Social Security’s Role in Retirement, Disability and Survivor Benefits

In the United States, Social Security is the commonly used term for the federal Old-Age, Survivors, and Disability Insurance (OASDI) program and is administered by the Social Security Administration (SSA).

There are a surprising number of common misconceptions about Social Security, including when to claim benefits, how to maximize them, and how they are taxed.

In fact, according to a survey conducted by the Nationwide Retirement Institute in 2023, only 24% of older adults even knew their correct Full Retirement Age (FRA). 

This is just one aspect of Social Security that makes a big impact on your lifestyle when you retire. 

In this 3-part series, we’re going to cover everything you need to know about Social Security, and steps you can take to get the most from your benefits. 

Let’s start with the basics of retirement, disability and survivor benefits. 

Social Security and Retirement Benefits

Social Security is a federal program, funded by payroll taxes that workers and employers pay on their earnings. It provides income and insurance benefits to millions of Americans who are retired, disabled, or surviving spouses and children of deceased workers. 

Social Security retirement benefits are monthly payments that replace some of your income when you stop working. The amount of your benefit depends on your earnings history, your age when you decide to claim benefits, and potentially other factors. 

You’re eligible for Social Security if you’re 62 or older, and you’ve worked and paid taxes for 10 years or more. 

However, this does not mean you should claim benefits at 62. If you do so, your benefits will be as much as 30% lower than if you wait until your Full Retirement Age (FRA). 

We’ll do an in-depth discussion of FRA and DRC (Delayed Retirement Credits) in Part 2 of this series, so keep an eye out for that. 

If you’d like to work with a professional to take the guesswork out of integrating and optimizing your retirement accounts, we can help. 

What are Social Security Disability Benefits?

While most are familiar with the fact that Social Security benefits, a lesser known benefit that Social Security provides are disability benefits. Disability benefits are monthly payments that help you meet your basic needs if you have a medical condition that prevents you from working for at least a year or is expected to result in death. 

To qualify for disability benefits, you must have worked long enough and recently enough in jobs covered by Social Security, and you must meet the Social Security Administration’s (SSA) definition of disability. The SSA will review your medical records, work history, and other evidence to determine if you are disabled.

For example, let’s say you worked as a nurse for 10 years and paid Social Security taxes on your earnings. Then you developed a severe back injury that made it impossible for you to perform your job or any other work. 

You could apply for disability benefits and submit your medical records and other documents to the SSA. If the SSA approves your claim, you will receive disability benefits based on your earnings history.

What are Social Security Survivor Benefits?

Social Security also offers survivor benefits. These are monthly payments that help support your family members if you pass away. 

The amount of your benefit depends on your earnings history and the age and relationship of your survivors. 

Your survivors may include your spouse, children, parents, or other dependents. To qualify for survivor benefits, you must have worked long enough in jobs covered by Social Security, and your survivors must meet certain eligibility criteria.

For example, suppose you worked as a teacher for 20 years and paid Social Security taxes on your earnings. If you were to pass away at age 50, leaving behind a spouse and two children, your spouse could receive survivor benefits as early as age 60. If they are disabled or caring for your children under age 16 they could receive benefits earlier. 

Your children could also receive survivor benefits until they turn 18, or 19 if they are still in high school, or longer if they are disabled. The total amount of survivor benefits that your family can receive is limited by a maximum family benefit. Like all Social Security benefits, this is based on your earnings history.

What’s next

This has been a high-level overview to give you the basics of Social Security. 

As the saying goes, “knowledge is power.” In order for you to get the most out of your Social Security benefits, our goal with this series is to increase your knowledge of the Social Security program and how it works.

Part 2 of this series will be an in-depth discussion on Full Retirement Age (FRA), Delayed Retirement Credits (DRC), the different claiming strategies and their effect on your overall retirement income. 

If you want help understanding YOUR Social Security benefits…

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