Letter From Social Security for Review of Disability
If you're thinking almost retiring shortly or are nearing your 60th altogether, yous're probably also starting to wonder more almost Social Security benefits. There's a lot to learn and some of the rules tin get complex, which can make understanding how and when to get benefits — and what they include — somewhat of a challenge. Before you begin the process of applying for Social Security, get started past reviewing some of the basics about the program to reply some mutual questions you might have.
The Groundwork and Purpose of Social Security
First things first: What is Social Security? Originally signed into police past President Franklin D. Roosevelt in 1935, what nosotros phone call Social Security actually refers to what's officially known as Onetime Historic period, Survivors and Inability Insurance. It's funded by payroll taxes — coin paid out by employees via paycheck deductions and past employers — and is a form of social insurance administered by the U.S. federal authorities. This ways that it's a plan that involves the government participating in the insurance market place to provide actress assist to certain groups and protect them against financial problems that arise after emergencies.
Perhaps the best-known and largest component of Social Security is the retirement benefits it pays out. In that case, these payments are intended to go on people who worked lower-wage jobs throughout their lives from living in relative poverty when they leave the workforce as they age. However, the Social Security Administration (SSA) as well makes payments to people with disabilities who cannot piece of work and to survivors of workers who've died. According to the SSA, the purposes of these payments are "to provide for the cloth needs of individuals and families, "to protect aged and disabled persons against the expenses of illnesses that may otherwise use up their savings" and "to keep families together."
It's important to annotation that Social Security benefits are intended to be supplemental — that is, they're not supposed to serve as someone'southward sole source of income when they retire. The benefit payments are meant to provide a boost to other retirement income, such as a pension.
Social Security Eligibility: The Credit System
Depending on your life circumstances, you lot could exist eligible to receive Social Security benefits at any age — not just the traditional retirement age of 62. For example, to receive disability benefits, you may exist eligible at virtually any historic period equally long equally y'all've worked long plenty and recently enough and accept a qualifying medical condition that limits your ability to work. Yous may also be able to receive survivors benefits in some circumstances if you lot're a surviving family member of a deceased person who "worked long plenty in jobs insured under Social Security to authorize for benefits."
Disability and survivors do good payments take relatively straightforward eligibility requirements to see. Social Security retirement benefits practice every bit well, but the ways eligibility and amounts are determined and the details involved can look somewhat complicated at get-go glance. Understanding eligibility for Social Security benefits involves learning about credits first.
Your eligibility for receiving Social Security is based in part on credits that you earn while working. When you're employed and Social Security taxes are deducted from your paycheck for receipt by the Internal Acquirement Service (IRS) yous starting time earning credits. These credits are based on the amount of money yous earn each year, and you tin earn up to four credits per year. For case, in 2020, earning $1,410 in wages at your task earns you one credit. Using this number as another example, in one case you've earned $v,640 ($one,410 x 4) in wages from your job, you've earned your four credits for the year and cannot earn more credits until the next year. The base amount of money you need to earn from your job to earn ane credit increases slightly each twelvemonth to account for inflation.
To qualify to receive Social Security retirement benefits, you must earn at least 40 credits, which equates to 10 years' worth of work. You don't need to piece of work ten consecutive years to earn the credits, however. Any credits you lot receive remain on your Social Security record, and if yous go out a job and return to the workforce years afterward, y'all tin begin accumulating credits again until you reach 40 and become eligible for benefits payments.
The number of credits needed to determine your eligibility for inability or survivors benefits depends on your age; by and large speaking, the younger you are, the fewer the number of credits is that yous need to become eligible. The age table on the Social Security Assistants's website tin can give you a meliorate idea of the number of credits relative to your age that you'll need to have earned to determine eligibility for disability or survivors benefits.
What Role Does Your Age Play?
As mentioned, historic period tin be a determining gene in the number of credits you'll need for eligibility for ii types of payments. However, when information technology comes to retirement benefits, your age tin can also play a role in not just when you're eligible to start receiving payments but likewise in the amounts of those payments. In particular, yous'll desire to think about the age at which you decide to first claiming your Social Security retirement payments.
The age when yous start claiming determines whether you receive 100% of your Social Security benefits. If you're eligible to receive Social Security retirement benefits, you can kickoff getting them as early equally age 62. However, your payment amounts will be less than they are if yous await until what's called your "full retirement historic period." This is the age at which y'all're eligible to receive 100% of your benefit amount every month, and it's typically between ages 66 and 67, depending on the year you were born. So, drawing earlier than your full retirement age results in you receiving a reduced amount in benefits — the Social Security Administration notes that you'll get well-nigh 28% less than you would if you wait until age 66.
Waiting until yous're older than full retirement historic period to quit working and describe benefits tin also affect the amount you receive every calendar month. Because you're working longer, you'll receive a larger monthly amount than if you retired at 66. For each month you lot delay challenge benefits, the corporeality y'all can receive monthly increases slightly, and if y'all wait until age 70, you'll go 132% of your Social Security benefit amount. In one case yous turn 70 and haven't started challenge still, your benefit corporeality won't keep increasing, so that 132% is the most you can get each calendar month if y'all delay claiming to go along working.
Source: https://www.askmoney.com/investing/understanding-your-social-security-benefits?utm_content=params%3Ao%3D1465803%26ad%3DdirN%26qo%3DserpIndex