How much do you really know about that social security withdrawal that comes out of your paycheck every week? If you are young person, you probably do not think about social security very much, other than the fact that it reduces the amount of money you take home. But no matter how old you are, there are things you need to know about your social security benefits. Here are three questions that every American needs to ask, and know how to answer, about social security, regardless of how close you are to retirement age.
1. Am I eligible for Social Security?
You must earn 40 credits to be eligible for Social Security based on your work record. The definition of “a credit” changes every year. A credit is defined as $1,410 in earnings in 2020. You’re only allowed to earn up to four credits per year, so you must work a minimum of 10 years to be eligible. But these years don’t have to be consecutive. You can also qualify for social security benefits if you’re married to someone who earned 40 credits, or you were married to a qualifying worker for at least 10 years and have not remarried. However, in these situations, the benefit you’ll receive will only be 50% of the worker’s benefit.
What is my full retirement age?
Your full retirement age (FRA) is the age at which you qualify for your standard Social Security benefit based on your work record. It is 66 if you were born between 1943 and 1954. Then it rises by two months for every year thereafter until it reaches 67 for those born in 1960 or later. You don’t have to wait until this age to claim benefits. You may start as early as 62. But for every month you claim benefits under your FRA, the Social Security Administration reduces the size of your checks. Every month you delay benefits increases your checks slightly until you reach your maximum benefit at 70.
3. What factors influence my benefits?
In addition to the age you begin benefits, your work record determines the size of your Social Security checks. When calculating your benefit, the government looks at your average monthly income over your 35 highest-earning years, adjusted for inflation. So the more you earn while working, the larger your Social Security checks, up to a certain point. Only the first $137,700 you earn in 2020 is subject to Social Security taxes.
If you have not asked these questions before and were not aware of the answers to them, the most important takeaway for you is this – try to delay taking your SSI benefits as long as possible, and you will receive the maximum amount.