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What Is Social Security Benefits?

What Is Social Security Benefits?

When many people think of Social Security benefits, they only consider the most commonly received benefit of supplemental income during retirement years. However, you should be aware that there are other benefits that you or your family members may be entitled to. The official name of the Social Security system is the Old Age, Survivors and Disability Insurance Program (OASDI), and as the name implies, the Social Security Administration or SSA pays out benefits for more than just retirement.

Disability Benefits

Even if you haven’t reached retirement age yet, you may still qualify for Social Security disability benefits. If you meet the SSA’s requirements concerning income, work history, and permanent medical disability status, you are likely eligible to begin receiving monthly Social Security benefits. These payouts should be about the same as what you would receive if you waited until retirement age to start drawing on your benefits.

Dependents Benefits

If you are receiving either retirement or disability benefits, your family members may qualify for benefits as well. Even if your spouse, minor-aged children, or disabled children do not rely solely on your income, they can still claim dependents benefits. The amount that they will receive is calculated based on your lifetime earnings, as reported through your Social Security number (SSN). Same-sex spouses qualify for benefits as well, as long as your marriage is legally recognized in the state you reside in.

Retirement Benefits

To qualify for retirement benefits, you obviously need to have paid into Social Security. You also typically need to have worked non-government jobs for a total of at least 10 years. This entitles you to retire at 62, or any age after, and begin receiving retirement benefits. However, if you wait until you are between the ages of 65 and 67 to start drawing on Social Security, you will qualify for more benefits, as you will have reached the full retirement age. All the way up to age 70, the longer you wait to start receiving benefits, the higher your payouts will be. However, in some cases, it may still make more sense to begin drawing early, despite the decreased payout.

Survivors Benefits

If you qualify for disability or retirement benefits and pass away, your surviving spouse and any disabled children or children under the age of 18 may qualify for survivors benefits. Like dependents benefits, their payout will be determined based on your total lifetime income, and same-sex spouses only qualify if same-sex marriages are officially recognized in your state.

With the exception of disability benefits, your Social Security benefits may be taxable, depending on your income. Low-income individuals and couples may qualify for tax-free benefits, as one of the goals of Social Security are to assist in keeping retirement-aged people out of poverty. Your benefits are determined by your lifetime income, as reported to the IRS, so you should make sure that your earning are correctly reported and that you are paying the right amount of Social Security taxes. Any unreported and untaxed, or in other words, illegal, income is not taken into account when your benefits are calculated.

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