Sense & Centsibility Blog

What is Social Security and How Can it Help My Family?

We all know that Social Security can provide much needed retirement income during our golden years. But there is more to Social Security than a benefit check. It also provides disability and survivor’s benefits to help people of all ages and their family members.

Whether you work full time, part time, or are a stay at home spouse, it is essential to understand how the time you spend in the workforce may affect your entitlement to Social Security benefits.

To qualify, you earn credits by working at a job where you pay Social Security taxes, or self-employment taxes. The number of credits you need to qualify depends on your age and type of benefit collected.

Disability Benefits

Over your working lifetime, you may become seriously ill or injured preventing you from working, potentially risking your family’s financial stability. You may qualify for disability benefits if you are eligible for Social Security based on your earnings history. Be aware that eligibility requirements for disability benefits are strict and your disability must be expected to last at least 1 year or result in death.

To be eligible for disability benefits, if you are disabled at age 31 or older, you must have earned at least 20 credits in the 10 years prior to becoming disabled. If you become disabled younger than at age 31, different rules apply.

You may want to consult with a Social Security benefits attorney to get a better understanding of how to qualify for disability benefits, and how the process works. Ask for a free consultation when you call to schedule an appointment.

Survivor’s Benefits

Social Security may offer some financial protection to your family if you die before retirement. If you qualify for Social Security at the time of your death, your surviving spouse, (or ex-spouse), or your dependent children (who must be single) may be eligible for benefits based on your earnings record. Survivor protection also applies if you are married, your covered spouse dies, and you are at least 60 years of age. There are other circumstances in which you may also qualify for survivor’s benefits.

To be eligible for survivor benefits for your family, you must earn 40 credits over 10 years of work. Under a special rule, if you have worked only 1.5 years in the 3 years before your death, benefits may be paid to your spouse and dependent children.

Retirement Benefits

According to the Social Security Administration (SSA), retirement benefits are the foundation of the Social Security program. Social Security benefits never expire and continue until your death. Women may depend more on Social Security simply because we often live longer than men and may not have other retirement resources to rely on.

To collect retirement benefits, you generally need to earn 40 credits, or 4 credits per year for 10 work years. If you are married, you may be able to qualify for spousal benefits based on your spouse’s work history if you have not worked long enough to qualify on your own. Or, if you have worked long enough to qualify on your own, you may still be able to collect more Social Security if your spouse qualifies for a higher benefit amount.

How much will my retirement benefit be?

The amount of your Social Security retirement benefit depends on the number of years you worked and the income you earned. The Social Security Administration uses a formula that takes into account your 35 highest earning years. (Check out the Retirement Estimator.)

Your benefit amount will also depend on what age you decide to begin collecting a retirement check. Anyone can choose to receive benefits at age 62 but the amount will be reduced by a minimum of 25% from your full retirement benefit. You will receive the full benefit amount if you wait to collect until your full retirement age. Full retirement age is at least 66 and depends on what year you were born.

If you wait to collect until age 70, your benefit amount will be higher than the full amount and increases by a percentage each year you wait beyond your full retirement age.

When should I opt to receive retirement benefits?

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You will have to decide if you should begin receiving retirement benefits early and receive smaller payments over a longer period of time, or wait until your full retirement age and receive larger payments over a shorter period of time. There is no right or wrong answer; it is a decision that should be based on your unique situation.

Other factors to consider when deciding at what age to begin collecting retirement benefits include your marital status, your income tax situation, whether you have other sources of income, whether you will continue to work during retirement, and your life expectancy.

For more information

This article is intended to be a brief overview of benefits available through the Social Security Administration. For more information, call the Social Security Administration at 800-772-1213 or visit the SSA website. Planning for your financial future and your family’s fiscal health means knowing where you can find help when the time comes.

We all need to think about our finances and the future. Check out Barbara Miller’s other post, 5 Tips to Retire Debt Free. Also, LSS Financial Counseling can help you take action to eliminatge your debt, build savings, and achieve your financial goals. Call us today at 888.577.2227 to get started!

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Author Barbara Miller is a Certified Financial Counselor with LSS Financial Counseling, and she specializes in bankruptcy counseling and education.