Understanding Social Security

An article from the AARP website

Social Security will be the foundation of your retirement income. That's because:

• You won't outlive your Social Security retirement benefit. It will be there for you for the rest of your life.
  
• Your Social Security benefit won't lose its value. From time to time, Social Security benefits are adjusted so they always keep pace with inflation.

What You Should Know

How Social Security Works
When you work, you pay taxes into the Social Security system. Then, when you retire or become disabled, you can apply for the benefits you've earned.

The amount of your Social Security retirement benefit is based on several things:

• How much time you spent in the workforce.
  
• How much money you made.
  
• Your age when you start receiving benefits.

To qualify for Social Security retirement benefits, you must have worked and earned at least 40 Social Security credits in a job covered by Social Security. The longer you work, and the more money you make, the higher your Social Security benefit will be. You can start receiving your Social Security retirement benefits at age 62. If you wait until you're older to start receiving your benefits, you'll get more money each month.

Do you qualify for retirement or disability benefits? If the answer is yes, then your spouse and dependent children can also receive monthly checks. Your survivors can collect benefits if you die.

Applying for Benefits

Social Security benefits are not paid automatically. You must apply for them using special forms. You may also have to provide several documents, including your Social Security card, birth certificate, and proof of U.S. citizenship, if you weren't born in this country. You may need to present other documents, depending on what type of benefits you're seeking.

You can fill out a Social Security application online. You can also call 1-800-772-1213 to apply for benefits, or visit your local Social Security office.

Checking on Your Benefit Amount

Most Americans receive a Social Security statement every year. You receive this statement about 3 months before your birthday, if you are over the age of 25. This statement lists the amount of money you have contributed each year to Social Security.

Read your statement carefully. Make sure you're getting full credit for all the years you worked. If you think a figure is wrong, check your own employment records or contact your former employer for information. It's important to correct any mistakes, so you will receive all your benefits.

Look at the amount of the benefit you will receive at age 62, and at your full retirement age. (The full retirement age will be higher than 65 for people born after 1937.) Consider these figures when you decide the age at which you would like to retire.

Remember: The amount of your Social Security projection is only an estimate. It is based on your work and earnings records up until the date of the statement. Your benefit amount could change, based on your future work and earnings. It could also change based on Social Security's Cost of Living Adjustments (COLAs).

For More Information

Visit the Social Security Administration Web site for publications and online resources to help you understand your Social Security benefits, how to apply for benefits, and the history of the Social Security program. You can also apply for benefits online.

"Social Security Retirement Benefits" is a brochure that outlines everything you need to know about retirement and family benefits. To get a copy of the booklet, call 1-800-772-1213 and ask for Publication No. 05-10035. Or, view the booklet online at the link shown above.

AARP Social Security Center
AARP maintains a special Social Security Center on its Web site. Visit the center to test your knowledge and find answers to some commonly asked questions about Social Security. You can also learn about issues and challenges facing Social Security, and you can tell your elected officials what you think about Social Security.

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