Social Security Insurance Benefits Explained

By Leslie McClintock , last updated October 28, 2011

The Social Security Administration administers OASDI, or Old-Age, Survivors, and Disability Insurance. The Social Security pension program is the first, and by far the largest, outlay in terms of the number of recipients and the overall dollar amount disbursed.

Retirement Income

Social Security provides a basic, subsistence level income to seniors who meet the qualifications. The monthly benefit amount you receive depends on the amount you have paid in over your working years, through payroll taxes. The more you paid in, the more you will receive. However, the system is somewhat redistributive. That is, lower-income workers will receive a greater percentage of their income during their working years than those at higher income levels. As of 2011, the maximum allowable Social Security income benefit you could earn if you retired at age 66 is $2,366.

Qualifying for Benefits

Not just anyone can qualify for Social Security income benefits. If you were born after 1929, in order to receive benefits you or your spouse must have recorded at least 40 quarters of qualified employment. If you were a nonworking spouse, you can qualify for benefits based on your spouse’s credits earned during your marriage. You must have been married for at least ten years, however.

Retirement Age

You can begin taking retirement benefits as soon as you turn age 62. However, the sooner you take them, the lower your monthly benefit will be. If you are in good health, it may benefit you to wait as long as you can before you start taking Social Security. For those born after 1960, full retirement age is age 67. However, if you are in poor health, it may make sense to take your benefits as soon as you qualify for them.

If you are a widow or widower, you can begin taking Social Security when you turn 60, or, if you are disabled, you can take them as early as age 50.

Taxation of Social Security Benefits

If you have any significant income from taxable sources in retirement, you may trigger an income tax on up to half of your Social Security Benefits. This will partially offset any wages you earn from working. To learn more about Social Security taxes, see IRS Publication 915, Social Security and Railroad Retirement Benefits.

Applying for Benefits

To start benefits, or to see if you qualify and what your estimated Social Security benefit will be, call 1-800-772-1213.

SSI Benefits

SSI, or Supplemental Security Income, is a special program that provides basic subsistence for those who have become permanently and completely disabled and unable to work. SSI has relatively stringent requirements for qualification, and it can take months to finally qualify. However, if you or a loved one is totally disabled, it may be worth it to apply for SSI. The benefit is generally just a few hundred dollars per month. But being on SSI may also help qualify you for Medicaid benefits as well.

Survivorship Benefits

The Social Security Administration provides assistance to your unmarried minor children in the event of your death in the form of 75 percent of your Social Security benefits. Widows can also qualify based on the ages described above.

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