Social Security

Social Security is a government program in the United States designed to provide financial support to individuals during retirement, disability, or in the event of the death of a family wage earner. It is primarily funded through payroll taxes collected from workers and employers. The program was established in 1935 as part of President Franklin D. Roosevelt’s New Deal, with the goal of providing a safety net for older Americans and others who are unable to work due to age or disability.

Social Security provides a source of income to help you cover your living expenses after you retire, if you become disabled, or if a family member who was supporting you passes away. This program ensures that you have a minimum level of financial security even when you are no longer able to earn a paycheck. For many retirees, Social Security benefits form a significant part of their income, helping to pay for essentials like housing, food, and healthcare.

1. Retirement Benefits: You can receive Social Security retirement benefits once you reach a certain age. These benefits are based on your earnings record over your working life, and they provide a steady income during retirement.

2. Disability Benefits: If you are unable to work due to a severe disability, Social Security provides benefits that replace a portion of your lost income.

3. Survivors Benefits: If you pass away, your family members—such as your spouse, children, or even dependent parents—may be eligible to receive survivors benefits to help them cope financially.

4. Medicare: While separate from Social Security, eligibility for Medicare (health insurance for people over 65 or with certain disabilities) is closely linked to Social Security. Most people qualify for Medicare if they are eligible for Social Security benefits.

You can choose to start receiving Social Security retirement benefits as early as age 62, but the longer you wait, the higher your monthly benefit will be.

• Early Retirement (Age 62): If you start receiving benefits at age 62, your monthly payments will be reduced because you are claiming benefits before reaching your full retirement age. The reduction is permanent and can be as much as 30% less than if you had waited until your full retirement age.

• Full Retirement Age (FRA): The full retirement age varies depending on your birth year, but it generally falls between 66 and 67 years old. If you start claiming benefits at your FRA, you will receive your full, unreduced benefit amount.

• Delayed Retirement (After FRA): If you delay claiming benefits beyond your full retirement age, your benefits will increase. For each year you wait, up to age 70, your benefit amount increases by a certain percentage (usually around 8% per year). This can significantly boost your monthly income during retirement.

Social Security is a vital program that provides financial support to individuals and families during retirement, disability, or after the death of a loved one. The timing of when you start receiving benefits plays a crucial role in determining the amount you will receive, offering flexibility to tailor the program to your financial needs and retirement plans.