Social Security provides benefits to almost 65 million people, and those monthly payments have an enormous impact on older Americans’ financial health. According to U.S. Census Bureau data:
• Social Security accounts for at least 50 percent of income for more than half of the 65-plus population.
• It provides more than 90 percent of income for nearly a quarter of that group.
• It keeps nearly 3 in 10 older Americans from falling below the poverty line.
An institution that looms so large in American life is bound to generate questions about what it does and how it works. Here are the answers to some of the most frequently asked questions about Social Security. You’ll find more detailed information on these and many more issues in AARP’s Social Security Resource Center.
No. As of November 2020, about 71 percent of beneficiaries were retirees. The remainder were spouses, ex-spouses and children of retirees (4.7 percent); disabled workers and their families (14.9 percent); and survivors of deceased beneficiaries (9.1 percent).
You can begin receiving retirement benefits at age 62, but your payments will be greater if you wait until your full retirement age (currently 66 years and 2 months and gradually rising over the next several years to 67). If you are eligible for survivor benefits or Social Security Disability Insurance (SSDI), you can start collecting earlier.
You can apply for retirement, spousal or disability benefits online or by phone at 800-772-1213. For survivor benefits, you can apply by phone. Local Social Security offices have been largely closed to in-person visits since March 2020 due to the coronavirus pandemic, but once they reopen you can also file for all types of benefits in person.
For retirement benefits, at least 10 years. Social Security uses a system of credits, which you collect by working and paying Social Security taxes. You can earn up to four credits a year, and you need 40 credits to qualify for retirement benefits. The credit threshold may be lower for disability benefits.
No, you can receive benefits while working. But if you are below full retirement age and earn more than a certain amount, your monthly benefits will be temporarily reduced. Once you reach full retirement age, the reduction is eliminated, and your benefits will be increased to make up for what was lost over time.
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That depends on a number of factors, most crucially your lifetime earnings from work in which you paid Social Security taxes. Social Security takes your 35 highest-earnings years, calculates an inflation-adjusted average, and plugs that into a progressive formula that determines your “basic” benefit. The amount will also be affected by how old you are when you claim benefits. You won’t know it for sure until you file, but you can use the AARP Social Security Calculator to get an estimate.
For a worker claiming Social Security in 2021 at the full retirement age of 66 and 2 months, the highest monthly amount is $3,148 (about double the average retirement benefit). To draw the top benefit, your earnings must have exceeded Social Security’s maximum taxable income — the annually adjusted cap on how much of your income is subject to Social Security taxes — for at least 35 years of your working life.
The longer you wait to start collecting after you become eligible, the more you will receive. Say you were born in 1959. If you claim Social Security in 2021, when you turn 62, you’ll get about 71 percent of the benefit amount calculated from your lifetime earnings. If you wait until full retirement age, in this case 66 years and 10 months, you’ll get 100 percent. Delay past full retirement age and Social Security increases your benefit 8 percent a year until age 70. There’s no financial incentive to delay past age 70.
You may be able to claim a divorced-spouse benefit if the marriage lasted at least 10 years, you are at least 62 years old and you have not remarried. If so, you could get up to 50 percent of your former spouse’s full benefit amount — but only if that exceeds your own retirement benefit. Social Security will pay the higher of the two amounts, not both.
The Social Security Administration (SSA) receives reports of beneficiaries’ deaths from family members, funeral homes and government agencies. Even if you know another entity will report the death of a member of your family, it’s a good idea to inform SSA yourself (by calling at 800-772-1213) as soon as possible.
Editor’s note: Kelly Miller contributed to the reporting of this story.
Andy Markowitz is a contributing writer and editor for AARP, covering Social Security and fraud. He is a former editor of The Prague Post and Baltimore City Paper.