Almost all working Americans eventually receive Social Security benefits. These funds are collected and distributed by the Social Security Administration, a federal agency that serves to fight poverty. The SSA’s programs pay benefits to about 70 million people including retirees, children, widows, widowers and those with disabilities. It can be helpful to understand how the agency works and what it offers. Here’s a look at what the Social Security Administration provides and how its major programs work.
What Is the SSA?
The SSA stands for the Social Security Administration, and it was formed in 1935. Taxes are used to fund the agency, and payments are sent out to qualifying Americans. During its initial years, the SSA paid benefits to retired workers. In 1939, the agency added benefits for spouses, minor children and the survivors of deceased workers. Disability benefits began to be distributed in 1956. The agency also plays a role in Medicare enrollment.
Programs the SSA Provides
There are several main types of benefits the SSA pays out to individuals. These include payments to retired workers, those with a disability and survivors. Here’s a closer look at the SSA’s major programs:
Social Security retirement benefits. This program focuses on providing Americans with income after retirement. For those who have paid into the system, SSA issues monthly payments based on their 35 years of highest income. You can choose to take Social Security at your full retirement age, which for many people is age 66. You also have the option of taking it as early as age 62 or as late as age 70. “When to start taking one’s Social Security benefit is one of the biggest decisions most will make in retirement,” says Tim Wood, founder of Safe Money Retirement in Johnson City, Tennessee. The right time to begin benefits could depend on your health, working preferences, earning level and lifestyle choices in retirement.
Social Security disability benefits. Social Security Disability Insurance gives benefits to workers who become disabled and can no longer work. The program also provides for the dependents of disabled workers, and aims to replace some of the income lost because of the disability. There are rules and criteria you need to meet to be eligible for Social Security disability benefits, and you’ll need to show supporting medical evidence for your condition. “Another less known program is the childhood disability benefits, which allows individuals to receive benefits on their parent’s account so long as their disability begins before the age of 22,” says Andrew November, a disability attorney at Liner Legal in Cleveland, Ohio.
Social Security survivor’s benefits. A spouse and other family members of a worker who passed away may be eligible for Social Security survivor benefits. A widow or widower who is at least age 60 (or 50 and above if they have a disability) or a surviving divorced spouse could receive survivor benefits. This program also supports widows and widowers who are raising the deceased’s child, if that child is under age 16 or has a disability, and unmarried surviving children who are age 19 or younger and full-time elementary or secondary students or who have a disability that began before age 22. A stepchild, grandchild, step grandchild, adopted child or dependent parents could be eligible in some instances too. “Survivor benefits are one of the least understood and appreciated benefits,” says Paul Tyler, chief marketing officer at Nassau Financial Group in Hartford, Connecticut. “If your spouse passes away, you can file for survivor benefits that may be higher than your own.” If you were living with a spouse who passed away, you could also be paid a lump-sum death payment of $255.
Medicare. This government program provides health insurance for people ages 65 and older. The Centers for Medicare & Medicaid Services is in charge of the Medicare program, but the Social Security Administration handles enrollment in Medicare Parts A and B, and premiums can be withheld from your Social Security checks. If you sign up for Social Security before age 65, you may even be automatically enrolled in Medicare.
How the SSA Is Funded
Employers and workers pay into the Social Security program through a federal payroll tax called FICA, or the Federal Insurance Contributions Act. The current payroll tax rate requires both companies and employees to contribute 6.2% of wages up to a certain limit, which is $147,000 for 2022. Self-employed individuals pay 12.4% of their earnings into the Social Security program.
How to Contact the SSA
There are several ways to get in touch with the SSA if you have a question or concern about your benefits. Many routine tasks can be accomplished online at ssa.gov. You can call 1-800-772-1213 between 8 a.m. and 7 p.m. Monday through Friday to speak to a representative. There are also automated telephone services that you can reach 24 hours a day. In addition, it’s possible to visit a local Social Security office in your area and make an appointment to speak to a representative about your situation.
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