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Social Security Benefits
If your job is covered under the Social Security program, your future retirement benefits will be determined by how much you earned and contributed to the system during your career. Ask your employer if you have questions about whether your job is covered by Social Security.
Browse the menu below for helpful information and links about Social Security.
How It Works
If you work for someone else, your employer withholds Social Security
and Medicare taxes from your paycheck, matches that amount, sends those taxes
to the Internal Revenue Service (IRS) and reports your earnings to Social Security.
If you’re self-employed, you pay your own Social Security taxes when you
file your tax return, and IRS reports your earnings to Social Security. You pay
a rate equal to the combined employee/employer share, but there are special deductions
you can take that offset your tax rate.
Get more information.
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Role of Payroll Professionals
In a letter from the former Commissioner of Social Security, Kenneth S. Apfel,
on the occasion of National Payroll Week 1998 wrote:
“I congratulate Payroll Professionals across
the country for the outstanding job they perform in ensuring the accurate and
timely reporting of wage and tax information to Federal and State agencies. Accurate
wage reporting is Social Security’s cornerstone for determining future
benefits for workers and their families. Payroll Professionals should be proud
of the important role they play in the lives of each and every worker.”
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Improving Lives
Social Security has improved the lives of countless Americans.
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Social Security provides benefits to more than 47 million men, women, and children.
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Nearly one in six Americans receives Social Security benefits.
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It is the major source of income for 66 percent of beneficiaries age 65 and older, and it contributes 90 percent or more of income for about 33 percent of those beneficiaries.
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About 40 percent of beneficiaries age 65 or older are kept out of poverty because of the Social Security program.
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How You Earn Credits
You qualify for Social Security benefits by earning Social Security credits when
you work in a job and pay Social Security taxes. The credits are based on the
amount of your earnings. The Social Security Administration uses your work history
to determine your eligibility for retirement or disability benefits or your family’s
eligibility for survivors benefits when you die.
In 2004, you receive one credit for each $900 of earnings, up to the maximum
of four credits per year.
Each year the amount of earnings needed for credits goes up slightly as average
earnings levels increase. The credits you earn remain on your Social Security
record even if you change jobs or have no earnings for a while.
Get more information.
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If You Are Self-Employed
If you are self-employed, you earn Social Security credits the same
way employees do (one credit for each $900 in net earnings, but no more than
four credits per year). If your net earnings are $3,600 or more, you earn four
credits--one for each $900 of earnings. However, special rules apply if your
net earnings are less than $900. All of your earnings covered by Social Security
are used in figuring the amount of your Social Security benefit. So, it’s
important that you report all of your earnings up to the maximum as required
by law. For more information go to http://www.socialsecurity.gov/pubs/10022.html
to view the factsheet, If You’re Self-Employed (Publication No.
05-10022).
Get more information.
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Special Rules
SSA also has special rules about how you earn credits for other kinds of work.
Some of these jobs are:
- Domestic work;
- Farm work; or
- Work for a church or church-controlled organization that does not pay
Social Security taxes.
Get more information.
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Military
If you are in the military, you earn Social Security credits the same
way civilian employees do. You also may get additional earnings credits under
certain conditions. For more information, call SSA for a free copy of the publication, Military
Service And Social Security (Publication No. 05-10017).
For more information, click here! http://www.socialsecurity.gov/pubs/10072.html#special and www.socialsecurity.gov/pubs/10017.html)
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Social Security Benefits
Social Security benefits replace a percentage of your earnings when
you retire, become disabled or die. Each year, SSA sends you a Social Security
Statement showing your earnings history and an estimate of the retirement, disability
and survivors benefits you and your family may receive based on those earnings.
When you receive your Statement, check your earnings history carefully. Make
sure all of your earnings are accurate. Be sure to report any errors to SSA.
That is important because your benefits will be based on your lifetime earnings.
Your Statement also is useful in helping you plan your financial future.
Get more information.
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Not Every Kind of Work Counts Toward Social
Security
Not all employees work in jobs covered by Social Security. Some of these
employees are:
- Most federal employees hired before 1984 (but since January 1, 1983
, all federal employees have paid the Medicare hospital insurance part
of the Social Security tax);
- Railroad employees with more than 10 years of service;
- Employees of some state and local governments that chose not to participate
in Social Security; or
- Children younger than age 21 who do household chores for a parent (except
a child age 18 or older who works in the parent’s business).
For more information, click
here!
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Types of Social Security Benefits
There are five major categories of benefits paid for through your Social Security
taxes: retirement, disability, family benefits, survivors and Medicare. (SSI
benefits, which are not financed by Social Security taxes, are discussed in another
section.)
For more information, click
here!
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Retirement
Benefits are payable at full retirement age (with reduced benefits available
as early as age 62) for anyone with enough Social Security credits. The full
retirement age is 65 for persons born before 1938. The age gradually rises until
it reaches 67 for persons born in 1960 or later. People who delay retirement
beyond full retirement age get special credit for each month they don’t
receive a benefit until they reach age 70.
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Disability Benefits
can be paid to people at any age who have enough Social Security credits and
who have a severe physical or mental impairment that is expected to prevent them
from doing “substantial”work for a year or more or who have a condition
that is expected to result in death. Generally, earnings of $800 or more per
month are considered substantial. The disability program includes incentives
to smooth the transition back into the workforce, including continuation of benefits
and health care coverage while a person attempts to work.
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Family Benefits
If you are eligible for retirement or disability benefits, other members
of your family might receive benefits, too. These include: your spouse if he
or she is at least 62 years old or under 62 but caring for a child under age
16; and your children if they are unmarried and under age 18, under 19 but still
in school or 18 or older but disabled. If you are divorced, your ex-spouse could
be eligible for benefits on your record.
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Survivors
When you die, certain members of your family may be eligible for benefits
if you earned enough Social Security credits while you were working. The family
members include: a widow(er) age 60 or older, 50 or older if disabled or any
age if caring for a child under age 16; your children if they are unmarried and
under age 18, under 19 but still in school or 18 or older but disabled; and your
parents if you were their primary means of support. A special one-time payment
of $255 may be made to your spouse or minor children when you die. If you are
divorced, your ex-spouse could be eligible for a widow(er)’s benefit on
your record.
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Medicare
There are two parts to Medicare: hospital insurance (sometimes called
Part A) and medical insurance (sometimes called Part B). Generally, people who
are over age 65 and getting Social Security automatically qualify for Medicare.
So do people who have been getting disability benefits for two years. Others
must file an application. Part A is paid for by a portion of the Social Security
tax of people still working. It helps pay for inpatient hospital care, skilled
nursing care and other services. Part B is paid for by monthly premiums of those
who are enrolled and from general revenues. It helps pay for such items as doctors’fees,
outpatient hospital visits and other medical services and supplies.
Recently, a new law was enacted to bring people with Medicare more choices in
health care coverage and better health care benefits.
This new law preserves and strengthens the current Medicare program, adds important
new prescription drug and preventative benefits, and provides extra help to people
with low incomes. For more information visit the Centers for Medicare & Medicaid
Services at www.cms.gov.
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Supplemental Security Income Benefits
SSI makes monthly payments to people who have a low income and few assets. To
get SSI, you must be 65 or older or be disabled. Children as well as adults qualify
for SSI disability payments. As its name implies, Supplemental Security Income “supplements”your
income up to various levels--depending on where you live.
The federal government pays a basic rate and some states add money to that amount.
Check with your local Social Security office for the SSI rates in your state.
Generally, people who get SSI also qualify for Medicaid, food stamps and other
assistance.
SSI benefits are not paid from Social Security trust funds and are not based
on past earnings. Instead, SSI benefits are financed by general tax revenues
and assure a minimum monthly income for elderly and disabled persons.
Get more information.
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Make Sure Your Records Are Accurate
Each year your employer sends a copy of your W-2 (Wage and Tax Statement)
to SSA which compares your name and Social Security number on the W-2 with its
records. When SSA finds your name and number, your earnings shown on the W-2
are recorded on your lifelong earnings record. Your lifelong earnings record
is what we use to figure whether you can get future benefits and the benefit
amount.
It is critical that your name and Social Security number on your Social Security
card agree with your employer’s payroll records and W-2. If they do not
agree, your employer may get a letter from Social Security. This letter does
not mean that your employer should change your job, lay you off, fire you or
take other action against you. You need to correct the error. It is up to you
to make sure both records are correct. If your Social Security card is not correct,
contact any Social Security office. Tell your employer if your name or Social
Security number is incorrect on the employer’s record.
Get more information.
Check out the SSA website for more information
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To get more information on Social Security, check out the following publications:
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