Social Security benefits are confusing to most. This interview with Peter Lawrence of Hauppauge, NY provides a simplified explanation to some very commonly asked questions about retirement benefits.
Host: What is Social Security?
Peter Lawrence of Hauppauge, NY: Social Security is the Old-Age, Survivors, and Disability Insurance (OASDI) program in the United States. It’s a federal program. It’s best known for retirement benefits, but it also provides survivor and disability benefits. Social Security provides benefits to more than 68 million people. It provides close to 80% of the income for 20% of American households and kept 27.6 million people out of poverty in 2023. Social Security accounts for at least 50 percent of income for more than half of households headed by someone 65 or older.
Host: How long do I need to work to become eligible for benefits?
Peter Lawrence of Hauppauge, NY: For retirement benefits, individuals must have contributed to Social Security for at least 10 years. Individuals can earn up to four credits per year and need 40 credits to qualify for retirement benefits.
Host: At what age can I start collecting Social Security benefits?
Peter Lawrence of Hauppauge, NY: To receive full retirement benefits, an individual must reach full retirement age (FRA). FRA is between 66 and 67 years of age (depending on birth year); however it is possible to receive a reduced amount beginning at 62 years of age.
Host: How does Social Security define full retirement age (FRA)?
Peter Lawrence of Hauppauge, NY: Full retirement age (FRA) is the age at which an individual is eligible to receive full retirement benefits from Social Security. An individual’s FRA depends on birth year. For individual’s born in 1955, FRA is 66 years and two months. FRA gradually increases to age 67 for individuals born in 1960 or later.
Host: How do I sign up for Social Security?
Peter Lawrence of Hauppauge, NY: Individuals can apply for retirement benefits online, by phone at 800-772-1213 or in person. The social security website has an office locator based on zip code.
Host: How much will I get from Social Security?
Peter Lawrence of Hauppauge, NY: Throughout an individual’s working life, FICA tax of 6.2% has been withheld from earnings to fund social security. This is done on all income up to the “maximum taxable income”, an amount which is defined by Social Security each year. The amount of your Social Security retirement benefit depends on your average indexed monthly earnings (AIME) during your 35 highest-earning years. The average monthly retirement benefit was $1,869.77 as of June 2024. In 2024, the maximum monthly benefit at full retirement age is $3,822. To qualify for this payment amount, an individual must have earned the highest taxable income for at least 35 years.
Host: Can an individual work while collecting Social Security retirement benefits?
Peter Lawrence of Hauppauge, NY: Individuals can receive retirement benefits while working. The individual will receive a reduced amount if he/she is younger than full retirement age and if the earned income is relatively high. This money is gradually recovered by the individual when full retirement age is achieved.
Host: Is there anything an individual can do to increase the monthly amount of retirement benefit they receive?
Peter Lawrence of Hauppauge, NY: Individuals who delay receiving retirement benefits, ultimately receive more money. In fact, for every year an individual does not collect their benefit after attaining full retirement age, Social Security increases the benefit by 8 percent until age 70. There’s no financial incentive to delay past age 70.
Host: Is an individual eligible for retirement benefits based on their ex-spouse’s contributions?
Peter Lawrence of Hauppauge, NY: Social Security will pay the higher of an individual’s retirement benefit and up to 50% of a divorced spouse’s benefit. To be eligible for up to 50% of the divorced spouse’s benefit, the marriage must have lasted at least 10 years, the individual must be at least 62 years old, and the individual cannot be remarried.
Host: Is it likely that the Social Security fund will be depleted soon?
Peter Lawrence of Hauppauge, NY: For the past two years, the Social Security Board of Trustees has estimated that reserves in the retirement fund will become depleted in 2033. As the balance shifts from more people collecting benefits and less people contributing to the fund, the tax revenue will be enough to pay only 79% of scheduled benefits after 2033. It is widely believed that the federal government will enact changes before then to correct this situation. These changes will likely be higher taxes on workers, lower benefits and/or higher age requirements for retirees.
