How Social Security Works
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How Social Security Works
Social Security benefits are not based on financial need. They are based on average lifetime earnings and the amount of time you’ve worked. All who pay Social Security taxes can get Social Security benefits when they retire. By paying Social Security taxes, you are also eligible to receive disability and death benefits, as well as Medicare. However, you must earn enough Social Security credits to qualify.
Things To Know
- All who pay Social Security taxes can get Social Security benefits when they retire.
- At retirement, your monthly Social Security benefit is based on the period of your past work history in which you made the most money.
Disability and Medicare, too
Besides retirement income, Social Security also pays disability benefits to those who cannot work due to physical or mental problems. These benefits are available to you at any time if you have earned enough credits. In addition, family members such as a spouse or children may be eligible for benefits in the event of your death. This is known as a survivor benefit.
In general, people over 65 who qualify for Social Security benefits also qualify for Medicare, as do those who have been getting disability for at least two years.
How it’s calculated
At retirement, your monthly Social Security benefit is based on the period of your past work history in which you made the most money. Your monthly benefit comes from a formula using your average indexed monthly earnings (AIME). At present, retirees can expect to earn about 40 percent of their annual average lifetime earnings in Social Security benefits each year. Benefits may be adjusted each year to keep up with inflation.
Social Security benefits are progressive. People who earn less have a greater percentage of their wages returned to them through Social Security benefits than higher wage earners do.
For more information
Social Security is one of the most important programs in the fight against elderly poverty. It also provides important family protection through its death and disability benefits. The Social Security Administration (www.ssa.gov/) has calculators and other planning tools to answer some of your questions about retirement.
The Social Security Administration (SSA) mails benefit statements to individuals who are 60 or older, who aren’t receiving benefits, and who don’t have a My Social Security account online.
