Understanding SSA Benefits (Part 3)
What You Need to Know About Benefits
Social Security benefits replace only some of your earnings when you retire, become disabled, or die. The Social Security Administration (SSA) bases your benefit payment on how much you earned during your working career. Higher lifetime earnings result in higher benefits. If there were some years when you didn't work, or had low earnings, your benefit amount may be lower than if you worked steadily.
Retirement Benefits
Choosing when to retire is one of the most important decisions you'll make in your lifetime. If you choose to retire when you reach your full retirement age, you'll receive your full benefit amount. SSA will reduce your benefit amount if you retire before reaching full retirement age.
Full Retirement Age
If you were born from 1943 to 1960, the age at which full retirement benefits are payable increases gradually to age 67. In 2019, if your birth year is 1952 or earlier, you are already eligible for your full Social Security benefit. Use the following chart to find out your full retirement age.
| Year of birth | Full retirement age |
|---|---|
| 1943–1954 | 66 |
| 1955 | 66 and 2 months |
| 1956 | 66 and 4 months |
| 1957 | 66 and 6 months |
| 1958 | 66 and 8 months |
| 1959 | 66 and 10 months |
| 1960 or later | 67 |
| NOTE: Although the full retirement age is rising, you should still apply for Medicare benefits three months before your 65th birthday. If you wait longer, your Medicare medical insurance (Part B) and prescription drug coverage (Part D) may cost you more money. | |
Delayed Retirement
If you choose to delay receiving benefits beyond your full retirement age, your benefit will increase a certain percentage, depending on the year of your birth. The increase will be added automatically each month from the time you reach full retirement age until you start taking benefits or reach age 70, whichever comes first. For more information on delayed retirement credits, go to Link opens in a new windowhttps://www.ssa.gov/planners/retire/delayret.html
Early Retirement
You may start receiving benefits as early as age 62. SSA reduces your benefits if you start early by about 0.5% for each month you start receiving benefits before your full retirement age. For example, if your full retirement age is 66 and 4 months, and you sign up for Social Security when you're 62, you will get only 73.3% of your full benefit. NOTE: The reduction will be greater in future years as the full retirement age increases.
If You Work and Get Benefits
You can continue to work and still receive retirement benefits. Your earnings in (or after) the month you reach full retirement age won't reduce your Social Security benefits. In fact, working beyond full retirement age can increase your benefits. SSA will have to reduce your benefits, however, if your earnings exceed certain limits for the months before you reach your full retirement age. If you work but start receiving benefits before full retirement age, SSA deducts $1 in benefits for each $2 in earnings you have above the annual limit. In 2019, the limit is $17,640.
In the year you reach your full retirement age, your benefits will be reduced by $1 for every $3 you earn over a different annual limit ($46,920 in 2019) until the month you reach full retirement age. Once you reach full retirement age, you can keep working, and your Social Security benefit won't be reduced, no matter how much you earn. For more information about how work affects your benefits, read How Work Affects Your Benefits (Publication No. 05-10069) at Link opens in a new window https://www.ssa.gov/pubs/EN-05-10069.pdf
NOTE: People who work and receive disability or Supplemental Security Income payments have different earnings rules. They must immediately report all their earnings to Social Security no matter how much they earn.
Retirement Benefits for Widows and Widowers
If you're receiving widow's or widower's benefits, you can switch to your own retirement benefits as early as age 62, assuming your retirement benefit is more than the amount you receive on your deceased spouse's earnings. Often, you can begin receiving one benefit at a reduced rate and then switch to the other benefit at the full rate when you reach full retirement age. The rules are complicated and vary depending on your situation, so talk to a Social Security representative about the choices available to you. For more information about retirement benefits, read Retirement Benefits (Publication No. 05-10035) at Link opens in a new window https://www.ssa.gov/pubs/EN-05-10035.pdf
Disability Benefits
If you can't work because of a physical or mental condition that's expected to last at least 1 year or result in death, you may be eligible for Social Security disability benefits. SSA's disability rules are different from private or other government agency plans. Qualifying for disability from another agency or program doesn't mean you will be eligible for disability benefits from SSA. Having a statement from your doctor saying you're disabled doesn't mean you'll automatically be eligible for Social Security disability benefits. You can apply for Social Security disability benefits online at Link opens in a new windowhttps://www.ssa.gov/benefits/. For more information about Social Security disability benefits, read Disability Benefits (Publication No. 05-10029) at Link opens in a new window https://www.ssa.gov/pubs/EN-05-10029.pdf
People, including children, who have little income and few resources, and who have a disability, may be eligible for disability payments through the Supplemental Security Income (SSI) program. For more information about SSI, read Supplemental Security Income (SSI) (Publication No. 05-11000) at Link opens in a new window https://www.ssa.gov/pubs/EN-05-11000.pdf
If you become disabled, file for disability benefits as soon as possible, because it usually takes several months to process a disability claim. SSA may be able to process your claim more quickly if you have the following when you apply:
- Medical records and treatment dates from your doctors, therapists, hospitals, clinics, and caseworkers
- Your laboratory and other test results
- The names, addresses, phone, and fax numbers of your doctors, clinics, and hospitals
- The names of all medications you're taking
- The names of your employers and job duties for the last 15 years
Your benefits may be taxable.
Some people who get Social Security will have to pay taxes on their benefits. About 40% of current beneficiaries pay taxes on their benefits. You may have to pay taxes on your benefits if you file a federal tax return as an individual and your total income is more than $25,000. If you file a joint return, you may have to pay taxes if you and your spouse have a total income that is more than $32,000. For more information, call the Internal Revenue Service's toll-free number, 1-800-TAX-FORM (1-800-829-3676).
U.S. Social Security Administration (SSA). (2019, January). What you need to know about benefits (pp. 6–10). In Understanding the benefits (SSA Pub. No. 05-10024, ICN 454930). Retrieved August 20, 2019, from https://www.ssa.gov/