There are more than 68 million people currently receiving some form of Social Security benefits. Approximately 65 percent of these beneficiaries are retirees. But Social Security is more than a retirement program. Its scope has expanded to include other benefits as well, such as disability, family, and survivor’s benefits.

How Does Social Security Work?

The Social Security system is a simple concept. Throughout your career, you pay a portion of your earnings into a trust fund by paying Social Security or self-employment taxes. Your employer contributes an equal amount, or if self-employed you contribute the full amount.

In return, you receive certain benefits that can provide income to you when you need it. Most often the time you will use benefits is at retirement or if you become permanently disabled. Your family members can receive benefits based on your earnings record, too. The amount of benefits that you and your family members receive depends on several factors. These factors include your average lifetime earnings, your date of birth, and the type of benefit being applied for.

Your earnings and the taxes you pay are reported to the Social Security Administration (SSA) by your employer. If you are self-employed, you report this information to the Internal Revenue Service. The SSA uses your Social Security number to track your earnings and your benefits.

You can find out more about future Social Security benefits by signing up for a My Social Security account at the Social Security website,

This will allow you to view your online Social Security Statement. Your statement contains a detailed record of your earnings, as well as estimates of retirement, survivor’s, and disability benefits. You can use the Retirement Estimator calculator on the Social Security website, as well as other benefit calculators that can help you estimate disability and survivor’s benefits.

Eligibility for Social Security

When you work and subsequently pay taxes into Social Security, you earn credits that enable you to qualify for Social Security benefits. You can earn up to 4 credits per year, depending on the amount of income that you have. Most people must build up 40 credits (10 years of full-time work) to be eligible for Social Security retirement benefits. The requirement to be eligible for disability benefits or for family members to be eligible for survivor’s benefits can depend on your age and other factors.

Social Security Retirement Benefits

The calculation for your Social Security retirement benefit is based on your average earnings over your working career. Your age at the time you start receiving Social Security retirement benefits also impacts your benefit amount. If you were born between the years 1943 and 1954, your full retirement age is 66. Full retirement age increases in two-month increments thereafter, until it reaches age 67 for anyone born in 1960 or later.

You don’t have to wait until full retirement age to begin receiving benefits. No matter what your full retirement age, you can begin receiving early retirement benefits as soon as age 62. Doing so can be advantageous depending on your situation. Although you’ll receive a reduced benefit compared to the amount upon reaching full retirement age, if you retire early, you’ll receive benefits for a longer period than someone who waits longer to begin.

You can also choose to delay receiving retirement benefits past full retirement age. If you delay Social Security benefits, you could receive up to 32% more if you wait until age 70 to begin. That’s because you’ll receive a delayed retirement credit for each month that you delay receiving retirement benefits, up to age 70. The amount of your Social Security delayed retirement credit will vary depending on your year of birth.

There is no one-size-fits-all strategy to claiming social security retirement benefits. Your financial advisor can help you determine the best time to start receiving social security retirement benefits based on your unique situation.

Social Security Disability Benefits

If you become disabled, you may be eligible for Social Security disability benefits. The SSA defines disability as a physical or mental condition severe and permanent enough to prevent a person from performing substantial work of any kind for at least a year. This is a strict definition of disability, so if you’re only temporarily disabled, don’t expect to receive Social Security disability benefits.

There is also a waiting period of six full months after the onset of your disability until you can receive any Social Security Disability Benefits. Keep in mind, processing your claim may also take some time, it’s wise to apply for disability benefits as soon as you realize that your disability will be long term.

Social Security Family Benefits

If you begin receiving retirement or disability benefits, your family members may also be eligible to receive benefits based on your earnings record. Eligible family members may include:
• Your spouse age 62 or older, if married at least 1 year
• Your former spouse age 62 or older, if married at least 10 years
• Your spouse or former spouse at any age, if caring for your child who is under age 16 or disabled
• Your children under age 18, if unmarried
• Your children under age 19, if full-time students (through grade 12) or disabled
• Your children older than 18, if severely disabled

Each family member may receive a benefit that is as much as 50 percent of your benefit. However, the amount disbursed each month to family has a limit. The maximum total benefit that your family can receive is between 150% to 180% of your full retirement benefit amount. If the total family benefit exceeds this limit, each family member’s benefit will receive a proportionate deduction. Your benefit is not impacted.

Social Security Survivor’s Benefits

When you die, your family members may qualify for survivor’s benefits based on your earnings record. These family members include:
• Your widow(er) or ex-spouse age 60 or older (age 50 or older if disabled)
• Your widow(er) or ex-spouse at any age, if caring for your child who is under 16 or disabled
• Your children under 18, if unmarried
• Your children under age 19, if full-time students (through grade 12) or disabled
• Your children older than 18, if severely disabled
• Your parents, if they depended on you for at least half of their support

Your widow(er) or children may also receive a one-time $255 death benefit immediately after you die.

Applying for Social Security Benefits

You can apply for Social Security benefits in person at your local Social Security office. You can also begin the process by calling (800) 772-1213 or by filling out an on-line application on the Social Security website.

The SSA suggests that you contact a representative the year before the year you plan to retire, to determine when you should apply and begin receiving benefits. If you’re applying for disability or survivor’s benefits, apply as soon as you are eligible.

Depending on the type of Social Security benefits that you are applying for, you will need to furnish certain records. The requested documents may include a birth certificate, W-2 forms, and verification of your Social Security number and citizenship. The documents must be original or certified copies. If any of your family members are applying for benefits, they will need to provide similar documentation. The SSA representative will let you know which documents you need and help you get any documents you don’t already have.

Knowing when to apply for Social Security can be a complex matter. Working with a financial planner is a good solution if you are looking for advice on how to maximize your Social Security benefits.

Social Security is a big part of your retirement. Schedule to meet with a Chartered Retirement Planning Counselor™ to discuss how Social Security will affect your retirement, and plan with confidence.