how social security works
social security is an insurance program workers pay into the program typically through payroll withholding from their paychecks self employed workers pay social security taxes when they file their federal tax returns 23workers can earn up to four credits each year one credit is granted up to 6 920 for every 1 730 earned in 2024 or up to four credits achieved 45the money goes into two social security trust funds the old age and survivors insurance trust fund oasi for retirees and the disability insurance trust fund di for disability beneficiaries these two funds are used to pay benefits to people who are currently eligible for them the money that s not spent remains in the trust funds 6a board of trustees oversees the financial operations of the two social security trust funds four of the six members are the secretaries of the departments of treasury labor and health and human services and the commissioner of social security the remaining two members are public representatives appointed by the president and confirmed by the senate 7medicare is the federal health insurance program for americans who are age 65 and older and some people who are receiving medicare benefits due to disability it s also supported through payroll withholding this money goes into a third trust fund that s managed by the centers for medicare medicaid services cms 89social security provides benefits to retirees their survivors and workers who become disabled 10spouses and ex spouses may be eligible for benefits based on the earnings records of their partners or former partners 11who can get retirement benefits workers who have paid into the social security system for at least 10 years become eligible for early retirement benefits at age 62 5 waiting until your full retirement age fra between ages 66 and 67 depending on the year you were born results in higher monthly benefits 12 you ll receive even more if you delay collecting retirement benefits until age 70 but benefits don t continue to increase if you wait any longer than that 13spouses can also claim benefits based on either their own earnings records or their spouses records a divorced spouse who isn t currently married can receive benefits based on an ex spouse s earnings record if the marriage lasted at least 10 years children of retirees can also receive benefits until they turn 18 or longer if the child is disabled or a student the cutoff is age 16 if you re caring for a child who isn t your own 11the amount of your social security retirement benefit depends on your average indexed monthly earnings aime during your 35 highest earning years amounts will differ significantly among retirees 14 the average monthly benefit was 1 866 or 22 392 annually as of april 2024 1your annual amount increases by 8 for each year that you delay collecting benefits if your retirement age is 66 to 67 this starts with the year after you reach your full retirement age and it stops at age 70 those who begin taking social security when they reach the fra of 66 would receive 100 of their primary insurance amount pia they d receive 108 of their pia if they delayed taking benefits until the following year they would receive 132 by delaying until age 70 15the benefit varies depending upon when you begin taking it the maximum monthly benefit for people aged 62 is 2 710 32 350 annually in 2024 it s 4 873 58 476 annually for those who have reached age 70 16a cost of living adjustment is made to social security benefits annually to keep pace with inflation it was 8 7 for 2023 and it s 3 2 for 2024 17workers can get a projection of their benefits at different retirement ages by using a calculator that s provided on the social security administration website social security provides a special minimum benefit for long term low earners that was first enacted in 1972 you must have income for at least 11 years to qualify the special monthly minimum benefit was 50 90 610 80 annually for december 2023 it increases for each additional year of low income work topping out at 1 066 50 or 12 798 annually for people who have worked for 30 years 1819who can get disability benefits people who can t work due to a physical or mental disability that s expected to last for a year or more or result in death may be eligible for social security disability benefits ssdi you generally have to meet certain earnings tests to qualify 20 family members of disabled workers can also be eligible 21a little over 8 39 million americans were collecting ssdi benefits as of april 2024 the average monthly benefit was 1 395 17 16 742 04 annually the monthly average for disabled workers was 1 537 57 18 450 84 annually spouses of disabled workers received an average of 418 84 monthly 5 026 08 annually and children of disabled workers received 494 47 monthly 5 933 64 annually 1who can get survivor benefits the spouse and children of a deceased worker may be eligible for survivor benefits based on the worker s earnings record this includes surviving spouses who are age 60 or older or age 50 or older and disabled a surviving spouse who is caring for a child who is younger than 16 or disabled may be eligible for these benefits as well children must generally be younger than 18 or disabled to receive benefits a stepchild a grandchild a step grandchild or an adopted child may also qualify for benefits under certain circumstances parents who are age 62 or older and who were dependent upon a deceased worker for at least half their income may also be eligible to collect benefits surviving spouses and minor children are also entitled to a one time payment of 255 after an eligible worker s death under some circumstances 22approximately 5 85 million people were collecting survivor benefits as of april 2024 the average monthly benefit was 1 503 89 or 18 046 68 annually survivor benefits are broken down into five categories average payments in april 2024 were the history of social securitythe social security system came into existence in the u s on aug 14 1935 when president franklin d roosevelt signed the social security act into law the first monthly benefits checks became payable on jan 1 1940 ida m fuller a retired legal secretary in vermont was the first person to collect one her check was for 22 54 23the system and its rules have evolved since 1935 social security was one of the largest government programs in the world as of 2023 paying out hundreds of billions of dollars each year 24the number of people who paid social security taxes in 2023 24the future of social securityconcerns have been raised about the aging of the u s population and the viability of a system in which fewer active workers will support a greater number of retirees and increases in the cost of living the social security board of trustees forecast in its 2024 report that reserves in the retirement fund oasi trust fund will become depleted in 2033 this was unchanged from the previous year s projection ongoing tax revenue will be enough to pay only 79 of scheduled benefits after that time the trustees also projected that reserves of the hospital insurance hi trust fund that finances medicare part a will be depleted in 2036 this is five years later than projected in 2023 the program income will be able to cover 89 of scheduled benefits after 2036 25congress will have to find ways to fill the gap if these predictions hold this might mean higher taxes on workers lower benefits higher age requirements for retirees or some combination of these elements 