Social Security Basics
Authored By: Social Security Benefits
- Information Survivor Benefits Disability Benefits Retirement Benefits "Understanding the Benefits" pamplet by the U.S. Social Security Administration
Social Security Basics
Social Security helps older Americans, workers who become disabled, and families in which a spouse or parent dies. Today, about 167 million people work and pay Social Security taxes and about 59 million people receive monthly Social Security benefits.
Most of social security beneficiaries are retirees and their families—about 42 million people. But Social Security was never meant to be the only source of income for people when they retire. Social Security replaces about 40 percent of an average wage earner’s income after retiring, and most financial advisors say retirees will need 70 percent or more of pre-retirement earnings to live comfortably. To have a comfortable retirement, Americans need more than Social Security. They also need private pensions, savings, and investments.
The money you pay in taxes isn’t held in a personal account for you to use when you get benefits. We use your taxes to pay people who are getting benefits right now. Any unused money goes to the Social Security trust funds, not a personal account with your name on it.
Where your Social Security tax dollars go
When you work, 85 cents of every Social Security tax dollar you pay goes to a trust fund that pays monthly benefits to current retirees and their families and to surviving spouses and children of workers who have died. The other 15 cents goes to a trust fund that pays benefits to people with disabilities and their families. From these trust funds, Social Security also pays the costs of managing the Social Security programs.
How you become eligible for Social Security
As you work and pay taxes, you earn Social Security “credits.” In 2015, you earn one credit for each $1,220 in earnings—up to a maximum of four credits a year. The amount of money needed to earn one credit usually goes up every year. Most people need 40 credits (10 years of work) to qualify for benefits. Younger people need fewer credits to be eligible for disability benefits or for their family members to be eligible for survivors benefits when the worker dies.
Social Security benefits only replace some of your earnings when you retire, become disabled, or die. Your benefit payment will be based on how much you earned during your working career. Higher lifetime earnings result in higher benefits. If there were some years when you didn’t work, or had low earnings, your benefit amount may be lower than if you worked steadily.
When to Apply for Benefits
You should apply for benefits about three months before the date you want your benefits to start. To file fordisability or survivors benefits, you should apply as soon as you’re eligible.
Benefits for your Family
When you start receiving Social Security retirement or disability benefits, other family members also may be eligible for payments.