Social Security Retirement Benefits
Understanding what Social Security can imply for your financial future and that of your family is vital information. Learn how Social Security works, who is eligible for retirement benefits, and what to think about before applying in this section. Continue reading to learn how Social Security fits into your retirement strategy.
How Do Retirement Benefits Work?
Based on someone’s career earnings, Social Security replaces a part of your pre-retirement income. Social Security replaces a portion of your pre-retirement earnings based on your top 35 years of earnings, which fluctuates depending on how much you earn and when you opt to begin benefits.
When you work, you contribute to the Social Security system. The tax money is used to give benefits to:
- Disabled individuals.
- Survivors of deceased workers.
- Beneficiary’s dependents.
Tax money isn’t maintained in a personal account for you to utilize when you receive benefits. We pay those who are currently receiving benefits with your taxes. Any money you don’t use goes to the Social Security trust fund, which pays you and your family monthly benefits once you reach retirement age.
How do you find out if you’re eligible for Retirement Benefits?
You earn “credits” toward Social Security benefits when you work and pay Social Security taxes. The number of credits required to receive retirement benefits is determined on your birth year. You’ll need 40 credits if you were born in 1929 or later (usually, this is 10 years of work).
If you stop working before accumulating enough credits to qualify for Social Security benefits, the credits will remain on your record. More credits may be added if you return to work later. We won’t be able to pay you any retirement benefits until you’ve accumulated 40 credits.
When can I start receiving Retirement Benefits?
The amount of your monthly payments is determined by the age at which you begin collecting your retirement benefit. When deciding when to begin receiving benefits, there are three things to keep in mind. It’s broken into 3 sections, Full retirement age, early retirement age, and delayed retirement age. Full retirement age is when you qualify to start receiving your full retirement benefits. The age to qualify is 66 if you are born from 1955 to 1960. If you’re born during 1960 or later, you will be eligible for your full retirement benefits at the age of 67. Early retirement age is being able to get your benefits as early as the age of 62. But the downside to this is that you won’t be receiving your full benefits until you hit your full retirement age. Delayed retirement age is when you don’t claim your retirement benefits by the age of 67. Your benefits will continue to increase until you hit the age of 70.
For more information regarding this topic, visit the social security administration website