabled persons against the expenses of illnesses that may otherwise employ up their savings" and "to keep families together."
Information technology's important to note that Social Security benefits are intended to exist supplemental — that is, they're not supposed to serve as someone's sole source of income when they retire. The benefit payments are meant to provide a heave to other retirement income, such as a pension.
Social Security Eligibility: The Credit System
Depending on your life circumstances, you could be eligible to receive Social Security benefits at any age — not just the traditional retirement age of 62. For example, to receive disability benefits, you may be eligible at almost any age as long as you've worked long enough and recently enough and take a qualifying medical condition that limits your power to piece of work. You may also be able to receive survivors benefits in some circumstances if you're a surviving family member of a deceased person who "worked long plenty in jobs insured under Social Security to authorize for benefits."
Disability and survivors do good payments have relatively straightforward eligibility requirements to encounter. Social Security retirement benefits practice as well, just the ways eligibility and amounts are determined and the details involved can await somewhat complicated at beginning glance. Understanding eligibility for Social Security benefits involves learning about credits offset.
Your eligibility for receiving Social Security is based in part on credits that y'all earn while working. When you're employed and Social Security taxes are deducted from your paycheck for receipt by the Internal Revenue Service (IRS) you start earning credits. These credits are based on the corporeality of money you earn each twelvemonth, and you lot can earn upward to four credits per yr. For example, in 2020, earning $i,410 in wages at your chore earns y'all one credit. Using this number equally another instance, once y'all've earned $5,640 ($1,410 ten four) in wages from your job, you've earned your four credits for the year and cannot earn more than credits until the next year. The base amount of money yous demand to earn from your job to earn one credit increases slightly each year to account for inflation.
To qualify to receive Social Security retirement benefits, you must earn at least 40 credits, which equates to 10 years' worth of work. You don't need to work ten consecutive years to earn the credits, however. Whatsoever credits y'all receive remain on your Social Security tape, and if y'all leave a job and return to the workforce years later, you tin begin accumulating credits over again until you reach xl and become eligible for benefits payments.
The number of credits needed to determine your eligibility for disability or survivors benefits depends on your historic period; generally speaking, the younger yous are, the fewer the number of credits is that you need to go eligible. The age table on the Social Security Administration's website tin can requite you a better idea of the number of credits relative to your age that yous'll need to have earned to make up one's mind eligibility for disability or survivors benefits.
What Role Does Your Age Play?
Every bit mentioned, age can be a determining gene in the number of credits y'all'll demand for eligibility for 2 types of payments. However, when information technology comes to retirement benefits, your historic period can also play a office in not merely when y'all're eligible to starting time receiving payments simply too in the amounts of those payments. In detail, you lot'll want to think about the age at which you decide to starting time claiming your Social Security retirement payments.
The age when you start challenge determines whether you receive 100% of your Social Security benefits. If y'all're eligible to receive Social Security retirement benefits, you can start getting them as early as historic period 62. However, your payment amounts will be less than they are if y'all wait until what's called your "total retirement historic period." This is the age at which you're eligible to receive 100% of your benefit amount every calendar month, and it's typically between ages 66 and 67, depending on the twelvemonth you were built-in. So, drawing earlier than your full retirement historic period results in you receiving a reduced amount in benefits — the Social Security Administration notes that you'll become virtually 28% less than you lot would if you wait until age 66.
Waiting until you're older than full retirement age to quit working and draw benefits can as well touch the amount you receive every month. Considering you're working longer, you'll receive a larger monthly amount than if you retired at 66. For each calendar month you delay claiming benefits, the amount you lot can receive monthly increases slightly, and if you await until age 70, you'll get 132% of your Social Security benefit amount. Once you turn 70 and oasis't started challenge nonetheless, your benefit amount won't proceed increasing, and then that 132% is the near you can get each calendar month if you lot filibuster claiming to continue working.
Source: https://www.askmoney.com/investing/understanding-your-social-security-benefits?utm_content=params%3Ao%3D1465803%26ad%3DdirN%26qo%3DserpIndex
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