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Social Security Benefits: Understanding The Benefits of Social Security

Updated on March 10, 2015

What is Social Security?

Social Security is a simple concept and the benefits of Social Security are easy to understand. It is a program that every US Citizen will encounter at some point or another.Social Security is a government set programs in which you pay a portion of your income taxes to the government, so they can maintain the Social Security program and all its benefits. The tax money is used toward:

  • People who already have retired;
  • People who are disabled;
  • Survivors of workers who have died; and
  • Dependents of beneficiaries.

The tax money you contribute towards Social Security is not being saved specifically for you. It is used right now to pay people who are eligible to receive the benefits. Any Social Security money that is not used on benefits goes into a Social Security Trust Fund, not into a personal account for you.

How to be Eligible for Social Security Benefits

When you work and pay taxes, you earn what is called a Social Security "credit". As of 2010, you earn one credit for each $1120.00 USD earned. You may receive up to 4 Social Security credits.

Most people need to have around 40 Social Security credits, to qualify for benefits. This means about 10 years of work.

Social Security Benefits: The Benefits of Social Security

Very simply put, your Social Security benefits depend on your lifetime earnings. The government issues a Social Security Statement each year you qualify which estimates the retirement, disability, and survivor benefits you can get based on your earnings.

Determine your Full Retirement Age

Year Of Birth
Full Retirement Age
66 and 2 months
66 and 4 months
66 and 6 months
66 and 8 months
66 and 10 months
1960 or later
Use the chart to determine your full retirement age. Source: Social Security Online

Early or Delayed Retirement Benefits

If you choose to delay your retirement age, you will receive a 7% increase in Social Security benefits each year that you do not receive benefits until you turn 70.

However if you choose to retire early, you can still receive benefits but they will be reduced. The rate of reduction is 1% per every 2 months that you retire before your eligible retirement age. (See chart above)

Social Security Benefits While Working

You are still eligible to receive Social Security benefits while you work. In most cases your benefits will actually increase if you choose to also work. If your earnings reach a certain limit however, your Social Security benefits may decrease because of supplemental income.

The annual limit in 2010 was $37,680. If you earn more than that amount annually, your Social Security benefits will be decreased by $1.00 for each $3.00 earned beyond that limit. (Assuming you have reached your retirement age.)

Retirement Benefits for Widows and Widowers

The rules and restrictions for this category are very broad. Please visit: for more information, and call the toll-free number at the top of the webpage.

Social Security Benefits for Disabilities

People that have disabilities, including children, may be eligible for the Supplemental Security Income (SSI). See more information about the SSI at:

If you would like to find out more about the SSI program and apply for the benefits, please visit:

If you do have a disability or recently became disabled, you should file for Social Security Disability benefits as soon as possible because it often takes several months to process the paperwork. The process can go faster if you have a few useful documents with you at the time. These include:

  • Medical records and treatment dates from your doctors, therapists, ­hospitals, clinics and caseworkers;
  • Your laboratory and other test results;
  • The names, addresses, phone and fax numbers of your doctors, clinics and hospitals;
  • The names of all medications you are taking; and
  • The names of your employers and job duties for the last 15 years.

Taxable Social Security Benefits

About one third (1/3) of individuals who get Social Security benefits, have to pay taxes on these benefits.

If you file a federal tax return as an "individual" and if you earn more than $25,000.00 USD a year, you will have to pay taxes on these benefits. If you file a federal tax return with your spouse and your yearly income exceeds $32,000.00 USD jointly, then you will have to pay taxes on these Social Security benefits.

Are you recieving Social Security benefits?

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For More Information

Please visit the official website at:


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    • tipstoretireearly profile image

      tipstoretireearly 5 years ago from New York

      Thanks for the clear explanation! Hopefully our politicians will start taking steps to insure the viability of the social security program in the future. The sooner they act, the less disruptive the changes will be. Voted up!

    • Casey White profile image

      Mike and Dorothy McKenney 6 years ago from United States

      I was going to do a hub on this very same thing, but after reading yours, I don't think I'll bother. Yours pretty much says it all. Voted you up and am a follower now. Hope you get to 200!

    • rpalulis profile image

      rpalulis 7 years ago from NY

      I just hope that there is some social security funds left by the time I get there in age. With all joking aside I think you have done an excellent job outlining the Benefits of Social Security