This section will tell you what you need to know about Social Security and how it effects you during the several years
leading up to retirement and after you retire. It will answer the following questions:
- How do I get my Social Security (SS) earnings statement?
- How do I set up an online SS account?
everyone entitled to receive SS?
- How much Social Security income will I receive?
- What's the maximum and minimum
amount of SS income that I can receive?
- What if I take early retirement or delay retirement past my full retirement
- What cost of living increases can I expect to receive?
- What SS deductions will I have?
- Can I
work and still receive SS income?
- What part of my SS payments will my spouse receive if I die?
Social Security Earnings Statement
There are two ways to receive a record of
your Social Security earnings history:
form #0960-0466 and mail it to the address shown on the form, or
Use the Social Security Administration’s website to request an online statement.
If you complete and mail the form, within four to six weeks you will receive a statement containing your earnings
history and other important Social Security information. If you request a Statement online, it will be instantly
Note that if you have been receiving a Social Security Statement each year about three months before your birthday, this request
will stop your next scheduled mailing. You will not receive a scheduled Statement until the following year.
Your Social Security Statement consists of 6 major sections titled:
- What Social Security Means
- Your Estimated Benefits
- How Your Benefits are Estimated
- Your Earnings Record
Us Keep Your Earnings Record Accurate
- Some Facts About Social Security
The Statement provides:
- Estimates of the retirement and disability benefits you may receive,
of benefits your family may get when you receive Social Security or die,
- A list of your lifetime earnings according
to Social Security’s records,
- The estimated Social Security and Medicare taxes you’ve paid,
about qualifying and signing up for Medicare,
- Things to consider for those age 55 and older who are thinking of retiring,
- General information about Social Security.
Click here to download a sample Statement
The content of your Statement will vary depending upon whether you've already filed a Claim for Benefits. If you've
already filed a claim, you will receive a separate "Your Benefits Amount" statement each new year showing the
exact amounts of your:
- Monthly benefit for the next year,
- Medicare medical insurance deduction,
prescription plan deduction, and
- Voluntary Federal tax withholding.
You can also request and receive a Statement online. To get your Statement online, you must first create a Social
Security account. Once you have an account, you can view, download and print your Social Security Statement at any time.
Online Social Security Account
You can create a Social Security online account at www.socialsecurity.gov or www.ssa.gov. To obtain access you must provide some personal information about yourself and answer questions that only you are
likely to know the answers to. Finally, you need to create a username and password for future access to your account
Who Receives Social Security Benefits?
In general anyone who has paid Social Security taxes or is the spouse of someone who has paid Social Security taxes receives
benefits when they retire.
When Congress passed the Social Security Act in 1935, it excluded federal, state, and local
government employees from mandatory coverage. In the early 1950s, Congress passed a law that allowed state and local government
employees to be covered if they voluntarily chose coverage in a referendum.
Up until 1984, workers for the federal government were covered under the Civil Service Retirement System (CSRS), did not
pay Social Security tax on earnings, and were not covered by Social Security.
But in 1984, a second retirement system,
the Federal Employees Retirement System (FERS), was introduced. Federal workers hired under FERS are covered by Social Security
because they pay Social Security taxes. Also, some workers covered by CSRS chose to switch to FERS.
Social Security Benefit Calculations
Social Security benefits replace a percentage of your earnings when you retire, become disabled or die. Your
benefit payment is based on how much you earned during your working career. Higher lifetime earnings result in higher
benefits. If there were some years when you did not work or had low earnings, your benefit amount may be lower than
if you worked steadily.
As described above, your
online Social Security statement will provide you with estimates of benefits you may get when you retire. Another way
to estimate benefits is to use the Retirement Income Estimator on the Social Security website: www.socialsecurity.gov.
The Retirement Income Estimator gives estimates based on your actual Social Security earnings record. Actual benefit
amounts are not available until you apply for benefits, and that amount may differ from the estimates provided because:
- Your earnings may increase or decrease in the future.
- After you start receiving benefits, they will be adjusted
for cost-of-living increases.
- Your estimated
benefits are based on current law. The law governing benefit amounts may change because, by 2033, the payroll taxes
collected will be enough to pay only about 75 cents for each dollar of scheduled benefits.
- Your benefit amount may be affected by military service, railroad employment or pensions
earned through work on which you did not pay Social Security tax.
Maximum Social Security Benefit
The maximum benefit depends on the age a worker chooses to retire. For example, for a worker retiring at full retirement
age in 2017, the amount is $2,687 per month. This figure is based on earnings at the maximum taxable amount for every
year after age 21 (see below).
Maximum Taxable Earnings Each Year
1937 - 50
1951 - 54
1955 - 58
1959 - 65
1966 - 67
1968 - 71
There is no minimum monthly Social Security benefit amount. For administrative reasons, they will not pay a benefit
of less than $1.
Full Retirement Age
Choosing when to retire is one of the most important decisions you will make in your lifetime. If you choose
to retire, and begin receiving social security benefits, when you reach your full retirement age, you will receive your full
benefit amount. If you were born in 1951, you will have reached your full retirement age this year (2017).
The following chart lists the full retirement age by year of birth:
If you were born on January 1st of any year you should refer to the previous year. If you were born on the
1st of the month, your benefit (and your full retirement age) is figured as if your birthday was in the previous month.
You may start receiving benefits as early as age 62. However, if you start your benefits early (before your
full retirement age shown above), your benefit amount is reduced. Your benefit is reduced about one-half of 1 percent
for each month you start your Social Security before your full retirement age. For example, if your full retirement
age is 66 and you sign up for Social Security when you are 62, you would only get 75 percent of your full benefit. Note
that the reduction will be greater in future years as the full retirement age increases.
Here's the percent of your full retirement benefit that you'll receive for various retirement years if your Full Retirement
Age (FRA) is 66 or 67:
SS Benefit Impact of
Your spouse will receive their social security benefit based on either the amount calculated from their earnings
or a percent of your social security benefit, whichever is greater. If based on your earnings, your spouse’s benefits
are determined by what your benefit would be at full retirement age. (As a maximum your spouse's benefit could
be 50% of your full retirement age benefit). If your spouse starts receiving benefits earlier than
your full retirement age (66 or 67 in this example), her/his benefits are the following percent of your
full retirement benefit:
Spousal Benefit Percentage
Several rules need to be considered in filing for spousal benefits:
- The primary worker must have filed for
benefits (but can suspend benefits to build delayed credits if over full retirement age and less than 70 years old).
spouse must be at least 62 for reduced benefit or 66 for full benefit.
- A spouse cannot delay receiving benefits past
their full retirement age and earn delayed retirement credits.
There are additional rules for divorcees which
can be found on the social security website.
If you choose to delay receiving benefits beyond your full retirement age, your benefit will be increased by a certain
percentage, depending on the year you were born. The increase will be added in automatically each month from the time
you reach full retirement age until you start taking benefits or reach age 70, whichever comes first. The following
table shows the percentage of your full retirement age (66 or 67) benefit that you'll receive based on the age you
begin receiving benefits:
Impact of Delaying Retirement
Determining When to Begin Receiving Benefits
As previously presented, you can begin receiving Social Security benefits anytime between the year you turn 62 and the
year you turn 70. There are many factors to consider in deciding when, within this 8-year period, to begin receiving
your Social Security benefits. Among them are:
- Your health and how long you expect to live.
dependent you are on your Social Security income.
- What you plan to do with your benefits if you begin receiving
- Whether you plan to work after retiring from your regular, primary job.
The table below shows the effect of receiving early (less than full retirement age) Social Security benefits. In
this example full retirement age is 66 and the maximum Social Security benefit a 62 year old worker would receive
today if he was already 66 is $2,687/month. (This example assumes that the $2,687 monthly SS payment will grow
by 2.0% a year to $2,908.50 by the time the worker reaches full retirement age.)
At age 62 the
worker will receive 75% of his full retirement age benefit ($2,015.25). The example calculates the cumulative affect
of receiving benefits early assuming 2.0% annual cost-of-living adjustments.
Full Retirement Benefit
Early Retirement Benefit
In this example the person who waited to receive social security benefits until they reached full retirement age (66)
will be ahead in cumulative benefits (by $6,505.11) at age 76. At age 80 this person will be receiving $11,513
a year extra and will have received a cumulative benefit of nearly $51,221 more.
Finally, you need to consider that the person who began receiving Social Security benefits at age 62 accumulated $99,672.85
before the full-retirement-age person received any money. These "early" dollars are worth more due to inflation.
If they are invested at 5% for these first four years, they would yield an additional $10,278 in interest.
Cost of Living Increases
The U.S. Social Security system is funded by investment in special U.S. Treasury Bonds.
increases, also known as cost-of-living adjustments or COLAs, have been in effect since 1975. The 1975-82 COLAs were
effective with June’s Social Security benefits payment. After 1982, COLAs have been effective with December’s
benefits payment (received in January).
COLAs received in 1975-2020 are shown below.
Automatic Cost-Of-Living Adjustments
July 1975 -- 8.0%
January 1999 -- 1.3%
July 1976 -- 6.4%
January 2000 -- 2.5%
July 1977 -- 5.9%
2001 -- 3.5%
January 2002 -- 2.6%
July 1979 -- 9.9%
January 2003 -- 1.4%
July 1980 -- 14.3%
January 2004 -- 2.1%
July 1981 -- 11.2%
2005 -- 2.7%
January 2006 -- 4.1%
January 1984 -- 3.5%
January 2007 -- 3.3%
January 1985 -- 3.5%
January 2008 -- 2.3%
January 1986 -- 3.1%
2009 -- 5.8%
January 2010 -- 0.0%
January 1988 -- 4.2%
January 2011 -- 0.0%
January 1989 -- 4.0%
January 2012 -- 3.6%
January 1990 -- 4.7%
2013 -- 1.7%
January 2014 -- 1.5%
January 1992 -- 3.7%
January 2015 -- 1.7%
January 1993 -- 3.0%
2016 -- 0.0%
January 2017 -- 0.3%
January 1995 -- 2.8%
January 2018 -- 2.0%
January 1996 -- 2.6%
January 2019 -- 2.8%
January 1997 -- 2.9%
2020 -- 1.6%
1998 -- 2.1%
Social Security Benefit Payments
As shown in the cumulative benefit columns of the above table, Social
Security provides very generous benefits to those who have
contributed (via payroll deductions) to the Old Age, Survivors and Disability Insurance
(OASDI) Trust Fund. If you are a recent retiree and live to age 80, you will receive over half
a million dollars in benefits. This will be over twice what you have contributed to the OASDI fund while
Social Security payments are made on Wednesdays based on the
day of the month on which you were born:
Social Security Deductions
Although you are not required to have federal taxes withheld from your Social Security benefits, you may find that easier
than paying quarterly estimated tax payments. To have federal taxes withheld, or to change your original withholding
request, you will need to:
- Complete IRS Form W-4V,
- Select the percentage (7, 10, 15, or 25 percent) of
your monthly benefit amount you want withheld, and
and return the form to your local Social Security office by mail or in person
You may obtain IRS Form W-4V from the IRS Website at http://www.irs.gov/pub/irs-pdf/fw4v.pdf or by calling the IRS toll-free number, 1-800-829-3676.
Social Security automatically deducts your monthly
cost for Medicare and your Medicare Prescription Drug Plan (if any). However, it is not authorized to withhold state
taxes, if any, from your benefit payment.
Can You Work and Get Benefits?
If you've already begun receiving Social Security retirement benefits, you can continue to work and still receive
benefits. Working while receiving benefits will only reduce benefits in the years worked and will not reduce future
benefits. Your earnings in (or after) the month you reach full retirement age will not reduce your Social Security benefits.
In fact, working beyond full retirement age can increase your benefits. However, your benefits will be reduced
if your earnings exceed certain limits for the months before you reach your full retirement age.
If you work but start receiving benefits before full retirement age, $1 in benefits will be deducted for each $2 in
earnings you have above the annual limit. In 2017, the limit is $16,920.
In the year you reach your full retirement age, your benefits will be reduced $1 for every $3 you earn over a different
annual limit ($44,880 in 2017) until the month you reach full retirement age. But, only the earnings before the month you
reach full retirement age are counted.
Once you reach full retirement age, you can keep working, and your Social Security
benefit will not be reduced no matter how much you earn.
Surviving Spouse Benefits
If you are getting benefits as a wife or husband based on your spouse’s work, when you report the death to Social
Security, they will change your payments to survivor’s benefits.
If you are getting benefits based on your own
work, call or visit Social Security, and they will check to see if you can get more money as a widow or widower. If
so, you will receive a combination of benefits that equals the higher amount. You will need to complete an application
to switch to survivors benefits, and will need to show your spouse’s death certificate.
The benefit amount is based on the earnings of the person who died. The more the worker paid into Social Security, the
greater your benefits will be.
Social Security uses the deceased worker's basic benefit amount and calculates what percentage
survivors are entitled to. The percentage depends on the survivors' ages and relationship to the worker. If the person who
died was receiving reduced benefits, your survivor's benefit is based on that amount. A widow or widower, at full retirement
age or older, generally receives 100 percent of the worker's basic benefit amount.