What Social Security is and who runs it

Social Security is a federal insurance program run by the Social Security Administration (SSA), a government agency. It pays monthly benefits to workers who have reached retirement age, to people who become disabled and cannot work, and to the surviving family members of workers who have died. The program is funded through payroll taxes — money taken from your paychecks and matched by your employer.

Social Security is not a savings account where your own money sits waiting for you. Instead, current workers' taxes pay current beneficiaries' benefits. You earn credits toward your own future benefits by working and paying these taxes. Most people need 40 credits to receive retirement benefits, though the number varies by the type of benefit you are seeking.

The SSA keeps a record of your earnings history and the credits you have earned. You can view your record online through a personal account at ssa.gov, or you can request a paper statement by mail. Checking your record periodically helps you catch errors before they affect your benefits.

Key Takeaways

  • Social Security provides monthly payments to retirees, disabled workers, and surviving family members, funded through payroll taxes on current workers.
  • You earn credits by working and paying Social Security taxes, and most people need 40 credits to receive retirement benefits.
  • Retirement benefits can begin as early as age 62, but waiting until your full retirement age or later results in a higher monthly payment.
  • Disability and survivor benefits are available to workers who become unable to work and to their family members, regardless of age.
  • You can create a free account at ssa.gov to view your earnings record, estimate your benefits, and manage your Social Security information online.

Retirement benefits and when you can start receiving them

Retirement benefits are the most common form of Social Security payment. You can begin receiving them as early as age 62, but your monthly payment will be smaller than if you wait. Your full retirement age — the age at which you receive your full benefit amount — depends on the year you were born. For people born in 1943 or later, full retirement age ranges from 66 to 67.

If you delay claiming past your full retirement age, your monthly benefit increases by a percentage each year until you reach age 70. This means that waiting to claim can result in a significantly larger monthly payment for the rest of your life. The trade-off is that you receive fewer total payments if you die early, but you receive more per month if you live a long time.

When you are ready to claim, you can start the process online at ssa.gov, by phone at 1-800-772-1213, or in person at your local Social Security office. The SSA will ask about your work history, your citizenship status, and your family situation. Processing typically takes a few weeks to a few months.

Disability benefits for workers who cannot work

Social Security Disability Insurance (SSDI) pays monthly benefits to workers under full retirement age who have a medical condition expected to last at least 12 months or result in death, and who cannot work because of that condition. You do not have to be a certain age to receive SSDI — you only need to have earned enough credits through work.

The SSA uses a strict definition of disability. You must have a condition that prevents you from doing substantial work — not just your previous job, but any job you could reasonably do given your age, education, and work experience. The SSA reviews your medical records, may order its own medical examination, and may ask you to provide detailed information about how your condition affects your daily activities and ability to work.

The process of receiving SSDI typically takes several months. Many people are denied on their first request and must appeal. If you are denied, you can request reconsideration, then a hearing before an administrative law judge, then further appeals. Each stage can take months, so it is common for the entire process to take one to two years or longer.

Survivor benefits for family members

When a worker who has earned enough Social Security credits dies, their family members may receive monthly survivor benefits. These include payments to a surviving spouse (at any age if caring for a child under 16, or at age 60 or older), to unmarried children under age 19 (or up to age 19 if still in high school), and to dependent parents age 62 or older.

The total amount paid to all family members combined is limited to a percentage of what the deceased worker would have received. This means that if many family members are receiving benefits, each person's individual payment may be smaller. The SSA calculates the family benefit amount based on the worker's earnings record.

To report a death and begin the survivor benefit process, contact the SSA at 1-800-772-1213 or visit your local office. You will need the worker's Social Security number, a death certificate, and proof of your relationship to the deceased worker. Surviving family members should report the death as soon as possible, as benefits cannot be paid retroactively for months before the SSA is notified.

How your benefit amount is calculated

Your Social Security benefit is based on your highest 35 years of earnings. The SSA adjusts your historical earnings for inflation, adds them up, and then applies a formula to calculate your primary insurance amount (PIA) — the benefit you receive at your full retirement age. If you claim before full retirement age, your benefit is reduced. If you delay past full retirement age, your benefit increases.

The formula is progressive, meaning that workers with lower lifetime earnings receive a larger percentage of their earnings as benefits compared to higher earners. This is by design — Social Security is meant to replace a larger share of income for lower-wage workers and a smaller share for higher-wage workers.

You can see an estimate of your retirement benefit by logging into your account at ssa.gov. The SSA updates your record each year after your tax return is filed, so your estimate may change if you continue working. If you have had periods of no earnings or low earnings, you can see how working additional years might affect your benefit.

Taxes on Social Security benefits

Depending on your total income, a portion of your Social Security benefits may be subject to federal income tax. This is determined by a calculation called combined income, which includes your adjusted gross income, any nontaxable interest, and half of your Social Security benefits.

If your combined income is below a certain threshold, none of your benefits are taxed. If it is above that threshold, up to 50 percent or up to 85 percent of your benefits may be taxable, depending on how much your combined income exceeds the threshold. These thresholds have not changed since 1984 and do not adjust for inflation.

State taxes on Social Security benefits vary. Some states do not tax Social Security at all, while others tax it in the same way the federal government does. A few states have their own rules. You can find information about your state's tax treatment on your state revenue department's website.

Managing your Social Security account online

The SSA offers a free online account at ssa.gov where you can view your earnings record, check your benefit estimate, change your address, report a change in your situation, and manage your benefits. To create an account, you will need your Social Security number, email address, and a way to verify your identity — usually a driver's license or passport number.

Once you are receiving benefits, you can use your account to view your payment history, change your direct deposit information, request a replacement Social Security card, and report changes such as a name change or a change in your work status. You can also read a benefit verification letter, which some employers or landlords may request as proof of your income.

If you prefer not to use the online account, you can call the SSA at 1-800-772-1213 (TTY 1-800-325-0778 for deaf and hard of hearing callers) or visit a local Social Security office. Wait times on the phone can be long, especially early in the week and early in the month. Many offices now require an appointment, which you can schedule online or by phone.

Frequently Asked Questions

Can I work and still receive Social Security benefits?

Yes, but if you claim before your full retirement age, your benefits will be reduced if your earnings exceed a certain amount. For 2024, if you are under full retirement age for the entire year, the SSA deducts $1 from your benefits for every $2 you earn above the limit. In the year you reach full retirement age, the limit is higher and applies only to earnings before the month you reach that age.

What happens if I move to another country?

You can receive Social Security benefits while living in most countries, but not all. The SSA has restrictions on payments to people living in certain countries. If you plan to move abroad, contact the SSA before you go to understand how it will affect your benefits and what documentation you may need to provide to continue receiving payments.

Can I receive both Social Security and a pension from a job where I did not pay Social Security taxes?

You can receive both, but two rules — the Government Pension Offset and the Windfall Elimination Provision — may reduce your Social Security benefit if you also receive a pension from federal, state, or local government work where you did not pay Social Security taxes. These rules are complex and depend on your specific situation. The SSA can explain how they explore to you.

What if I disagree with the SSA's decision about my benefits?

You have the right to appeal any decision the SSA makes about your benefits. The first step is to request reconsideration within 60 days of receiving the decision. If you are still denied, you can request a hearing before an administrative law judge. Many people hire a representative — either a lawyer or a non-lawyer advocate — to help with appeals, and they are paid only if you win.

How do I report a change in my situation?

You can report changes such as a name change, address change, change in marital status, or return to work through your online account at ssa.gov, by phone at 1-800-772-1213, or in person at a local office. Some changes must be reported within a certain time frame to avoid overpayment, so report them as soon as they happen.