What Does It Mean if Social Security Wants to Send You to Their Doctor
If you lot're thinking about retiring soon or are nearing your 60th birthday, yous're probably besides starting to wonder more well-nigh Social Security benefits. There'southward a lot to larn and some of the rules can 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, become started by reviewing some of the basics most the plan to answer some common questions you might have.
The Background and Purpose of Social Security
First things beginning: What is Social Security? Originally signed into law by President Franklin D. Roosevelt in 1935, what we call Social Security actually refers to what'due south officially known as Old Age, Survivors and Disability Insurance. It's funded past payroll taxes — money paid out by employees via paycheck deductions and by employers — and is a form of social insurance administered past the U.S. federal government. This means that it's a plan that involves the regime participating in the insurance market place to provide extra assist to certain groups and protect them against fiscal issues that arise after emergencies.
Possibly the all-time-known and largest component of Social Security is the retirement benefits information technology pays out. In that instance, 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 equally they age. However, the Social Security Administration (SSA) besides 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 textile needs of individuals and families, "to protect aged and disabled persons confronting the expenses of illnesses that may otherwise apply up their savings" and "to proceed families together."
It's important to note that Social Security benefits are intended to be supplemental — that is, they're not supposed to serve as someone's sole source of income when they retire. The benefit payments are meant to provide a boost to other retirement income, such every bit a pension.
Social Security Eligibility: The Credit System
Depending on your life circumstances, you could be eligible to receive Social Security benefits at whatever age — not just the traditional retirement age of 62. For instance, to receive disability benefits, you lot may be eligible at near whatever age every bit long every bit you've worked long enough and recently enough and have a qualifying medical condition that limits your ability to work. You may as well exist able to receive survivors benefits in some circumstances if you're a surviving family fellow member of a deceased person who "worked long plenty in jobs insured under Social Security to qualify for benefits."
Disability and survivors benefit payments have relatively straightforward eligibility requirements to run into. Social Security retirement benefits exercise besides, but the ways eligibility and amounts are determined and the details involved can look somewhat complicated at first 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 lot earn while working. When you lot're employed and Social Security taxes are deducted from your paycheck for receipt by the Internal Acquirement Service (IRS) y'all start earning credits. These credits are based on the amount of money you earn each year, and y'all can earn upwards to four credits per twelvemonth. For example, in 2020, earning $1,410 in wages at your job earns you one credit. Using this number as another instance, one time yous've earned $v,640 ($i,410 x iv) in wages from your task, you lot've earned your four credits for the yr 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 year to account for inflation.
To authorize to receive Social Security retirement benefits, yous must earn at least 40 credits, which equates to x years' worth of piece of work. You don't need to piece of work ten sequent years to earn the credits, however. Whatsoever credits you receive remain on your Social Security record, and if you leave a job and return to the workforce years later, you lot tin can brainstorm accumulating credits over again until y'all attain 40 and get eligible for benefits payments.
The number of credits needed to determine your eligibility for inability or survivors benefits depends on your age; generally speaking, the younger yous are, the fewer the number of credits is that you need to go eligible. The age table on the Social Security Administration's website can give yous a better idea of the number of credits relative to your historic period that you'll need to have earned to make up one's mind eligibility for disability or survivors benefits.
What Function Does Your Age Play?
As mentioned, age tin exist a determining factor in the number of credits you'll need for eligibility for ii types of payments. However, when it comes to retirement benefits, your historic period can also play a role in not only when y'all're eligible to start receiving payments but too in the amounts of those payments. In item, you'll want to think about the age at which yous decide to outset claiming your Social Security retirement payments.
The historic period when you start claiming determines whether you receive 100% of your Social Security benefits. If you're eligible to receive Social Security retirement benefits, you can start getting them every bit early as age 62. However, your payment amounts will be less than they are if y'all wait until what's called your "total retirement age." This is the age at which you'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 built-in. So, drawing earlier than your full retirement historic period results in yous receiving a reduced amount in benefits — the Social Security Administration notes that you'll get about 28% less than you would if you wait until age 66.
Waiting until yous're older than full retirement age to quit working and draw benefits tin can also touch on the amount you receive every month. Because you're working longer, you lot'll receive a larger monthly amount than if you retired at 66. For each calendar month you delay challenge benefits, the amount you tin can receive monthly increases slightly, and if you wait until age seventy, you'll get 132% of your Social Security do good amount. Once you plow lxx and oasis't started claiming yet, your do good corporeality won't keep increasing, so that 132% is the virtually you can get each month if yous filibuster claiming to proceed working.
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Source: https://www.askmoney.com/investing/understanding-your-social-security-benefits?utm_content=params%3Ao%3D1465803%26ad%3DdirN%26qo%3DserpIndex
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