Social Security is a program we all know about, but few are likely aware of how it actually works. Fortunately, there are a number of Social Security resources available to help us better understand the details and what we can expect once we start receiving benefits.
Browse through the resources below and then take our Social Security quiz to test your knowledge!
What is Social Security?
Social Security is a federal program that provides financial benefits to those who are eligible. It is funded through a payroll tax levied on both employers and employees.
The taxes you pay now fund Social Security benefits for those who are currently retired. Once you choose to receive Social Security, your benefits will be funded by the taxes of those still in the workforce.
Social Security is meant to replace some, but not all, of your pre-retirement income. According to the federal government Social Security benefits account for roughly 30% of senior citizens’ income.
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Social Security is not an individual investment program. That is, the amount of taxes you pay into the program is not necessarily the amount you’ll receive. There are several factors that affect your benefit total, including how much you earned during your career and at what age you retire.
For reference, the average monthly Social Security benefit as of February 2023 was $1,693.88.
A great resource you can use to get an estimate of your monthly benefit is the Social Security Administration’s benefit calculator.
What is your Social Security retirement age?
Figuring out your full retirement age, when you become eligible for your full benefit, can be a little bit confusing. It wasn’t always this way. For many years, the full retirement age was 65. But people began living longer lives than they did when Social Security was enacted in the 1930s. So in 1983, Congress passed a new law that allowed for a gradual increase in age for collecting the full benefit.
The full retirement age increases by a few months for every birth year after 1938 until 1960. For those born in 1960 or later, the full retirement age is 67.
To find your full retirement age, use the Social Security Administration’s retirement calculator.
How can I apply for Social Security?
Applying for Social Security benefits can most easily be done online. Just visit the Social Security Administration’s application page.
Make sure you have the necessary information and paperwork available, including, but not limited to, your birth certificate, tax forms, military papers, and bank information.
Take our Social Security quiz
Get more financial knowledge.
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Quiz has 2 errors. First, a widow can collect social security at age 60, not 62. Second, there is a COL adjustment EVERY year; the amount may be positive, negative or zero, but it is there. You need to be more careful with the wording in setting up your questions.