Social security in the United States is a government program that provides financial support for individuals who are elderly or disabled. Over the course of their lives, individuals will pay a certain percentage of their income to the government in the form of Social Security taxes.
After an individual retires or becomes disabled, the government will send them monthly payments. The amount of these payments is based on how much the individual paid in Social Security taxes.
Social Security benefits are benefits an individual receives after they retire. When an individual is employed, they pay Old Age, Survivors and Disability Insurance (OASDI) taxes, or Social Security taxes.
OASDI taxes are collected by the federal government. These taxes are then placed into a fund. The government uses tax money from this fund to pay individuals their Social Security benefits.
The federal government provides these benefits to individuals who have retired. The government also pays benefits to:
Social Security benefits are different from other types of retirement benefits, including pension benefits. The retirement money in a pension benefit plan is funded in advance by an employer. The money in these plans accumulates as an employee works through the years. When the employee retires, the money to pay the employee is there.
In contrast to this, the Social Security benefit program is a pay as you go setup. In other words, the employees of today are paying taxes into the program, and these taxes are taken out of the program and paid as Social Security benefits. The Social Security benefits for employees who retire now are paid for by employees who are working today.
Whether or not an individual is eligible for Social Security benefits depends on several factors. These factors include:
While an individual is working and paying taxes for Social Security, that individual earns credits. In order to receive Social Security benefits, the individual must earn a certain amount of credits.
There are approximately 4 credits in a year of work. If an individual was born in 1929 or after, they must earn at least 40 credits in order to be eligible for benefits.
The amount of income an individual accumulates during their working career determines the amount of their monthly Social Security benefit. A higher income will result in a higher monthly benefit rate.
An individual is eligible to receive Social Security benefits when they reach 62 years of age. However, these individuals will not receive the full amount of Social Security benefits.
Instead, these individuals will receive reduced, or partial, benefits. Full benefits are paid only when individuals reach the full retirement age. As of 2021, the full retirement age is 66 years and 10 months.
If an individual receives Social Security retirement benefits, their family members may also be entitled to receive benefits. Family members that may be eligible include:
An individual may be entitled to Social Security benefits because they are disabled. In order to be eligible for these benefits, an individual must have a physical or mental impairment that is likely to prevent them from performing work that is considered substantial. Additionally, an individual whose condition will likely result in death is eligible for disability benefits.
A disabled individual may receive benefits under one of two Social Security programs. One program is Social Security Disability Insurance (SSDI).
This program pays benefits to disabled individuals and certain members of their family. In order to receive payments, the disabled individual must be under the age of 65, worked for a sufficient amount of time, and paid Social Security taxes.
The Supplemental Security Income Program (SSI) is a separate program that provides benefits to disabled adults and children that have limited financial means. In order to be eligible for SSI disability benefits, the following requirements must be met:
If an individual is younger than the full retirement age, then there is a limit to how much income the individual can earn and still receive all of their social security benefits. If an individual is under the full retirement age, the Social Security Administration (SSA) will deduct $1 from the individual’s Social Security benefits from every $2 the individual earns above $11,640.
Once an individual reaches full retirement age, this changes. If an individual is older than 65 years and 4 months old, they are entitled to keep all of their Social Security benefits, no matter how much they earn in their part-time job.
Yes, there are special rules as individuals approach full retirement age. If an individual is already receiving retirement benefits, a higher earnings limit will apply in the calendar year that they turn their full retirement age.
If an individual reaches the full retirement age in 2021, they can earn up to $4,210 per month without losing any of their benefits, up until the month they turn 66. However, for every $3 they earn in any month, they will lose $1 in Social Security benefits. Beginning in the month that an individual reaches the full retirement age, they become eligible to earn any amount without a penalty.
If an individual is self-employed, they may receive full benefits for any month during the first year in which they did not perform what Social Security considers to be substantial services. The test for whether substantial services were performed is whether an individual worked in their business for more than 45 hours during the month, or for between 15 and 45 hours in a highly skilled occupation.
It is crucial to have the help of a government attorney with any Social Security matter you may be dealing with. The laws regulating Social Security are extremely complex and confusing. It may not always be clear which benefits you are entitled to.
Your lawyer can review your situation, advise you regarding what benefits you may be entitled to, and assist you in requesting those benefits. If your claim for Social Security benefits is denied, which is not uncommon, your lawyer can help you appeal that denial.
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