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Social Security

What is Social Security?

Social Security is a federal program that provides income and other benefits to eligible individuals and families. It was established in 1935 as a part of the New Deal legislation signed by President Franklin D. Roosevelt.

Who is eligible for Social Security benefits?

Most workers who have paid into the Social Security system are eligible for benefits. Eligibility is based on the number of credits earned through working and paying Social Security taxes. To receive benefits, you must have earned a certain number of credits based on your age and the year you were born.

When can I start receiving Social Security benefits?

You can start receiving Social Security benefits as early as age 62. However, if you start receiving benefits before your full retirement age (FRA), your monthly benefit amount will be reduced. Your FRA varies based on your birth year, but it ranges from 66 to 67 years old.

Can I receive Social Security benefits if I am still working?

Yes, you can receive Social Security benefits while still working, but if you haven't reached your FRA, your benefit amount may be reduced if you earn more than a certain amount. Once you reach your FRA, there is no earnings limit, and you can receive your full benefit amount while working.

How is my Social Security benefit amount calculated?

Your Social Security benefit amount is based on your lifetime earnings. The Social Security Administration calculates your average indexed monthly earnings (AIME) based on your highest-earning years, and then applies a formula to calculate your primary insurance amount (PIA). Your PIA is the amount you will receive at your FRA.

What happens if I delay receiving Social Security benefits?

If you delay receiving Social Security benefits beyond your FRA, your benefit amount will be increased by a certain percentage (usually around 8%) for each year you delay. This means that if you can afford to delay receiving benefits, your monthly benefit amount will be higher once you start receiving benefits.

Can my spouse and children receive Social Security benefits based on my work history?

Yes, your spouse and children may be eligible for benefits based on your work history. The amount of benefits they receive depends on several factors, including their age and relationship to you.

Working with a financial coach or advisor can be helpful when navigating the complex rules and decisions surrounding Social Security. A financial coach can help you understand your eligibility, calculate your benefit amount, and make informed decisions about when to start receiving benefits based on your individual circumstances and retirement goals.