Social Security has been mentioned in the news quite often in the past couple of years. Reduced contribution rates, budget deficits, and the idea that it may not even exist in the future have received plenty of media coverage. However, most of us are still unsure of how Social Security really works. Let’s cover the basics.
The most common type of Social Security (SS) benefit that comes to mind is the retirement benefit. Even though there are other types of SS benefits, we will limit our focus to those created by retirement. You must apply for retirement benefits and you should do so when it is most advantageous for you. There are three options which are related to your age:
- Full Retirement Age (FRA) between 66 and 67
- Early at age 62
- Delayed at the age of 70
You can apply to receive benefits at any age after you turn 62 and your monthly payment will be adjusted accordingly. A later installment will discuss the age at which you should apply.
The insured individual is referred to as the worker which means that he or she has earned SS credits by “making contributions” by way of OASDI withholding taxes. Besides the worker’s retirement benefit, spouses – even divorced spouses, minor children, and the survivors of a deceased worker can receive SS. Keep a look out for the next installment that covers who is entitled to SS benefits in greater detail.
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