What to Know About Social Security

About 65 million Americans will receive more than $1 trillion in Social Security benefits in 2021 alone. You likely think of Social Security as a retirement program. It is true that the bulk of its funds do go toward retiree benefits. However, Social Security provides other sorts of benefits – benefits that you might be eligible to receive. It can be a complex topic, but here's what you need to know.

Key Takeaways

1. To receive full Social Security retirement benefits, you must wait until you full retirement age -- which ranges from 66 to 67 depending on year of birth -- to start collecting benefits. The amount you receive will be reduced if you claim Social Security benefits early, and it will be increased if you delay claiming benefits.
2. Social Security isn’t just a retirement program. It also provides disability benefits, survivors benefits for widows and widowers, and Supplemental Security Income for low-income seniors who are 65 and older, blind or disabled.
3. You can use the Social Security Administration’s Benefit Eligibility Screening Tool  to find out what benefits you are eligible to receive.

Retirement benefits

Most Social Security beneficiaries are retirees. However, Social Security benefits were not meant to be the sole source of income for retirees, according to the Social Security Administration. They replace just a percentage of pre-retirement income. 

The average monthly benefit in 2021 is $1,555, which adds up to $18,660 a year. That might not be enough for you to live comfortably. Your benefit could be higher or lower, depending on your earnings while working. Plus, the age at which you start collecting benefits affects how much you get.

You can start collecting Social Security retirement benefits as early as age 62. However, your benefits will be reduced by one half of 1% for each month you start receiving benefits before you full retirement age. The full retirement age is 66 for those born in 1943 to 1953. For those born in 1954 or later, the full retirement age gradually increases to age 67.

If, for example, you were born in 1958 and your full retirement age is 66 and 8 months but you started receiving benefits at 62, you would get only 71.7% of your full benefit amount, according to the Social Security Administration. 

Your benefits can be increased if you delay receiving benefits past you full retirement age. For each year you delay collecting up to age 70, benefits are increased by a certain percentage (depending on the year you were born). The maximum benefit that can be received in 2021 is $3,148. 

If you haven’t started receiving Social Security retirement benefits yet, consider the financial pros and cons of claiming benefits early, at full retirement age or delaying benefits. You can estimate your benefit amounts based on the age at which you retire by using the Social Security Retirement Estimator.

Disability benefits 

If you can’t work because of a disability, you might be eligible for Social Security disability benefits. The disability can be a physical or mental condition, but it must be expected to last at least a year. 

To qualify for benefits, you parent must have worked a certain number of years before becoming disabled (at least 9.5 years if age 60 or older). Then your state Disability Determination Services office will use a five-step evaluation process to determine if you are disabled. To qualify for benefits, you must be unable to do the work you did before becoming disabled as well as any other type of work. 

See the Social Security Administration’s guide to disability benefits for more details.

Survivors benefits

If you or your spouse dies, the surviving spouse might qualify for monthly Social Security survivors benefits based on the deceased spouse’s earnings. The surviving spouse must be at least 60 years old (50 if disabled) to qualify for reduced benefits and full retirement age to get 100% of the deceased spouse’s benefit amount. 

Be aware that you can’t get survivors benefits if you remarry before reaching age 60. Also, if you have worked and is eligible to receive Social Security on his or her own, that parent can claim survivors benefits then switch to his or her own benefit amount once eligible for retirement benefits if that benefit amount is higher. 

Even if your parents were divorced, the surviving parent might qualify for survivors benefits if he or she is at least 60 and your parents were married at least 10 years. See the survivors benefits guide for more details.

‍Supplemental Security Income 

This program pays benefits to adults 65 and older -- and those who are blind or disabled -- who have limited income and resources. To qualify in 2021, monthly earned income must be less than $1,673, and monthly unearned income (which includes Social Security benefits and pensions) must be less than $814.

The monthly benefit amount in 2020 is $783 for individuals, $1,175 for couples. However, it can vary depending on where beneficiaries live and what other sources of income they have. See the Social Security Administration’s guide to Supplemental Security Income for more details. 

You can use the Benefit Eligibility Screening Tool to find out which Social Security benefits you might be eligible to receive.