Social Security benefits: Questions & answers guide
It’s common to associate Social Security with retirement. However, there is much more to Social Security than retirement income. There are many people who can qualify for Social Security benefits including retirees, their spouses, disabled individuals, and survivors of the deceased. For many people in the U.S., Social Security is a valuable program.
People have many Social Security benefits questions because it’s such a vast program — we help simplify the information and answer your top questions.
In this article:
- What is Social Security?
- Who can qualify for Social Security benefits?
- What are Social Security credits and how are they earned?
- Can I qualify for benefits based on my spouse’s income?
- When should I take my Social Security retirement benefits?
- How is my Social Security benefit amount calculated?
- When do I apply and how do I apply for Social Security benefits?
- How can an Ameriprise financial advisor help?
Social Security is a U.S. federal program that provides enrolled individuals with a source of income when they become unable to work or earn sufficient wages on their own. There are three types of Social Security benefits:
- Retirement (spousal benefits available in some cases)
Who can qualify for Social Security benefits?
You are eligible to receive Social Security benefits in the United States once you’ve accumulated 40 work credits — as long as you also pay Social Security taxes (this is applicable for certain government employees or those who are self-employed). Non-U.S. citizens who are living legally in the United States and have earned benefits can also qualify for Social Security.
Social Security credits determine eligibility and benefit amounts in retirement. In 2022, earning $1,510 in income qualifies as earning one Social Security work credit.2 You are eligible to earn up to four credits per year. Most people need 40 credits (10 years of work) to qualify for Social Security benefits — though younger individuals require fewer credits for disability benefits or for their family members to receive survivor’s benefits.
Short answer: in some cases.
Retirement benefits are based on your own earnings record. However, spousal and survivors Social Security benefits are based on your spouse’s earnings, whether the spouse is deceased or divorced from you.
Keep in mind that you can qualify for spousal or survivors Social Security benefits as well as your own retirement benefit — but, Social Security won’t let you add these amounts together. Instead, you will receive whichever benefit is larger.
Waiting to collect Social Security benefits may be beneficial if you’re able to do so. While the age to receive your full retirement benefit is 66-67 (depending on the year you were born), you can begin collecting Social Security benefits as early as age 62. But each month you wait to start collecting (up until age 70) increases your eligible benefits.4
Once you reach full retirement age, you’re entitled to 100% of the benefits calculated from your lifetime earnings. If you wait until age 70 to begin collecting Social Security, your retirement benefit will be 32% larger.3
However, waiting may not be the right choice for everyone. Your financial advisor will help you determine an approach that reflects your options and your personal situation. For example, they may consider:
- Varying tax rates on Social Security income
- Capital gains and IRA withdrawals
- Health issues and life expectancy in your family history
- Whether your current retirement accounts and additional sources of income (including Social Security or pensions) will cover your essential expenses before you reach full retirement age
Another common Social Security benefits question is how payments are calculated based on your lifetime earnings. To account for changes in average wages each year, the Social Security Administration (SSA) indexes your income using the national average wage index.
The SSA calculates your average indexed monthly earnings (AIME) based on the 35 years in which you earned the most. A formula generates your basic benefits, otherwise known as your primary insurance amount. This primary insurance amount (PIA) is what you would receive at your full retirement age. If you were born between 1955 and 1959, full retirement age is between age 66 and 67. For those born in 1960 or later, full retirement age is 67.5
The SSA recommends applying four months before you want your Social Security retirement benefits to begin.
There are two ways to apply:
- Online application: Find it on the Social Security Administration’s website.
- Over the phone: Call 1-800-772-1213 (TTY 1-800-325-0778) from 8 a.m. to 7 p.m., Monday through Friday, to apply by phone.
Your Ameriprise financial advisor can answer any Social Security benefits questions you may have, as well as evaluate your Social Security options and help you with your overall retirement income planning. They will review how scenarios (such as working longer or delaying benefit collection) can help maximize the benefits for you, a spouse or family members.
Or, request an appointment online to speak with an advisor.
At Ameriprise, the financial advice we give each of our clients is personalized, based on your goals and no one else's.
If you know someone who could benefit from a conversation, please refer me.
Background and qualification information is available at FINRA's BrokerCheck website.