Most Asked Social Security Questions

Depending on your current age, you may or may not know all of the details about Social Security. There are a lot of small details that are easy to overlook, but we have put together a short guide that covers the most common questions regarding Social Security.

What Exactly is Social Security?

Social Security is a government-funded program for working individuals that was initiated in 1935. When it first started, only select workers were part of the program, but in modern times, virtually all of the workforce falls under the program. In essence, Social Security is a government-based pension plan that seniors will avail in after retirement.

What Will My Social Security Payments Be?

Each person’s Social Security benefits will differ because they are calculated according to a person’s lifetime earnings. The quick way to calculate is that your payments will be an average from the most you earned over 35 years of work. The Social Security website has a Retirement Estimator that can provide a general estimate.

How Much of Retirement Income is Covered by Social Security?

Social Security will cover almost half of most senior's retirement income, and for a fifth of the elderly population, it will cover as much as 90%.

At What Age is a Person Eligible for Social Security?

The first tier of Social Security eligibility currently comes at the age of 62. Full Social Security eligibility comes at the age of 65, and the oldest age of eligibility is 67. While the program is intended for working adults, the spouses of those adults are able to receive their benefits after they have passed. The earlier you take your benefits, the less you will receive, however, the later you start payments, the more you will receive.

What About Social Security Benefits & Taxes?

Social Security benefits may be taxed, or they may fall under the threshold. For couples who receive Social Security benefits with an income that falls between $32k and $44k, as much as 50% of their benefits will be taxed. Any income over the amount of $44k will result in an 85% tax on Social Security benefits. For individuals, the thresholds are a bit lower, with $34k being the max for a 50% tax and anything above that being taxed at 85%.

How Much do People Contribute to Social Security?

Currently, 6.2% of your income from wages is contributed to the Social Security fund and your employer will contribute a matching amount. This is helpful for those with traditional jobs; however, self-employed workers must contribute the full 12.4%. If you have reached the age of eligibility, you can receive Social Security even if you are still employed.

How is Social Security Eligibility Determined?

Each person’s Social Security eligibility is based on the number of credits they earned during their years of labor. Currently, each person will earn one credit for every $1,410 earned, and a maximum of 4 credits may be earned annually. A person must earn at least 40 credits, which is equal to 10 years of work, in order to qualify for Social Security benefits.

May I receive Social Security Payments if I Still Work?

Anyone who is working and has also reached full retirement age may still avail of their Social Security benefits even if they are working full or part-time. Seniors who are at the minimum age of retirement will have a temporary reduction in their benefits while they are employed.

How Do I Apply for Social Security Benefits?

Placing an application for Social Security benefits is easy. Anyone that is at least 62 or older simply needs to visit their local Social Security Administration office. You can also apply for Social Security benefits online and then mail in your legal documentation. You will need to provide the Social Security office with your birth certificate and a valid form of identification with your application. It takes about four months for the process to be completed, so make sure you time your application properly if you will be dependent upon those benefits to pay for other expenses.

What are Social Security Spousal Benefits?

In 2015, The Bipartisan Budget Act changed the way spouses received Social Security benefits. There were many common strategies that married couples would use to boost their no longer possible benefit amounts. The spouse of a person with benefits can also receive Social Security benefits if they never worked, the only caveat is that the working spouse must already be receiving Social Security benefits.

How Does Social Security Actually Work?

Social Security can best be described as a large, legal pyramid payment arrangement, or a pay as you go arrangement. The money that is being paid out to retired Social Security beneficiaries actually comes from people who are currently in the workforce now. That means that the money you paid during your working years was not actually put away, it was being used to pay seniors who were retiring at the time you were a part of the workforce.

What About Left-Over Payments to Social Security?

The population is only getting larger, which means the number of retirees that will draw on social security is also going to increase. Leftover payments are placed in the Social Security Trust Fund, specifically the Social Security Trust Fund and Disability Insurance (DI) Trust Fund. These monies are to be used in the future when the current amount being paid in by the workforce does not actually cover the amount being paid out to retired seniors. While the sums of money are in limbo, they are invested in U.S. government securities where the total amount can grow to meet the future needs of the population.

Are the Rumors About Social Security being in Trouble True?

There are many challenges that the Social Security system will face in the coming years and decades. One of the main complications is that the number of people in the actual workforce is dropping lower than the number of retirees drawing benefits. In addition, people are living much longer than when the program was created, which means that they also will be able to avail benefits for a longer time period. As of this year, the Social Security program will be paying out more than it takes in annually and the $3 trillion trust fund that has been set aside will start to be used.