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Social Security

Updated: March 1, 2024

Social Security is a federal benefits program that provides supplemental income for:

  • Qualified retired adults and their spouses;
  • Surviving spouses or qualifying ex-spouse, minor and/or disabled children, and dependent parents;
  • Workers with certain disabilities.

The official name Old Age, Survivors, Disability Insurance Program is rarely used.

Social Security is funded by social security taxes in the form of payroll taxes as laid out in the Federal Insurance Contributions Act and the Self Employed Contributions Act (for self-employed individuals). The current payroll tax rate for Social Security is 6.2% for the employer and 6.2% for the employee (12.4% if you’re self-employed). The maximum amount of earned income that is subject to social security taxes is $168,600 in 2024. Earnings above that will have 6.2% less taxes removed.

The taxes are collected by the Internal Revenue Service and put into the Social Security Trust Fund. The money is then invested and the interest is used to pay out benefits to eligible retired seniors and their spouses. This trust is made up of two separate funds:

United States (US) citizens/nationals living in the US, citizens in the military, and qualified aliens can qualify for two additional programs available from the Social Security Administration.

  • The Supplemental Security Income (SSI) program benefits older adults and adults of any age with blindness or a qualifying total disability with very limited income and resources.
  • The Social Security Disability Insurance (SSDI) program benefits individuals with disabilities who have a qualifying work history, either through their own employment or a family member.
  • It is possible to qualify for both programs.
  • If you receive SSI and/or SSDI you may be able to work without it impacting your benefits if you earn less than $1,550 ($2,590 if you are blind) a month in 2024. You can find all the details in Working While Disabled: How We Can Help (PDF).

Social Security was collected by over 71 million Americans in 2023 and Social Security programs help keep 16,500,000 seniors and 900,000 children out of poverty.

Social Security Benefits

Social Security is an earned benefit for retirees who have paid enough social security taxes to qualify them and their spouses. The Social Security Administration keeps track of your earnings throughout your working career to determine your eventual eligibility and benefits.

Currently, you qualify for full Social Security if you have accumulated 40 quarters or “credits” from covered wages.

  • Individual credits are awarded for each interval amount accumulated, an amount that is determined by the year in which it was earned, and adjusted annually to keep up with inflation. For example: in 2023 one credit is awarded for each $1,640 earned and for 2024 the interval will be $1,730.
  • The maximum number of credits you can earn in a year is four, meaning you must have worked for at least ten years before qualifying for Social Security. 

Here’s how your monthly benefit is calculated.

Full retirement age is currently 66 years and 6 months old. This will slowly increase and reach a maximum of 67 years old in 2027 — USA.gov. Retirement Age Calculator.

The benefits currently increase with the cost of living (8.7 % for 2023 and 3.2% for 2024) and will continue the rest of your life.

  • In 2024, the maximum monthly Social Security payment for workers at full retirement age is $3,822 ($45,864 for the year). 
    • If you begin collection at 62 years old (minimum age allowed) the maximum is $2,710 ($32,520 for the year).
    • It will increase by 8% each year until 70 years old.
    • If you begin collection at 70 years old the maximum is $4,555 ($54,660 for the year).
  • There is an alternate minimum benefit program for long-term low earners — $1,066.50/month ($12,798 annually) for 2024 — who have had income for at least 11 years.
    • In 2024 the monthly benefit is $50.90 ($610.80 annually).
    • It increases for each additional year of low-income work up to 30 years.
    • The maximum is $1,066.50 ($12,798) for people who have worked for 30 years.
    • Like other benefits, the amounts vary with the age at which benefits are begun — lowest at 62 years old and highest at 67 years old (not 70 years old as with higher earners).
  • It may be possible to do a breakeven calculation to determine what the best age to begin benefits is based on your life expectancy.
    • For example, if your average indexed monthly earnings indicate your benefit could be $1,500 a month if you start at age 62 vs $2,000 a month at age 66, you break even at about 77 years old, after which the higher monthly benefits that you’d get as a result of waiting will begin to pay off; or
    • If your family history suggests that you may live much longer, you may want to consider calculating the long-term benefit of waiting until you are 70 years old before collecting your benefit.

If you are not yet at your full retirement age and you work while collecting Social Security, even part-time, your benefits will be decreased until the month when you become fully eligible or stop working.

  • In 2024 the reduction is $1 for every $2 of earned income over $22,320/year; one month before the month you reach full retirement age the reduction for any income over $59,250 decreases to $1 for every $3.
  • The withheld benefits will be credited to your record and increase your benefit when you do reach your full retirement age. 
  • Social Security benefits are not reduced by income from interest, annuities, capital gains, investment earnings, non-government pensions, and other government benefits.
  • Unless you have paid Social Security taxes on 30 years of substantial earnings, your government pension may reduce your Social Security benefits (The Windfall Elimination Provision). 

You can use the official Social Security Administration Online Benefits Calculator to determine your Social Security benefits.

Your surviving beneficiary must return any benefits received for the month of your death and any subsequent months if they did not contact the Social Security office right away to stop them.

Social Security Survivors Benefits

Spouses

Spouses can collect Social Security under three circumstances

  1. Your spouse can collect Social Security based on their own status as a qualified retiree.
  2. If your spouse does not qualify for Social Security they can receive benefits while you are alive that are 50% of your benefits. The amount will be lower if benefits begin between 62 years old and the full retirement age, but will not increase if benefits start after this age.
  3. After your death, your surviving spouse is entitled to receive the higher of their own benefit or your benefit — even if they did not qualify for Social Security.
    • If they have yet to reach their full retirement age, they will be entitled to prorated survivor benefits.
      • Starting at 60 years old they receive 71½% of your benefit, increasing to 99% just before retirement age.
      • Starting at 50 or older if disabled and the disability started before or within 7 years of your death they will also receive 71½% of your benefit for ten years. 
    • Once they reach full retirement age, they are entitled to 100% of your benefit or their own benefit, whichever is higher.
    • They may be entitled for 75% of your benefits at any age if caring for a child who is younger than 16 years old.
    • If your spouse was born before January 2, 1954 they may be able to file a restricted application that allows them to claim spousal benefits while delaying their own benefits up to age 70.

If you and your spouse were married for 10 years or more before you were divorced and your spouse has not remarried they are entitled to collect both the spousal benefit and the spousal survivor benefits in the amounts listed above.

Your surviving spouse can receive a special lump-sum death payment of $255 if they meet certain requirements.

  • They were living in the same household as you when you died.
  • If you were living apart and during the month you died they:
    • Were already receiving you benefits; or
    • Became eligible for benefits upon your.
    • If your surviving spouse is eligible, but not currently receiving benefits, they must apply for this payment within 2 years of your death.

Children

Children can receive 75% of your benefits under the Social Security Child’s Insurance program. In some cases, a stepchild, grandchild, step-grandchild, or adopted child may also qualify for children’s benefits. To qualify for this program, the child must be unmarried, dependent on you, and:

  • Younger than 18 years old;
  • Aged 18-19 years and a full-time high-school student; or
  • 18 years old or older with a disability that began before 22 years old.

If your spouse has died, your child may receive the special lump-sum death payment of $255 if during the month you died they:

  • Were already receiving benefits; or
  • Became eligible for benefits upon your death. The eligible child must apply for this payment within 2 years of your death.

Parents

Parents who are at least 62 years old and dependent on you for at least half of their expenses can receive survivor benefits.

  • One surviving parent – 82½%.
  • Two surviving parents – 75% to each parent.

Taxing Social Security

Although the Social Security Trust Fund is funded by payroll taxes, Social Security benefits beyond the first 15%-50% are subject to income tax, depending on your combined income.

  • The Social Security Administration defines your combined income as the sum of your adjusted gross income, nontaxable interest (such as the required minimum distribution from your IRA or municipal bond interest), and half of your Social Security benefits.
  • If you file your federal tax return as an individual and your combined income is:
    • $25,000 – $34,000, you may have to pay income tax on up to 50% of your benefits; or
    • More than $34,000, you may have to pay income tax on up to 85% of your benefits.
  • If you’re married, filing a joint return, and your combined income is:
    • $32,000 – $44,000, you may have to pay income tax on up to 50% of your benefits; or
    • More than $44,000, you may have to pay tax on up to 85% of your benefits.

Currently Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, and West Virginia tax Social Security benefits.

Benefits received due to disability are not taxed as income. Any dependent or survivor benefits that go to your child are not considered income. 

Supplemental Security Income

Supplemental Security Income is an additional program available from the Social Security Administration that provides basic financial assistance to qualified adults who have or live in households that have very limited income and resources, including:

  • Adults that are at least 65 years old;
  • Adults of any age with blindness or qualifying total disability; or
  • Children with physical or mental condition(s) that very seriously limits their daily activities for a period of 12 months or more or may be expected to result in death.

The maximum monthly benefit for 2024 is:

  • $943 for an eligible individual;
  • $1,415 for an eligible individual with an eligible spouse; and
  • $472 for an essential person. 

You are not eligible for SSI if you:

  • Have an unsatisfied felony or arrest warrant,
  • Are in jail or prison;
  • Give away a resource or sell it for less than it is worth in order to qualify for SSI; and
  • Have been outside the country for a calendar month or 30 consecutive days or more.

State programs may supplement federal Supplemental Security Income benefits and automatically provide health care coverage through Medicaid.

Social Security Disability Insurance

Social Security Disability Insurance (SSDI) is an additional program available from the Social Security Administration that supports adults younger than retirement age who are disabled and have a qualifying work history, either through their own employment or a family member (spouse/parent). To qualify for SSDI benefits, you must:

  • Have worked in jobs covered by Social Security; and
  • Have a medical condition that meets the following strict definition of disability.
    • You cannot do work and engage in substantial gainful activity because of your medical condition.
    • You cannot do work you did previously or adjust to other work because of your medical condition.
    • You do not have a partial disability and your condition has lasted or is expected to last for at least 1 year or to result in death.

The SSA usually pays monthly benefits if you are unable to work for a year or more because of a qualifying total disability.

  • The maximum monthly benefit for 2024 is $3,822.
  • There is a 5-month waiting period with benefits beginning the sixth full month after the date your disability began.
  • Benefits may be paid retroactively for as many as 12 months before you apply if the Supplemental Security Income finds you had a disability during that time and you meet all other requirements.
  • Benefits usually continue until you can work again on a regular basis. There are also several special rules called work incentives that provide continued benefits and health care coverage to help you make the transition back to work.

If you are receiving SSDI benefits when you reach full retirement age, your disability benefits automatically convert to retirement benefits, but the amount remains the same.

Beneficiaries of SSDI will automatically qualify for Medicare after 24 months of receiving disability payments — individuals with amyotrophic lateral sclerosis (ALS) are eligible for Medicare immediately.

Resources

You can also get information about all Social Security programs and applying for them by visiting your local Social Security office or by calling 1-800-772-1213 (TTY 1-800-325-0778) between 7 a.m.-7 p.m. Monday through Friday. You can also use these to report a death to the SSA. 

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