What is social security?
Answers to that question can fill volumes of books, but we’re here to distill the most important information on social security so you can know its history, benefits, and qualifications.
Social Security is part of a vast federal law called the Social Security Act that was created in 1935 to help provide retirement income for certain workers that are United States citizens. It’s in essence a public pension program that gives money to people after they’ve retired to help cover living expenses when they’re no longer making income from employment.
In this article, we’ll answer your questions on what is social security, its history, who it’s for, why it exists, how you can access it, and some resources that can help you on the journey.
As we mentioned above, Social Security is a federal program that provides retirement income to U.S. citizens that have retired from the workforce. Social Security offers financial protections to seniors that are no longer working but still need to cover living expenses like rent, medical bills, insurance, vehicle upkeep, and more.
Social Security is a popular program in the United States, in part because it is so vital for seniors. Many retirees, veterans, and disabled people depend on Social Security as their primary means of income after they’re no longer in the workforce.
The history of Social Security
The Social Security Act was established in 1935 and signed into law by President Franklin D. Roosevelt.
The act created the Social Security System and was a key component of President Roosevelt’s “New Deal,” which was a series of programs — including public works projects, regulations, and finance reforms — that helped revitalize the U.S. economy after the Great Depression.
While there have been many changes in the years following, the act created what we now know as Social Security, as well as unemployment insurance, old-age assistance, aid to dependent children, and grants to the states to provide various forms of medical care, according to the Social Security Administration.
The program also created the ubiquitous Social Security number that all American citizens now receive upon their birth and that eligible U.S. residents can apply for. The number was created with the intention of tracking the earning history of U.S. workers to determine their Social Security entitlements, however, it is now commonly used by many government organizations and businesses to establish one’s identity.
For a more robust history of the Social Security Act, how it was established, its programs, and changes over the years, check out this helpful article from the Social Security Administration.
Why Social Security exists
The Social Security program we now know was established to offer economic stability to U.S. workers so they can create a plan for their retirement. The program also was created to provide social insurance to U.S. workers that may have become disabled or to family members whose primary income earners died.
Upon signing the Social Security Act President Roosevelt said: “We can never insure one hundred percent of the population against one hundred percent of the hazards and vicissitudes of life, but we have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age.”
So what is Social Security? In summary, the program exists to help protect people from the devastating effects of losing a job, the inability to work in old age, after becoming disabled or losing a breadwinning family member.
In addition to providing retirement income to millions of Americans, Social Security serves as an important life insurance program.
The Center on Budget and Policy Priorities reports that more than 64 million people — or more than 1 in every 6 U.S. residents — collected some Social Security benefits in June 2020. U.S. citizens older than 65 comprise about 80 percent of Social Security recipients, while about 20 percent of beneficiaries received Social Security Disability Insurance or were young survivors of deceased workers.
Qualifying for Social Security
When you are eligible to receive full Social Security benefits depends on when you were born.
You can receive full benefits as young as 65 years old or as late as 67 years old. Here’s a quick breakdown of the ages and years for eligibility from Investopedia:
- For those born before 1938, your full retirement age is 65.
- For those born between 1938 and 1942, the age ranges from 65 and two months to 65 and 10 months.
- For those born between 1943 and 1954, it’s age 66.
- For those born between 1955 and 1960, it ranges from 66 and two months to 66 and 10 months.
- If you were born in 1960 or later, it’s 67.
You can receive some of your Social Security benefits when you reach age 62, however, your monthly benefits will be permanently reduced for the rest of your life. As an example, if you were to take Social Security benefits at 62 and your full retirement age is 66, your benefits will be permanently reduced by 25 percent, according to Investopedia.
Paying into Social Security
In 2021, U.S. workers paid 6.2 percent of their wages into Social Security up to about $143,000 in wages. Employers match that percentage contribution to the program. Self-employed workers must pay 12.4 percent into the program.
Calculating Social Security benefits
Social Security reimburses a percentage of your pre-retirement income based on your earnings throughout your life.
The portion of your wages that Social Security replaces is based on your highest 35 years of earnings, and it depends on much you earned and when you start your Social Security benefits, according to the Social Security Administration.
While your work and pay taxes toward Social Security, you’ll earn credits toward your Social Security later in life. If you were born in 1929 or later, you need 40 credits — or about 10 years of work — to receive Social Security benefits. In 2021, you earn one Social Security or Medicare credit for every $1,470 in earnings each year. You must earn $5,880 to get the maximum four Social Security credits per year, according to the Social Security Administration.
If you delay benefits beyond your full retirement age, the amount of your retirement benefit will increase until age 70. After you hit 70, there is no incentive to delay retirement or claiming your Social Security benefits.
The Social Security Administration has a helpful guide on how credits are earned, which you can read here as well as its explainer of what is Social Security.
How to access Social Security
If you’re of full retirement age and interested in receiving Social Security benefits, the best resource to learn about your options, apply for the program, and manage your benefits is the Social Security Administration’s retirement page.
Before you apply, take a moment to learn what is Social Security is, and review some of the basics of Social Security. Through this article from the Social Security Administration, you’ll learn more about qualifications, how your earnings will impact benefits, what you should consider, and how to assess your family situation.
Apply for Social Security
You can easily apply for Social Security benefits online via the Social Security Administration’s digital application. If you don’t have a computer, you can also apply by phone or at a local Social Security office.
You can start your application here. Once you’ve applied, you’ll create an account with “my Social Security,” which is a program that will help you manage your benefits and find resources.
Again, make sure you have a solid understanding of your qualifications and financial situation before you apply as you might be limiting your benefits.
Resources for Social Security help
To find help or learn more about Social Security, find your area’s social security office. You can locate your area’s office with this tool from the Social Security Administration. You can also review and search through the organization’s Frequently Asked Questions page here.
The Association of Mature American Citizens Foundation also counsels seniors that are considering applying for Social Security benefits. You can call the organization at 888-750-2622 or send an email to SSAdvisor@amacfoundation.org
Social Security is a popular and important program to care for seniors in the United States. While it can seem complicated, there are many resources available to you that can help you make sense of Social Security and how to access it.
We hope through this article you learned what is social security, its history, who it’s for, why it exists, how you can access it, and more about the resources that can help you.