6 Game-Changing Things You Need to Know about Social Security

(DailyDig.com) – Social security is the United States’ most basic source of retirement income and most people who work in the US pay into the program. Even though nearly 65 million Americans are receiving social security benefits, a recent survey shows that more than half of the current beneficiaries still don’t understand how the program works.

A good understanding of the social security program will allow individuals to better plan for retirement by getting maximum benefits. Here are six game-changing things you need to know about social security:

1. Social Security Offers More Than Just Retirement Benefits to Retired Workers

In addition to being the nation’s primary source of retirement income, the social security program offers other benefits like life insurance, survivor’s benefits, and disability insurance. While retirees make up most of the beneficiaries, about 20% of the benefits paid by social security are services other than retirement benefits.

Survivor’s benefits help spouses and children of the deceased to receive income upon their kin’s passing. If you and your partner are both social security recipients, you will not receive both the survivor’s benefits and your retirement benefits upon their demise. However, you get to keep the bigger of the two benefits, irrespective of who dies first. Also, your parents may receive survivor’s benefits based on your work record if they relied on you for more than half of their financial support.

Disability benefits are one of the most common benefits provided by social security after retirement income. If one suffers a mental or physical disability that renders them unable to work, they are eligible for disability benefits.

2. Retirement Eligibility Does Not Mean Full Retirement

While applying for social security benefits after 65 years will enable you to get the full benefits, you can claim your benefits before your full retirement age. Ideally, one’s personal situation is more important than their age, and the SSA allows members to apply for social security as early as 62 years on a reduced benefit basis.

The social security administration does not prohibit individuals from working and earning extra income if they claim their benefits early. However, the SSA will reduce the benefits by $1 for every $2 earned above the annual limit until one reaches full retirement age. In 2021, the SSA set the limit at $18,960.

The longer you wait to claim your social security benefits, the more you will earn. For instance, at 65 years, you will get 100% of your benefits, but if you wait until you are 70 years old to claim your social security benefits, you will receive 132%.

3. Benefits Are Based On Your Highest 35 Years Of Earnings

The amount of one’s retirement benefits is determined by various factors like how much one earned as a worker and when one decided to start drawing the benefits. Work credits determine eligibility for retirement benefits, while the average of your highest 35 years of earnings approximates your monthly benefit amount. Therefore, spending a considerable number of years on a lower salary will not negatively influence social security benefits.

According to AARP, the average monthly retirement income was $1,630, but the maximum is more than $3,300 for those who filed for retirement benefits in 2022. The social security administration offers yearly statements of updated estimates given a worker’s earning records.

4. Social Security Benefits Are Protected Against Inflation

The monthly benefits differ yearly because social security benefits are adjusted according to inflation rates to respond to changes in the cost of living. Since 1975, the SSA has provided an annual cost-of-living adjustment (COLA) every year to cushion beneficiaries against the rising cost of living. From 2023 social security beneficiaries will experience a significant increase in their monthly earnings since 1981 due to an 8.7 percent cost-of-living adjustment.

5. Your Monthly Benefits Will Not Go Up Automatically If You Claim Early


The main advantage of claiming social security benefits earlier is that one is able to collect the benefits for a longer period. However, if you claim your benefits before your full retirement age, and you are still working, part of your monthly benefits will be withheld. According to the Nationwide Retirement Institute survey, nearly half of the retirees believe their benefits will automatically go up when they reach the full retirement age if they start drawing benefits early. Contrary to this popular belief, the SSA provides that your monthly income is reduced permanently by a small percentage every month before you reach full retirement age.

6. Claiming Ex-Spousal Benefits

The SSA allows an ex-spouse to receive benefits on your record if your marriage lasted at least ten years, and you have been divorced for a minimum of two years. To qualify for the ex-spousal benefits, you must be at least 62 years old, not have remarried, and your ex-spouse is entitled to collect social security retirement or other benefits from the program.

For ex-spousal benefits, one can only collect 50% of the total monthly payment their former partner is entitled to at full retirement age. However, if you claim ex-spousal benefits before the retirement age, the amount will be reduced to 32.5 percent of your ex’s full benefit. You are also entitled to 100% of the survivor’s benefits if your ex-partner dies.

It is worth noting that receiving ex-spousal benefits on a former partner’s record does not decrease what they can receive from social security. Also, if you are a social security beneficiary on your earning record, the SSA will not pay you both ex-spousal and retirement benefits. One is only entitled to the highest amount between the two benefits and nothing more.

The Bottom Line

Social security has been a crucial program for millions of American retirees for more than eight decades. The program offers Medicare, disability, and retirement benefits which are essential to most working Americans. Through this program, most working Americans and their dependents are able to fund their lifestyles both during their working years and in retirement.

Despite these numerous benefits, many Americans across all generations need more social security education to correct many misconceptions affecting people’s participation in the program.

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