Social Security is a federal insurance program, not a savings account or welfare program

Social Security is a federal insurance program run by the Social Security Administration (SSA). You pay into it through payroll taxes during your working years, and it pays you or your family members when you reach retirement age, become disabled, or die. The program covers about 67 million people in the United States — roughly one in five Americans receives a Social Security payment each month.

The program operates on a pay-as-you-go system: taxes collected from current workers fund payments to current beneficiaries. This is different from a personal savings account where your own contributions sit in a fund waiting for you. It is also different from means-tested welfare, because you do not have to prove you are poor to receive it — you receive it based on your work history and age or disability status.

Social Security has three main branches: retirement benefits, disability benefits, and survivor benefits. Each one has different rules about who can receive payments and how much they get.

Key Takeaways

  • Social Security is funded by payroll taxes (6.2% from employees, 6.2% from employers) and covers retirement, disability, and survivor benefits.
  • You build may be able to access by working and paying Social Security taxes; most people need 40 credits (roughly 10 years of work) to receive retirement benefits.
  • Your benefit amount depends on your earnings history and the age at which you start receiving payments, not on how much you need.
  • Social Security is a federal program run by the Social Security Administration, with local offices in most communities where you can get information in person.

How you build may be able to access through work credits

Social Security may be able to access is based on work credits, not years of work. You earn one credit for every $1,730 of wages you earn (this amount changes each year). You can earn up to four credits per year, which means you can earn a full year's worth of credits in as little as three months if you earn enough.

For retirement benefits, you need 40 credits total — which typically means about 10 years of work at any point in your life, not necessarily recent. For disability or survivor benefits, you need fewer credits, and the requirement depends on your age when you become disabled or die. A 25-year-old who becomes disabled might need only 6 credits; a 55-year-old might need 35.

Self-employed people also pay into Social Security. They pay both the employee and employer portions of the tax (12.4% total), but they still earn credits the same way — based on earnings, not on the amount of tax paid.

The three types of Social Security benefits

Retirement benefits begin when you reach full retirement age, which ranges from 66 to 67 depending on your birth year. You can start receiving reduced benefits as early as age 62, or delay and receive higher benefits up to age 70. Your monthly payment is based on your 35 highest-earning years of work.

Disability benefits (called SSDI, or Social Security Disability Insurance) go to people under full retirement age who have a medical condition expected to last at least 12 months or result in death, and who have enough work credits. The amount is calculated the same way as retirement benefits — based on your earnings history, not on your medical condition or how much you need.

Survivor benefits go to family members of a worker who has died. A widow or widower can receive benefits at full retirement age, or reduced benefits as early as age 60. Children under 19 (or 19 if still in high school) can receive benefits, as can dependent parents age 62 or older. The total amount paid to all family members is capped at a percentage of what the worker would have received.

How your benefit amount is calculated

Your Social Security benefit is not based on how much you need or how much you paid in taxes. It is based on your Primary Insurance Amount (PIA), which the SSA calculates from your earnings record. The SSA takes your 35 highest-earning years, adjusts them for inflation, and runs them through a formula that replaces a higher percentage of lower earnings than higher earnings.

If you have fewer than 35 years of earnings, the SSA counts zeros for the missing years, which lowers your benefit. If you worked more than 35 years, only your highest 35 count. The formula is progressive — it replaces about 90% of the first portion of your average earnings, 32% of the next portion, and 15% of earnings above that.

Your actual monthly payment also depends on when you start. If you start at 62, you receive about 70% of your full retirement age benefit. If you wait until 70, you receive about 124% of your full retirement age benefit. This is called the early claiming reduction or delayed retirement credits, and it is permanent — it affects every payment you receive for the rest of your life.

Where to find your Social Security information

You can create an account on ssa.gov to view your earnings record, see an estimate of your future benefits, and manage your account online. The website also has a benefits calculator that shows how different claiming ages would affect your monthly payment.

If you prefer to speak with someone in person, you can visit your local Social Security office. Most communities have one, and you can find the address and phone number on ssa.gov. You can also call the national Social Security number (1-800-772-1213) to ask questions or request a replacement Social Security card.

If you are deaf or hard of hearing, you can use the TTY number (1-800-325-0778). If you speak a language other than English, Social Security offers interpretation services at local offices and over the phone.

The difference between Social Security and Supplemental Security Income

Supplemental Security Income (SSI) is often confused with Social Security because both are run by the SSA. They are separate programs with different rules. Social Security is based on your work history; SSI is a needs-based program for people age 65 or older, blind, or disabled who have limited income and resources. You do not need any work credits to receive SSI.

Some people receive both programs. For example, a 68-year-old with a very low Social Security benefit and few savings might receive Social Security plus SSI to bring their total income to the federal SSI limit. The rules for how the two interact are complex and vary by state, because states can add their own money to the federal SSI payment.

What happens to your benefits if you work

If you claim Social Security before full retirement age and continue working, your benefits are reduced by $1 for every $2 you earn above an annual limit. In 2024, that limit is $23,400 per year. Once you reach full retirement age, there is no earnings limit — you can work and receive your full benefit.

This rule applies only to earned income (wages or self-employment income). It does not apply to investment income, pensions, or other unearned income. If you are receiving disability benefits and work, the rules are different — you have a trial work period and other protections that allow you to test your ability to work without immediately losing benefits.

Frequently Asked Questions

Can I receive Social Security if I did not work in the United States?

If you worked in another country and paid into its social security system, you may be able to combine your work credits under a totalization agreement between the United States and that country. The SSA has agreements with about 30 countries. Contact your local Social Security office to learn about your country has an agreement and how to apply.

What if I disagree with my benefit amount?

You can request that the SSA review your earnings record. If you find an error — a year where you earned income that was not credited to your account — you can ask the SSA to correct it. You have a limited time to do this, so contact your local office or call 1-800-772-1213 as soon as you notice a problem.

Do I have to pay taxes on my Social Security benefits?

Whether you owe federal income tax on your Social Security benefits depends on your total income. If your combined income (adjusted gross income plus half your Social Security benefits) exceeds certain thresholds, up to 85% of your benefits may be taxable. State taxes vary — some states do not tax Social Security at all, while others do.

What happens to my benefits if I move out of the United States?

You can receive Social Security payments while living in most countries, but not all. If you move to a country where the SSA does not send payments, your benefits will stop. Some countries have restrictions on which beneficiaries can receive payments abroad. Check with the SSA before you move to find out whether your benefits will continue.

Can I receive Social Security benefits based on someone else's work record?

Yes. Spouses, ex-spouses (if married at least 10 years), and children can receive benefits based on a worker's record. A spouse can receive up to 50% of the worker's full retirement age benefit, and children can each receive up to 75% of the worker's benefit. The total paid to all family members is capped at 150% to 180% of the worker's benefit.