Social Security Benefits

Social Security is a federal insurance program that provides income benefits to qualified retired workers and disabled people as well as their spouses, children and survivors. More than 64 million people – one in every six Americans – collect Social Security benefits each month.

When Should You Apply for Social Security Benefits?

You can begin receiving Social Security at age 62. However, starting at that age means those benefits will be about 30 to 35 percent less each month than what you will receive if you delay benefits until you reach what the government considers your full retirement age.

Waiting past your full retirement age before you draw Social Security can also mean you will receive larger monthly benefits.

Full Retirement Age Based on Birth Year
Year of BirthFull Social Security Retirement Age
1937 or earlier65
193865 and 2 months
193965 and 4 months
194065 and 6 months
194165 and 8 months
194265 and 10 months
1943 to 195466
195566 and 2 months
195666 and 2 months
195766 and 6 months
195866 and 8 months
195966 and 10 months
1960 and later67

If you wait past your full retirement age to start collecting Social Security benefits, your monthly benefits will increase by eight percent every year until you’re 70.

This can be a significant amount of income. Take, for example, someone who turned 62 in 2021 – this person’s full retirement age would be 22 years and 10 months. Let’s say they were entitled to $1,000 a month at full retirement. But the amount they can receive based on when they choose to retire varies by hundreds of dollars a month.

Examples of Benefits
  • Early retirement at age 62 – $708 per month
  • Full retirement at age 66 & 10 months – $1,000 per month
  • Delayed retirement at age 70 – $1,253 per month
Source: Social Security Administration

The decision of when to begin claiming Social Security benefits is an extremely important part of your retirement plan. That’s because it determines the amount you will receive every month for your entire time in the program.

It would be best if you considered several factors before deciding when to apply for Social Security benefits. These include what other retirement savings or benefits you have available to you, how long you expect to live in retirement and whether you plan to continue working while drawing Social Security.

Financial expert John Clark explains what impact taking Social Security early — or delaying it — has on your retirement.

Social Security is designed to replace about 40 percent of employment income, on average.

However, that is not the same with every worker. Social Security will replace a higher percentage of the income of lower-income workers and a lower percentage of the income of higher-earning workers.

How Do You Apply for Social Security Benefits?

If you are eligible for Social Security benefits, you can apply online, by phone or by appointment at a local Social Security office.

How to Apply for Social Security Benefits
Online
Applying online is the easiest way to apply for Social Security benefits. The Social Security website allows you to apply for retirement, spouse’s, Medicare and disability benefits at the same site. You can also apply for Supplemental Security Income (SSI) benefits.
Phone
If you don’t have Internet access, you can sign up by phone. You can call the Social Security Administration at 1-800-772-1213 (TTY at 1-800-325-0778).
In-person
The Social Security Administration has restrictions on office visits during the COVID-19 pandemic. It does allow in-person visits for certain services. You should check with the SSA’s Coronavirus page to see if you can make an in-person appointment at your local office.

Social Security Benefits If You’re Married

Determining Social Security calculations is a bit more complicated if you are married because you have the option to base benefits on your spouse’s salary history.

If the lesser earning spouse’s benefits are based on the higher earning spouse’s, then the limit of those earnings will be 50 percent of the higher earning spouse’s benefit amount.

To illustrate this, let’s talk about A and B, a married couple.
  • A makes significantly more money than B.
  • A makes so much more money that A’s monthly Social Security benefits are going to be more than twice of B’s, based on B’s salary history.
  • The good news for B is that they can choose to have their Social Security benefits based on A’s salary history and can receive as much as 50 percent of A’s monthly benefit. This is the case even if B didn’t hold a job outside the home.

On the other hand, if B’s monthly benefit would have been more than half of A’s, based on B’s salary history, then B can claim that amount.

In short, B can claim the higher of these two possibilities: B’s own Social Security earnings or half of A’s.

This all assumes that B doesn’t begin claiming benefits until B reaches full retirement age. If B begins claiming earlier, then B’s benefits will be less. In addition, if B is claiming benefits based on A’s earnings, then B does not benefit by waiting later than full retirement age.

B will not be given more monthly benefits if B waits until age 70, for example, based on A’s earnings.

Social Security Benefits for Surviving Spouses

If your spouse was receiving Social Security benefits upon their death, you must report the death as soon as possible. You can call the Social Security Administration at 1-800-772-1213 between 7 a.m. and 7 p.m. on weekdays or visit your local Social Security office in person.

You are eligible for a one-time, lump-sum death benefit of $255 from Social Security if:
  • You were receiving benefits on your spouse’s record at the time of death, or
  • If you were living in the same household as your spouse at the time of death.

Any benefits received in the name of your spouse during the month of death or later must be returned to the Social Security Administration as soon as possible.

If your spouse worked long enough under Social Security, you may be eligible for Social Security benefits. You must be age 60 or older or disabled and 50 or older to qualify.

How much you’ll receive depends on the percentage of your spouse’s benefit as well as your age and the type of benefit you’re eligible for.

You must apply for survivor benefits in person. You can call Social Security at 1-800-772-1213 to request an appointment.

The Relationship between Social Security and Medicare

Medicare and Social Security are both federal programs. Because they are both associated with retirement in the United States, people often think they are part of the same organization, but different agencies run them within the federal government.

FAQs About Medicare and Social Security
How are Medicare and Social Security related?
Both are federal programs that primarily provide insurance to retirees. Medicare is managed by the Centers for Medicare & Medicaid Services. The Social Security Administration administers Social Security. You apply for Medicare through the Social Security Administration and money is taken out of your Social Security check to pay for your Medicare premiums.
Do you automatically get Medicare with Social Security?
Not always. You can choose to claim Social Security benefits as early as age 62 or delay until you are 70. You are not eligible for Medicare until you turn 65. If you are already collecting Social Security benefits when you turn 65, you will be automatically enrolled in Medicare. If you are not collecting benefits, you must enroll in Medicare within a window that begins six months before your birth month in which you turn 65 and lasts until six months after.
How are Medicare premiums paid if you’re already enrolled in social security?
If you’re already enrolled in Social Security, your Medicare premiums are typically deducted from your monthly Social Security check. If you are enrolled in Medicare but not yet enrolled in Social Security, you will receive monthly or quarterly bills for your Medicare premiums.
How much is taken out of your Social Security check for Medicare?
You have to pay monthly premiums for Original Medicare. Most people don’t have to pay the Medicare Part A hospital insurance premium. The Medicare Part B medical insurance premiums are based on your income. Social Security looks at your tax returns from two years earlier and bases your premium payments to Medicare on your income then. If your income is significantly lower now, you can file an appeal to let Social Security know that your income is less than it was.

Social Security Disability Programs

In addition to retirement benefits, the Social Security Administration manages two programs that provide benefits to people who are disabled or blind.

Social Security Disability Insurance Program (SSDI)
SSDI supports disabled or blind individuals by providing benefits based on their workers’ contributions to the Social Security trust fund. Your contributions are based on your earnings – or your spouse’s or parents’ earnings – while in the workforce. Your dependents may also be eligible for SSDI benefits based on your earnings.
Supplemental Security Income Program (SSI)
SSI benefits are paid out as cash assistance to people with limited incomes and resources who are elderly, blind or disabled. These benefits may also include blind or disabled children. SSI payments are a federal benefit funded by the general fund of the United States – not the Social Security trust fund. Some states provide additional state supplemental benefits in addition to the federal SSI payments.

In some cases, people may be eligible for both SSI and SSDI at the same time. The Social Security Administration calls these concurrent benefits. This can happen when a disability qualifies you for Social Security Disability Benefits, but you only get a small amount of monthly SSDI benefits. This may qualify you to receive SSI benefits as well.

Comparing SSDI and SSI Programs
FEATURESSDISSI
Funding sourceDisability trust fundGeneral tax revenues
Additional state supplemental benefitsNo state supplemental benefitsMany states provide additional state supplemental benefits
Health insurance providedMedicareMedicaid
How payments are determinedBased on your (or your spouse’s or parents’) lifetime average earnings covered by Social Security. Workers comp payments may reduce the amount you receive.Based on the Federal Benefit Rate (FBR). Your countable income is subtracted from the FBR and adjusted based on your state and whether you receive a state supplemental benefit.
Minimum eligibility requirements
  • Must meet Social Security disability qualifications
  • Must be insured – based on FICA contributions based on your earnings (or the earnings of your spouse or parents)
  • Must meet Social Security disability qualifications
  • Must have limited income and resources
Source: Social Security Administration

Is Social Security Considered Taxable Income?

Social Security benefits have been taxable as income tax since 1983.

Most Americans on Social Security have to pay income taxes on their Social Security benefits. But those who do tend to pay taxes on 50 percent to 85 percent of their Social Security income.

Income Tax Rates on Social Security
FILING STATUSCOMBINED INCOME*PERCENTAGE OF BENEFITS TAXED
Individual$25,000 to $34,000Up to 50%
Individual$34,000 and upUp to 85%
Joint$32,000 to $44,000Up to 50%
Joint$44,000 and upUp to 85%
Source: Social Security Administration

*Combined income includes the total of your adjusted gross income, your non-taxable interest as well as half of any Social Security benefits that you receive for the year.

Spousal, survivor and disability benefits follow the same basic income tax rules as Social Security benefits. SSI benefits – for people with low incomes and limited resources – are not taxed.

Income Taxes for Other Benefit Programs
Spousal benefits
Benefits are taxed at the same rate as if you were filing an individual tax return on Social Security.
Survivor benefits
These benefits are rarely taxed since they are paid to children who typically don’t have other taxable income. Though survivor benefits are paid to parents or guardians on behalf of the children, the benefits do not count toward the adults’ incomes.
Disability benefits
Benefits are taxed at the same rate as if you were filing an individual tax return on Social Security.

Thirteen states also tax Social Security benefits. Check with your state tax authority or your financial professional to see if you have to report and pay taxes on your benefits.

Can You Still Work While Receiving Social Security?

You can continue to work while you receive Social Security benefits. But there is a limit to how much you can earn and still receive full benefits. The earning limit may be adjusted each year.

If you earn above the limit, Social Security will deduct a certain amount of your benefits each year.

Social Security Benefits, Earning Limits and Penalties
RETIREMENT AGEEARNING LIMIT (2021)PENALTY
Under full retirement age$18,960SSA deducts $1 from your benefits for every $2 you earn over the limit
Full retirement age & above$50,520SSA deducts $1 from your benefits for every $3 you earn above the limit
Source: Social Security Administration

What Is the Future of Social Security?

Social Security is expected to run out of cash reserves in 2034, according to the Old-Age and Survivors Insurance Trust Fund, the retirement benefits account managed by the Social Security Administration.

How Much Will You Receive?
The Social Security Administration lets you check how much you’ve paid into the system every year you’ve worked. It also provides a retirement estimator to give you an approximate idea of how much you can expect to receive each month when you retire.
Source: Social Security Administration

However, this doesn’t mean the program would be bankrupt and unable to pay out benefits. If Congress does nothing to reform the system by 2034, Social Security would still be able to pay 79 percent of promised benefits until 2090.

Social Security has run out of cash reserves before. Congress reformed the program in the 1980s by taxing benefits based on income levels and by gradually increasing the full retirement age from 65 to 67.

Last Modified: August 10, 2021

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