The Social Security Administration (SSA) is one of the most important agencies in the United States, and the different types of benefits are designed to reach as many citizens as possible. In addition to being the country’s largest social program, it also provides a financial safety net for various vulnerable groups.
Understanding how Social Security works and the different types of benefits available is essential for planning your future and knowing what kind of support you can count on when the time comes.
What Is Social Security?
Social Security is a government-run insurance program funded by taxes. Most workers and their employers contribute through the Federal Insurance Contributions Act (FICA), which includes taxes for both Social Security and Medicare. These contributions are used to pay for current beneficiaries.
The main goal of Social Security is to provide financial protection against loss of income due to retirement, disability, or death. It’s not meant to be your only source of income, but rather a supplement to other savings and pensions.
Main Types of Social Security Benefits
Social Security offers several types of benefits, each designed to meet specific needs. The most common include:
1. Retirement Benefits
Retirement benefits are the most well-known and widely used. To qualify, you must have worked and paid into the Social Security system for a certain period. Eligibility is based on “credits” earned through work and Social Security tax payments.
As of 2024, you earn one credit for every $1,730 in earnings, up to a maximum of four credits per year. Most people need 40 credits—roughly equivalent to 10 years of work—to qualify for retirement benefits.
The age at which you start collecting your retirement benefits affects how much you’ll receive. Full Retirement Age (FRA) varies depending on your birth year. For those born in 1960 or later, FRA is 67. However, you can choose to begin benefits at age 62 with a reduced amount. On the other hand, if you delay retirement beyond your FRA, your benefits will increase each year until age 70.
Your benefit amount is calculated based on your highest 35 years of indexed earnings. That means the more you earn throughout your career—and the more you contribute—the higher your monthly benefit will be when you retire.
2. Disability Benefits
Social Security Disability Benefits provide financial assistance to individuals who are unable to work due to a serious medical condition. There are two main programs:
Social Security Disability Insurance (SSDI): For individuals who have worked long enough and then became medically unable to earn an income.
Supplemental Security Income (SSI): A need-based program that offers financial help to adults and children with disabilities that have prevented them from working from the start.
To qualify for either program, the SSA has a strict definition of “disability.” The condition must be severe enough to prevent you from engaging in “substantial gainful activity” and must be expected to last at least 12 months or result in death.
3. Survivors Benefits
Social Security Survivors Benefits offer financial protection to the family members of a deceased worker who paid into the system. These benefits may be available to surviving spouses, children, and, in some cases, dependent parents.
Eligibility includes:
- Widowed spouses starting at age 60, or at any age if they’re caring for a child of the deceased who is under 16 or has a disability.
- Dependent, unmarried children who are under age 18, or who have a disability.
- In certain situations, dependent parents of the deceased worker.
The benefit amount is based on the earnings of the deceased worker. The more they contributed to Social Security, the higher the survivor benefits will be for their family.
4. Medicare
Medicare is a federal health insurance program for people age 65 and older, as well as for younger individuals with disabilities. It helps cover health care costs such as doctor visits, hospital stays, and prescription drugs.
While managed by the SSA, Medicare is a separate program with its own rules and eligibility requirements. So it’s important to check specific guidelines before enrolling.
Why Is the SSA So Important to the United States?
Social Security plays a vital role in the financial security of millions of Americans. It provides a foundation on which people can build retirement plans and acts as a safety net for life’s unexpected events, such as serious illness or the death of a loved one.
While Social Security is not meant to be your only income source in retirement, it’s a program that helps citizens stay afloat, regain stability, and take the next steps toward living a more secure and peaceful life.
All information in this and other BOISLA articles is subject to change over time. Please check for updates directly with the institutions and companies mentioned. Approval is subject to the institution’s review.
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