social security: how retirement benefits work

Social security is the foundation of economic security for millions of Americans. Over 150 million Americans pay social security taxes and approximately 60 million people today receive some form of benefits: retirement, disability, survivor, and family benefits (Source: Fast Facts & Figures About Social Security, 2016). Although most people receiving Social Security are retired, eligibility for benefits can be at any age, depending on your circumstances.

Social Security eligibility
As you work and pay taxes, you earn credits that enable you to qualify for Social Security benefits. You can earn up to 4 credits per year, depending on your income. In 2017, the value of one work credit is based on $1,300 of income. Most people must build up 40 credits (based on a maximum of 4 credits a year) to be eligible for Social Security retirement benefits; fewer credits are needed to be eligible for disability benefits (not covered in this article) or for family members to be eligible for survivor benefits.

Your retirement benefits
Your Social Security retirement benefit is based on your average earnings over your working career. Your age at the time you start receiving benefits also affects your benefit amount. If you were born between 1943 and 1954, your full retirement age (FRA) is 66. FRA increases in two-month increments thereafter, until it reaches age 67 for anyone born in 1960 or later. However, you don’t have to wait until your FRA to begin receiving benefits: you can begin receiving early retirement benefits at age 62 regardless of your FRA, but it will be a permanently reduced benefit.

If you delay receiving retirement benefits past your FRA, the Social Security benefit you eventually receive will be as much as 8 percent higher for each year you delay benefits beyond full retirement age. The benefit no longer increases once you reach the age of 70.

Family benefits
If you begin receiving retirement or disability benefits, your family members might also be eligible to receive benefits based on your earnings record and certain eligibility requirements.

Survivor benefits
When you die, your family members may qualify for survivor benefits based on your earnings record.

Applying for Social Security benefits
The SSA recommends applying for benefits online at the SSA website, but you can also apply by calling 800-772-1213 or by making an appointment at your local SSA office. The SSA suggests that you apply for benefits three months before you want your benefits to start. If you’re applying for disability or survivor benefits, apply as soon as you are eligible.

Depending on the type of Social Security benefits you are applying for, you will be asked to furnish certain records, such as a birth certificate, W-2 forms, and verification of your Social Security number and citizenship. The documents must be original or certified copies. If any of your family members are applying for benefits, they will be expected to submit similar documentation.

You can find out more about your future Social Security benefits by signing up for a my Social Security account at the Social Security website If you’re not registered for an online account and are not yet receiving benefits, you’ll receive a statement in the mail every five years, from age 25 to age 60, and then annually thereafter. You can also use the Retirement Estimator calculator on the Social Security website, as well as other benefit calculators that can help you estimate disability and survivor benefits.

Source for facts and figures obtained from

Latest posts by Adam Kalender (see all)