Social Security is a program in the United States that provides government financial support to people in certain life situations. You may know that social security can be used in retirement, but there are also other cases where you can claim social security benefits.

This program was established in 1935 as part of the New Deal during the Great Depression. Here’s a quick overview of the three main benefits it offers:

• Retirement benefits: Social Security replaces a small portion of your pre-retirement income when you reach “retirement age” and retire. While this age can vary, it is typically at 66 or older, depending on your birth year. The amount you receive is based on your lifetime earnings.
• Disability benefits: If you become disabled and cannot work, Social Security can provide financial assistance. While this benefit usually isn’t very high, it can help meet your basic needs.
• Survivors benefits: If you are married to someone receiving Social Security, you may be able to claim after they pass away. Sometimes, this also applies to the children of deceased workers.

Social Security has its own government website, where you can learn more about it and:

• Check your eligibility
• Get an estimate of your benefits
• Plan for retirement
• Apply for benefits 

Social Security History

In 1934, the United States was in the midst of the Great Depression, and President Franklin D. Roosevelt knew that something had to be done to help struggling families. He established the Committee on Economic Security (CES) to investigate social insurance programs that could help provide a safety net for Americans.

After months of research, the CES recommended the creation of a federal insurance system for the elderly. On August 14th, 1935, Roosevelt signed the Social Security Act into law, which established a system of old-age benefits for retired workers. The Social Security program was initially funded by payroll taxes on both employees and employers.

Over time, the Social Security program expanded to include benefits for survivors of deceased workers, as well as disability benefits for those who were unable to work due to a medical condition. In 1965, President Lyndon B. Johnson signed legislation that established Medicare, a government-run health insurance program for Americans over the age of 65. To

Today, Social Security and Medicare are two of the most important social programs in the United States, providing critical support to millions of Americans every year. Here is our more in-depth review of the history of Social Security.

How Social Security Works

Social Security is a federal program that was established in 1935 as part of the New Deal. It is designed to provide financial support to retired individuals, survivors, and disabled persons. The program is funded through payroll taxes, which are deducted from each paycheck received by any worker in America.

The collected funds are then used to provide benefits to current retirees and other qualifying individuals. These benefits may include retirement, survivor, disability, and Medicare. The Social Security Administration (SSA) is responsible for administering the program and determining eligibility for benefits. You can learn how to apply for Social Security benefits in our complete how-to guide.

When you qualify or retire, you can receive benefits yourself. Your amount depends on your lifetime earnings and when you choose to receive them. For instance, you can sometimes begin receiving benefits as early as 62, but the amount will be lower until you reach full retirement age, often 66 or 67. Make sure to change your Social Security address if you move to keep up with your potential benefits.

You can learn more about the specific amounts you can expect in our How Much Social Security Will I Get by Age explainer. We also have guides depending on the specific amount of money you make, such as How Much Social Security Will I Get If I Make $25,000 a Year.

The amount you receive also changes based on Social Security COLA adjustments, which are added to keep up with inflation each year.

If you want more info, check out our comprehensive explainer on how social security benefits work. You may also want to read our in-depth guide on how Social Security is calculated, which probably isn’t as confusing as you think!

The 3 Different Types of Benefits

There are three different types of benefits under the Social Security umbrella. These include retirement, disability, and survivor.

Retirement Benefits

When you retire, Social Security provides a portion of your pre-retirement income. Your benefit is calculated based on your average earnings over the 35 highest-earning years of your working life. Social Security considers your actual earnings, which means that any years with no or low earnings will be factored in while calculating your benefit.

You can start receiving benefits as early as 62 in some cases, but your monthly benefit will be reduced if you opt for early retirement. The reduction is based on the number of months you receive benefits before reaching full retirement age. Your full retirement age, ranging from 66 to 67 years, depends on your birth year.

If you decide to delay receiving benefits, you can increase your monthly benefit amount. However, the increase will depend on the number of months you delay receiving benefits. For example, if you wait until age 70 to receive benefits, your monthly benefit could be up to 32% higher than if you had started receiving benefits at full retirement age.

Remember that Social Security probably isn’t everything you need to save for retirement. It’s important to check your retirement expectations against reality.

Disability Benefits

If you have a medical condition that is expected to last for more than a year or that may result in your death and prevent you from working, you may be eligible to receive Social Security benefits. Social Security provides two benefits for people with disabilities: Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI).

SSDI is a benefit based on your work history and the amount you have paid into Social Security through payroll taxes. If you have worked for a certain number of years and paid enough into Social Security, you may be eligible for SSDI benefits. The amount of benefit you receive will depend on your earnings record.

SSI, on the other hand, is a needs-based benefit for people with disabilities who have limited income and resources. The amount of benefit you receive will be based on your income and assets.

Proving you’re disabled can be challenging, though, and documentation from your doctor is required.

For more information, see our complete guide to What You Need To Know About Social Security Disability Benefits.

Survivor Benefits

Spouses, children, and other dependents of wage earners who paid Social Security taxes may be eligible to receive benefits. The benefits are based on the deceased worker’s earnings history and age. Your relationship with the deceased may also matter, with spouses and young children qualifying for more than more distant relations.

Depending on your relationship with the deceased and your age, the percentage of benefits you receive differs.

To read more about each of the three types of benefits, here’s a deeper dive.

Family Eligibility

Some family members may also be eligible for Social Security benefits because of your work history, even if they haven’t worked themselves. For instance, children may be eligible under certain circumstances, such as being unmarried, under 18, or students. Dependent grandchildren may qualify in a similar situation.

If you are already receiving Social Security benefits, your retired spouse may be eligible for up to 50% of your benefit. To qualify, your spouse must be at least 62 years old, and you must have been married for at least 10 years.

Additionally, if you are divorced, your ex-spouse may still be eligible for benefits based on your earnings record, even if you haven’t filed yet.

To be eligible, you must have been married for at least 10 years, and your ex-spouse must be at least 62 years old. It’s important to note that these benefits do not affect your benefits, and you can still receive your full benefit amount.

For more information, check out our explainer on Family Eligibility for Social Security.

The Best Age to Claim Benefits

Retirement varies from person to person and may not be completely your choice. However, the later you apply for benefits, the more money you receive monthly. Claiming before your full retirement age (usually 66 to 67) reduces your monthly benefit. Your benefit slightly increases each month after your full retirement age, too, up to age 70. That said, age 70 is not the best time to claim Social Security.

The best time to claim Social Security depends on your needs and retirement plan. There isn’t a one-size-fits-all answer.

Your “full retirement age” depends on when you were born. You can find it on the SSA retirement planner. Here is the maximum benefits eligibility by age.

Social Security Taxes

Social Security taxes are mandatory payroll taxes that fund two programs: Social Security and Medicare. Both the employer and employee contribute equally, paying around 6.2% each. The collected taxes go into a “trust fund” that benefits current receivers.

There is a maximum taxable income for Social Security. Currently, it is around $147,000. Once you reach this income total, you no longer pay Social Security taxes on the rest of your income. This limit can change each year, so always double-check.

This is a very basic explanation of how Social Security and taxes work. We have a more complete guide to Social Security and Taxes you can read for more information. Don’t forget about taxes after you start claiming, either. In some cases, Social Security is taxable.

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