Learn About Social Security Benefits Application

Understanding Social Security Benefits: The Basics

Social Security is a federal insurance program run by the Social Security Administration (SSA). The program provides monthly payments to people in specific situations. Understanding how Social Security works is an important first step in learning about the program.

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The program has several different types of benefits. Retirement benefits are payments made to workers who have reached a certain age and have worked long enough to earn credits in the system. Disability benefits provide monthly payments to workers under full retirement age who have a medical condition expected to last at least 12 months or result in death. Survivor benefits are paid to family members of workers who have passed away.

Social Security is funded through payroll taxes. Workers and employers each pay 6.2% of wages into the system. Self-employed people pay 12.4%. These taxes go into a trust fund that pays current beneficiaries. The amount you may receive later depends on how much you and your employers paid into the system over your working years.

As of 2024, about 67 million people receive Social Security benefits each month, according to the SSA. The average monthly retirement benefit is approximately $1,907 for someone who retired at full retirement age. However, benefit amounts vary significantly based on individual work history and the age when someone begins receiving payments.

The program has been operating since 1935 and is one of the largest social insurance programs in the world. Learning the basic structure helps you understand what information you'll need and what steps might be involved if you decide to explore whether you may be able to receive benefits.

Practical Takeaway: Social Security provides three main types of benefits—retirement, disability, and survivor—funded through payroll taxes. Your potential benefit amount depends on your work history and when you begin receiving payments.

Retirement Benefits: Age, Credits, and Payment Amounts

Social Security retirement benefits are available to workers who have earned enough credits through payroll taxes. To understand retirement benefits, you need to know about credits, full retirement age, and how your benefit amount is calculated.

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Credits are earned through work and payroll tax contributions. In 2024, you earn one credit for every $1,730 of wages you earn, up to a maximum of four credits per year. Most people need 40 credits to be able to receive retirement benefits, which typically means working for about 10 years. However, younger workers who become disabled or pass away may need fewer credits for their family members to receive survivor benefits.

Full retirement age depends on your birth year. For people born in 1943 through 1954, full retirement age is 66. For those born between 1955 and 1960, it increases gradually from 66 and 2 months to 67. Anyone born in 1960 or later has a full retirement age of 67. This is the age at which you can receive your full benefit amount.

You can choose to receive retirement benefits before full retirement age, as early as age 62, but your monthly payment will be permanently reduced. For example, if your full retirement age is 67 and you begin benefits at 62, your payment may be about 30% lower than if you waited until full retirement age. Conversely, if you delay benefits past full retirement age, your monthly payment increases by about 8% per year until age 70.

Your benefit amount is based on your highest 35 years of earnings. The Social Security Administration calculates this by taking your average monthly earnings during those years and applying a formula that is adjusted each year. Workers who earned more money during their careers generally receive higher benefits, but the formula is designed so that lower-income workers receive a higher percentage of their average earnings back as benefits.

Recent changes to work rules allow people receiving retirement benefits to earn unlimited income without any reduction to benefits. Prior to 2024, there were limits on how much someone could earn while under full retirement age, but those rules have been modified.

Practical Takeaway: You need 40 credits to receive retirement benefits. Your full retirement age depends on your birth year. You can start benefits as early as 62 or delay until 70 to receive higher payments. Your benefit amount is based on your 35 highest-earning years.

Disability and Survivor Benefits: Coverage Beyond Retirement

Social Security provides more than retirement income. The program includes disability insurance and survivor insurance that protect workers and their families if the worker becomes unable to work or passes away.

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Social Security Disability Insurance (SSDI) provides monthly benefits to workers under full retirement age who have a severe medical condition. The condition must be expected to last at least 12 months or to result in death. The medical condition must prevent the person from doing substantial work. About 7.7 million people currently receive disability benefits through Social Security, according to the SSA.

To receive disability benefits, you must have worked long enough and recently enough. The number of credits you need depends on your age when you become disabled. Generally, younger workers need fewer credits than older workers. For example, someone who becomes disabled at age 24 might need only 12 credits, while someone disabled at age 31 might need 20 credits. The credits must be earned within a certain time period, usually within the last 10 years.

Survivor benefits are paid to family members of a worker who passes away. These benefits may go to a spouse caring for the worker's children under age 16, children under age 19 who are in high school, unmarried children who became disabled before age 22, the worker's spouse at age 60 or older, or a divorced spouse in some situations. Parents of the worker may also be able to receive benefits if they were receiving at least half their support from the worker.

As of 2024, the average monthly disability benefit is about $1,550. Survivor benefit amounts vary based on family circumstances. When a worker passes away, the SSA calculates a family maximum benefit, which is typically 75% to 180% of what the worker would have received at full retirement age. The family's total benefits cannot exceed this amount.

Family members who receive benefits based on a worker's record do not reduce the worker's benefit amount. If a worker receives retirement benefits and a family member receives survivor or dependent benefits based on that worker's record, the total family payment may be limited by the family maximum, but each person's individual benefit is calculated separately.

Practical Takeaway: Disability and survivor benefits protect workers and families beyond retirement. Disability benefits require a severe medical condition lasting 12 months or more. Survivor benefits help support family members after a worker's death. Family members' benefits don't reduce the worker's benefit amount.

How to Review Your Social Security Record and Earnings History

Before considering any interaction with Social Security, reviewing your personal earnings record is a crucial step. Your record shows the income reported to Social Security under your name and Social Security number. Errors in this record can affect your benefit amount, so checking it periodically is important.

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You can view your Social Security earnings record through a personal account on the Social Security Administration's website at ssa.gov. To create an account, you'll need to provide personal information and verify your identity. The website uses a secure authentication process. Once your account is set up, you can see your earnings history going back to 1978.

Your Social Security Statement is an official record that shows your earnings year by year and provides an estimate of benefits you may receive at different ages. The statement includes retirement benefit estimates, disability benefit estimates, and survivor benefit estimates. You can print your statement from your online account or request a paper version by mail.

When reviewing your earnings record, look for missing or incorrect entries. If you worked under a different name or Social Security number at some point, those earnings might not be under your current record. Some types of work, such as military service or work for certain government employers, may require special reporting. Household work or self-employment income that wasn't reported may be missing from your record.

If you find an error in your earnings record, you can contact Social Security with documentation such as W-2 forms, tax returns, or pay stubs to request a correction. There are time limits for requesting corrections, so addressing errors promptly is helpful. Generally, you have about three years, three months, and 15 days from the year in which the earnings were reported to request a correction.

Reviewing your record every few years helps ensure accuracy. Major life events like changing jobs, starting self-employment, or returning to work after a gap are good times to check