Receiving Social Security Benefits: How Do They Work?

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Are you planning to retire soon? Did you suffer from an accident or illness that made you permanently disabled? Are you a widow or spouse of a disabled person and raising young children? If one of these cases fits your situation right now, you may be entitled to receive your Social Security benefits. 

Social Security benefits or Old-Age, Survivors, and Disabled Insurance (OASDI) program is a comprehensive government-mandated benefit created as a partial source of income for retirees, widows or survivors, and the disabled. The program also provides assistance to the children of the beneficiary, whether the beneficiary is deceased or not.  

When claiming the benefits, the first step would be getting a social security award letter. This is a legal letter saying that your claims have been approved and eligible to receive your benefits soon. Also, you can show this to your creditors as proof of income. This is also known as a benefit verification letter, just in case you hear it from an institution. 

How Does Social Security Work?

Social Security works for people who are currently employed. You might have seen a deduction on your payslips tagged as OASDI tax. This means that you’re continuously paying for the benefits you might need in the future. 

The Social Security tax of an employed individual is 12.4%. This rate is divided equally between two payers, the employee and the employer. 

Even if you’re not working for anyone, you may still pay your contributions, that’s if you want to benefit from Social Security. However, you have to pay the full amount, which will be 12.4 % of your declared earnings. 

What Are The Three Types Of Benefits You Can Receive?

The three types of benefits you may receive under your Social Security are retirement, survivor or spousal, and disability benefits. Unfortunately, misleading information about how these things get processed and done is rampant. With that said, you might want to take a look at how these benefits actually work:

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1. Retirement Benefits

When people mention Social Security, the first thing that comes to their minds is retirement benefits. In fact, the largest department of the Social Security Administration (SSA) is focusing on the retirement program. 

To qualify for retirement benefits, you must work for at least ten years and have accumulated payment of 40 credits. There are four maximum Social Security credits each year, and in 2022, a credit is given for every USD$1,510 in earnings. 

When Will You Be Able To Collect Your Benefits?

In the past several years, people would be able to claim their retirement benefits when they reach 65 years old, but that has already changed. Now, you have to meet certain conditions to receive all the benefits. You’ll be able to receive your benefits when you’re:

  • 66 years old and was born between 1943-1954
  • 66 years old and 2 months and was born in 1955
  • 66 years old and 4 months and was born in 1956
  • 66 years old and 6 months and was born in 1957
  • 66 years old and 8 months and was born in 1958
  • 66 years old and 10 months and was born in 1959
  • 67 years old and was born in 1960 or above

Most importantly, if you’re not planning on getting your retirement benefit until you’re 70, SSA will award you increased benefits. The computation will be based on the year you were born, with an eight percent maximum increase on your monthly benefits.

On the other hand, you may claim your retirement benefit as early as 62 years old. However, the amount you will receive will be a bit lower than what you’re supposed to receive.

2. Survivor Or Spousal Benefits

Survivor benefits are given to the immediate bereaved family. Even when you’re gone, your spouse and children will receive continuous support from the SSA as long as they meet the requirements. Also, your parents may be eligible if you’re still supporting them before your death. 

Here are the requirements the bereaved must meet:

  • The spouse must be 60 years old or older
  • The spouse must be 50 years old or older and disabled
  • Spouse is raising children 16 years old and below or disabled
  • Children 18 years old or younger
  • Children 19 years old or younger and enrolled in primary or secondary school
  • Children 18 years old or older and disabled
  • Parents dependent on your support and show that you’re giving them at least half of their needs 

Furthermore, you need to have at least six credits three years before your untimely demise for your family to be eligible to receive the benefits.

Once filed and approved, they may receive a one-time payment of USD$255. Then, your spouse and children may claim 71.5 to 100% of your contributions and 150 to 180% of your benefit rate. 

3. Disability Benefits

Unlike others mentioned above, claiming disability benefits is quite strict. The condition should be severe to qualify for the disability benefits. For instance, your current physical state is preventing you from working properly.  You may also be eligible if your condition results in death or lasts for a year or longer.

Furthermore, you will be required to have at least 40 credits if you’re already 62 years old and up. For applicants aged 24 years old and below, they need to be working prior to their disability and must have six credits to fully qualify for disability benefits.

Your spouse and children may also qualify for disability benefits and may receive as much as half of your benefit claims. 

Once your application gets approved, your benefits will be released six months from the start of your disability, and benefit claims will be based on your lifetime earnings. However, if your claims have been declined, you may consult a social security lawyer to help you better address issues on benefit claims. 

Final Words

Social Security benefits are created to help people who might have experienced a loss of income due to their situation, such as retirement, accidents, disability, and untimely death of a spouse. Under the circumstances, the beneficiary’s immediate family, such as their spouse, children, and even parents whom they continuously support, may also receive benefits. 

Social Security works by putting taxes on your earnings. If you’re employed, you and your employer will share the responsibility of paying the tax. But if you’re self-employed, you need to pay the entire amount alone, that’s if you want to have the chance to receive the benefits. 

Furthermore, if you’re a retiree and plan to invest in your Social Security benefits, you can wait until you’re 70 for an increased benefit. 

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