Top Questions About Social Security Answered
Millions of Americans depend on social security benefits to provide them with the needed income to pay for monthly expenses. The Social Security Administration explains that for a large number of senior citizens, payments received from social security benefits will represent more than half of the money they receive each month.
Despite the important role that payments from social security will play in the lives of many in the country, the American public is surprisingly uninformed regarding these benefits. This lack of knowledge will mean that many citizens will not fully capitalize on the social security benefits available to them.
The following eight questions, once answered, will provide Americans with the knowledge needed to ensure full participation and benefit from the social security program.
The Important Questions:
1. Who Is Eligible For Social Security Benefits?
A: Social Security has been incorrectly characterized as an entitlement program. There are requirements involved with qualifying for social security benefits.
Forty work credits are required over the work career of an individual to qualify for the retired worker benefits. Four credits can be earned each calendar year. As of 2018, A credit was valued at $1,320. This means that it would require $5,280 in earned income to receive the full year's allotment of social security credits.
2. When Can I Receive Payments For Social Security Benefits?
A: The typical American worker is eligible for social security benefits once they reach 62 years of age. Americans that wish to begin receiving social security benefits at this age can begin the process by filing paperwork with the Social Security Administration three months before their 62nd birthday.
3. Will My Payments Be More If I Wait Past The Age Of 62?
A: The individual that can forego filing for social security benefits at the minimum age of 62 will benefit greatly from doing so. The payout for social security grows eight percent each year that follows the 62nd birthday. This eight percent increase continues until the age of 70.
Payment increases are adjusted monthly and a wait of just a few months can result in a substantial increase in payments.
4. Why Is My Full Retirement Age Important?
A: The full retirement age of an individual is the age at which the Social Security Administration determines them to be eligible for 100 percent benefits. Benefit recipients that decide to receive social security payments before reaching full retirement age will have their payments reduced by a considerable amount.
The full retirement age for Americans is determined by the year of their birth but in all cases is between the ages of 65 and 67. This table is provided by the Social Security Administration and can be used to determine the exact age at which a particular individual will be eligible for full retirement benefits.
5. How Is The Payment Amount For Benefits Payments Calculated
A: The specific amount a benefits recipient receives monthly from the Social Security Administration is decided by four factors. These factors are work history, history of earnings, enrollment age, and age of full retirement.
The Administration will use the 35 highest earning years of an individual's work history, adjusted for inflation, to calculate their base monthly pay. This is then adjusted by the age of enrollment and proximity to the full retirement age.
6. How Much Money Can I Receive Through Social Security Benefits?
A: Social security is designed to replace a portion of monthly wages earned by an individual during their work career. The maximum monthly payment possible for 2018 is $2,788 for individuals that have reached full retirement age. Payments are often increased on an annual basis by the Social Security Administration to account for inflation.
7. What If A Claim Is Filed Too Early?
A: There is good news for individuals who feel they have filed a social security benefits claim too early to receive the benefit from the claim they desire. SSA Form 521 can be used to undo claims that have been filed and restart the eight percent growth of annual benefit payments. Recipients are eligible to file SSA Form 521 within a one year period of filing a benefits claims. However, all payments that have been received from the claim must be repaid before the form can be filed.
8. Are Benefit Payments Taxed?
A: The United States Congress decided in 1983 that income taxes will be required for payments received through social security. Individuals that earn more than $25,000 annually, or $32,000 when filing as a couple, can see as much as half of their annual income exposed to income taxes from the federal government. Additionally, a 1993 policy provides for up to an 85% rate of taxation for individuals earning more than $34,000. This tax tier kicks in for couples at $44,000.