Social Security’s various benefits are meant to address different situations, but they share a common goal: to help individuals and their families meet the fundamental needs of survival. This chapter explains what that means for you.
Bringing Security to Old Age: Retirement Benefits
Retirement benefits were created to help older Americans live in dignity and independence after a lifetime of work. To qualify for these benefits, you have to meet certain earnings requirements. The good news is that these requirements are in relatively easy reach for most healthy people who’ve worked for a number of years. However, interruptions in earnings – such as for child rearing, caregiving, or long-term unemployment – may leave you with a smaller benefit.
In this section, I fill you in on who qualifies for Social Security retirement benefits and when, how you qualify (through work credits), why you may not qualify, and how much you can expect to get.
Retirees may qualify for benefits starting at age 62. Technically, you become eligible on the first full month after your 62nd birthday. Say you turn 62 on July 19. That means you become eligible for benefits on August 1. The August payment arrives in September, however, because Social Security pays with a one-month delay.
If you qualify for retirement benefits, Social Security may also provide benefits to other family members under certain conditions without reducing the benefits that go to you. Eligible dependents may include
❯❯ A spouse age 62 or older: When you begin collecting retirement benefits, a spouse who has reached 62 may also qualify for a benefit.
❯❯ A spouse of any age who cares for your dependent child: Spouses may get benefits based on your work record if they’re caring for a child who is dependent on you and younger than 16 or disabled.
The SSA tends to follow state guidelines in terms of recognizing common-law marriages, although the rules leave some wiggle room for interpretation. In addition, as of this writing, the SSA has begun to give spousal benefits to partners in same-sex unions who, at the time of their application, live in states that recognize same-sex marriage as legal and who were married in states that deemed the union to be valid.
Note: Social Security now recognizes same-sex marriages if the initial claim for benefits was filed on or after June 26, 2015, or pending a final determination at that time – regardless of the state where the marriage occurred.
❯❯ Children: In certain cases, your children can get benefits if you’re collecting retirement or disability benefits. To qualify, children must fall into one of the following categories:
● Younger than 18 and unmarried
● Full-time students up to age 19 who haven’t yet completed high school and are unmarried
● Age 18 or older and severely disabled with a disability that began before age 22
The SSA’s definitions of parent and child are generally inclusive but sometimes a cause of dispute. It recognizes that you may have an adopted child or a stepchild. (See Chapter 10 for some of the technicalities.)
❯❯ Grandchildren: If the grandchild depends on you financially and the grandchild’s parents provide no support (for example, because of death or disability), the grandchild may qualify for Social Security benefits on your work record.
❯❯ A former spouse: Your ex may get benefits if the following apply:
● You were married for at least ten years.
● You’ve been divorced for at least two years.
● He or she is 62 or older, not remarried, and not eligible for a bigger benefit on anyone else’s work record. (If a former spouse remarries before turning 60 but that marriage ends, the former spouse may again qualify for benefits on the record of the original partner.)
Note: If your former spouse collects Social Security benefits based on your work record, this doesn’t reduce the amount of benefits that go to you or your current spouse. The same is true even if you have more than one ex-spouse who qualifies under the rules.
Under the rules, you get credits toward eligibility by earning certain amounts of money. Most workers pick up the necessary credits without even thinking about it. Generally, 40 credits – which you can pick up in ten years of covered employment – does the trick. By covered employment, I mean a job in which you and your employer pay Social Security taxes. (If you’re in business for yourself, you have to pay both the employer and employee shares.) These days, almost all jobs are covered. (For information on which jobs aren’t covered, see the nearby sidebar “Which jobs aren’t covered.”)
In 2017, Social Security awarded you one credit for every $1,300 in earnings, and you could get up to a maximum of four credits per year. (The dollar amount typically rises each year to reflect growth in wages.) For example, say you earned $5,200, in 2017. That means you earned a total of four credits (
WHICH JOBS AREN’T COVERED
Most work is covered by Social Security today, but that wasn’t always the case. When Social Security was launched in the 1930s, roughly half the economy wasn’t part of it. Largely excluded were fields associated with African Americans, women, and low pay (including agriculture, domestic service, and many jobs in education and social work). Critics said the exclusions reflected bias in favor of white, male breadwinners. (The self-employed, professionals [such as doctors and lawyers], and most jobs in government and the nonprofit sector were also initially left out.) Today, 96 percent of American jobs are covered by Social Security. Categories of workers who may still not be covered include the following:
● Most federal employees hired before 1984
● Railroad workers with more than ten years of experience or who have worked at least five years with the railroads since 1995
● Some state and local government employees
If you fall into one of these categories, it is possible you will get no Social Security benefits or reduced amounts. (Many people who spend part of their working lives in uncovered employment end up with reduced benefits because of the Windfall Elimination provision and Government Pension Offset provision, which I explain later in this chapter.)
Although you have to tote up 40 credits to qualify for benefits, that doesn’t determine the size of the payment that goes to you or your dependents. The SSA bases the amount of your benefit on your lifetime earnings – specifically (for workers born after 1928), the 35 highest-paid years in which you paid Social Security taxes. Your 35 highest years don’t have to be consecutive, and they don’t have to be the most recent 35 years, but 35 is an important number. If you have fewer than 35 years of earnings, the SSA adds zeros to reach 35. The impact of those zeros varies