Answers to frequently asked questions about your retirement benefits
by Andy Markowitz, AARP, September 14, 2020
En español |
Social Security provides benefits to almost 65 million people, and those
monthly payments have an enormous impact on older Americans’ financial health.
According to U.S. Census Bureau data:
•
Social Security accounts for at least 50 percent of income for more than half
of the 65-plus population.
• It
provides more than 90 percent of income for nearly a quarter of that group.
• It
keeps nearly 3 in 10 older Americans from falling below the poverty line.
An institution that looms
so large in American life is bound to generate questions about what it does and
how it works. Here are the answers to some of the most frequently asked
questions about Social Security. You'll find more detailed information on these
and many more issues in AARP's Social Security Resource
Center.
1. Is Social
Security just for retired workers?
No. As of August 2020, 71
percent of beneficiaries were retirees. The remainder were spouses, ex-spouses
and children of retirees (5 percent); disabled workers and their families (15
percent); and survivors of deceased beneficiaries (9 percent).
2. At what age can
I start collecting Social Security benefits?
You can begin receiving
retirement benefits at age 62, but your payments will be greater if you wait
until your full retirement
age (currently 66 and gradually rising over the next several
years to 67). If you are eligible for survivor
benefits or Social Security
Disability Insurance (SSDI), you can start collecting earlier.
3. How do I sign up
for Social Security?
You can apply for retirement, spousal or disability
benefits online or by phone at 800-772-1213. For survivor
benefits, you can apply by phone. Local Social
Security offices have been closed to in-person visits since
March 2020 due to the coronavirus
pandemic, but once they reopen you can also file for all types of
benefits in person.
4. How long do I
need to work to become eligible for benefits?
For retirement benefits,
at least 10 years. Social Security uses a system of
credits, which you collect by working and paying Social Security
taxes. You can earn up to four credits a year, and you need 40
credits to qualify for retirement benefits. The credit threshold may be lower
for disability benefits.
5. Must I stop
working to collect retirement benefits?
No, you can receive
benefits while working. But if you are below full retirement age and earn more
than a certain amount, your monthly benefits will be temporarily reduced. Once
you reach full retirement age, the reduction is
eliminated, and your benefits will be increased to make up for what
was lost over time.
6. How much will I
get from Social Security?
That depends on a number
of factors, most crucially your lifetime earnings from work in which you paid
Social Security taxes. Social Security takes your 35 highest-earnings years,
calculates an inflation-adjusted average, and plugs that into a progressive
formula that determines your “basic” benefit. The amount will
also be affected by how old you are when you claim benefits. You won't know it
for sure until you file, but you can use the AARP Social
Security Calculator to get an estimate.
7. What's the
maximum monthly Social Security benefit?
For a worker retiring in
2020 at the full retirement age of 66, the highest monthly amount is $3,011
(about double the average retirement benefit). To draw the top benefit, your
earnings must have exceeded Social Security's maximum taxable
income — the annually adjusted cap on how much of your income
is subject to Social Security taxes — for at least 35 years of your working
life.
8. How can I boost
the amount of my benefit?
The longer you wait to
start collecting after you become eligible, the more you will receive. If 66 is
your full retirement age, your benefit will be 25 percent higher if you claim
then than it would be at 62. Wait past full retirement age and Social
Security increases your
benefit 8 percent a year until age 70 — a 32 percent bonus.
There's no financial incentive to delay past age 70.
9. Can I receive
Social Security benefits based on an ex-spouse's earnings?
You may be able to claim
a divorced-spouse benefit if the marriage lasted at least 10 years, you are at
least 62 years old and you have not
remarried. If so, you could get up to 50 percent of your former
spouse's full benefit amount — but only if that exceeds your own retirement
benefit. Social Security will pay the higher of the two amounts, not both.
10. When someone
dies, how does Social Security know?
The Social Security
Administration (SSA) receives reports of beneficiaries’ deaths from family
members, funeral homes and government agencies. Even if you know another entity
will report the death of a member of your family, it's a good idea to inform
SSA yourself (by calling at 800-772-1213) as soon as possible.
Editor's note: Kelly
Miller contributed to the reporting of this story.
Also of
Interest
·
Find answers to
any Social Security question
·
How is Social
Security funded?
·
What to consider
when you’re offered an early retirement package
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