What Social Security is and who it covers

Social Security is a federal insurance program run by the Social Security Administration (SSA). It pays monthly benefits to workers who have reached retirement age, to people who become disabled before retirement, and to the surviving family members of workers who have died. Nearly all working Americans pay into it through payroll taxes, and the program covers about 67 million people as of recent counts.

You earn Social Security credits by working and paying taxes. Most people need 40 credits to receive retirement benefits — roughly 10 years of work. Younger workers need fewer credits to receive disability or survivor benefits. The amount you receive depends on how much you earned during your working years and when you claim benefits.

Social Security is not means-tested, meaning your other income or savings do not disqualify you. However, if you claim benefits before your full retirement age and continue working, your benefits may be reduced based on your earnings.

Key Takeaways

  • Social Security provides monthly payments to retirees, disabled workers, and surviving family members, funded through payroll taxes paid by current workers.
  • You earn credits toward benefits by working and paying Social Security taxes, with most retirees needing 40 credits accumulated over roughly 10 years.
  • Your benefit amount is based on your highest 35 years of earnings, adjusted for inflation, and the age at which you claim benefits.
  • You can claim retirement benefits as early as age 62, but waiting until your full retirement age or later results in a higher monthly payment.
  • The Social Security Administration handles all claims, and you can check your earnings record and estimate your benefits through your personal account at ssa.gov.

How your benefit amount is calculated

The SSA calculates your benefit using your highest 35 years of earnings. They adjust those earnings for inflation and then average them to arrive at a number called your Primary Insurance Amount (PIA). This is the benefit you receive if you claim at your full retirement age. If you claim earlier, the payment is reduced; if you claim later, it increases.

Your full retirement age depends on your birth year. For people born in 1943 or later, it ranges from 66 to 67. If you were born in 1960 or later, your full retirement age is 67. You can claim as early as 62, but each year you claim before your full retirement age reduces your monthly benefit by a percentage. Conversely, if you delay claiming past your full retirement age, your benefit increases by roughly 8 percent per year until age 70.

The SSA sends you an annual statement showing your earnings record and an estimate of your benefits at different claiming ages. You can view this online through your personal account at ssa.gov, or request a paper statement by mail.

Retirement benefits and when to claim

You can claim Social Security retirement benefits starting at age 62, but the decision of when to claim involves trade-offs. Claiming at 62 gives you payments sooner but at a permanently lower rate. Claiming at your full retirement age gives you your full benefit. Claiming at 70 gives you the highest monthly payment, but you receive fewer total payments over your lifetime if you die before reaching your mid-80s.

If you are still working when you claim before your full retirement age, the SSA will reduce your benefits based on your earnings. For 2024, benefits are reduced by $1 for every $2 you earn above $23,400 annually. Once you reach your full retirement age, there is no earnings limit — you can work and receive your full benefit.

Married couples have additional options. A spouse may receive up to 50 percent of the worker's full retirement age benefit, and a divorced spouse may receive benefits on an ex-spouse's record if the marriage lasted at least 10 years and the ex-spouse is at least 62.

Disability and survivor benefits

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. You do not have to be retired to receive SSDI — you only need enough work credits, which vary by age. A 24-year-old needs 12 credits; a 31-year-old needs 20 credits; workers 42 and older typically need 20 credits earned in the 10 years before disability began.

The SSA also pays benefits to your family members if you die. A surviving spouse at full retirement age receives 100 percent of your benefit; a surviving spouse caring for a child under 16 receives 75 percent. Each child under 19 (or 19 if still in high school) receives 75 percent. A surviving parent age 60 or older receives 75 percent. The total family benefit is capped at 150 to 180 percent of your benefit amount.

To apply for disability or survivor benefits, you must contact the SSA directly. You can apply online at ssa.gov, by phone at 1-800-772-1213, or in person at your local Social Security office.

How to check your earnings record and create an account

Your earnings record is the foundation of your benefit calculation. Errors in your record — such as a missing year of earnings or earnings credited to the wrong name — can reduce your benefit. The SSA recommends checking your record every few years to catch mistakes early.

To view your earnings record and get a benefit estimate, create a personal account at ssa.gov. You will need your Social Security number, email address, and a way to verify your identity. Once logged in, you can see your complete earnings history, your estimated benefits at different claiming ages, and your family members' potential benefits.

If you find an error in your earnings record, contact the SSA as soon as possible. You will need documentation such as W-2 forms or tax returns showing the correct earnings. The SSA can correct errors going back several years, but the sooner you report them, the better.

Working while receiving Social Security

If you claim Social Security before your full retirement age and continue working, your benefits will be reduced if your earnings exceed a certain threshold. For 2024, the SSA reduces benefits by $1 for every $2 earned above $23,400 per year. In the year you reach your full retirement age, the limit is higher — $62,160 — and benefits are reduced by $1 for every $3 earned above that amount, but only for earnings before the month you reach full retirement age.

Once you reach your full retirement age, you can earn any amount without a reduction to your benefits. This is an important distinction: the earnings limit applies only to benefits claimed before full retirement age.

Self-employment income counts toward the earnings limit. If you own a business, the SSA counts your net profit from self-employment. You must report your earnings to the SSA, and they will adjust your benefits accordingly.

Taxes on Social Security benefits

Depending on your total income, a portion of your Social Security benefits may be subject to federal income tax. The SSA uses a formula based on your "combined income," which includes your adjusted gross income, non-taxable interest, and half of your Social Security benefits.

If your combined income is below $25,000 (single) or $32,000 (married filing jointly), your benefits are not taxed. If your combined income is between $25,000 and $34,000 (single) or $32,000 and $44,000 (married filing jointly), up to 50 percent of your benefits may be taxable. If your combined income exceeds $34,000 (single) or $44,000 (married filing jointly), up to 85 percent of your benefits may be taxable.

The SSA will send you a Form SSA-1099 each January showing the benefits you received in the previous year. You use this form to report your benefits on your federal tax return.

Frequently Asked Questions

Can I change my mind after I claim Social Security?

Yes, but only within limits. If you claim and then change your mind within 12 months, you can withdraw your claim and repay all benefits received. This allows you to claim again at a later age and receive a higher benefit. After 12 months, you cannot withdraw your claim, but you can suspend your benefits at your full retirement age and let them grow until age 70.

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

You can receive Social Security benefits while living outside the U.S., with some exceptions. Citizens of most countries can receive benefits abroad. However, citizens of certain countries may have restrictions. Contact the SSA before you move to confirm your situation. You will need to report your address change to the SSA.

How do I report a change in my circumstances to Social Security?

You can report changes such as a name change, address change, or change in work status through your online account at ssa.gov, by phone at 1-800-772-1213, or in person at your local office. Some changes, such as marriage or divorce, may affect your benefits or your family members' benefits.

What is the difference between Social Security and Supplemental Security Income?

Supplemental Security Income (SSI) is a separate program for people with limited income and resources who are 65 or older, blind, or disabled. SSI is needs-based and funded by general tax revenue, not payroll taxes. Social Security is based on your work history and is not means-tested. You may receive both, but they are administered separately.

Can I receive Social Security benefits based on my spouse's work record?

Yes. A spouse at full retirement age can receive up to 50 percent of the worker's full retirement age benefit. A spouse under full retirement age receives a reduced amount. A divorced spouse can receive benefits on an ex-spouse's record if the marriage lasted at least 10 years, you are at least 62, and your ex-spouse is at least 62 (or deceased).