The Social Security Act has established numerous programs which provide for the material needs of individuals and families, protect aged and disabled persons against the expenses of illnesses that could otherwise exhaust their savings, keep families together, and give children the opportunity to grow up in health and security.
Congress passed the Social Security Act in 1935 and the retirement benefits program went into effect on January 1, 1937. The law has been amended many times since its original enactment.
There have been many changes in Social Security and the United States since 1935. First, in 1935 the life expectancy was only age 60, while today it is 78. Therefore in 1935 most people would not have lived long enough to collect Social Security retirement benefits. While today, many retirees are concerned they will outlive their retirement savings.
In 1935 Social Security was designed to supplement a retiree’s retirement income. Today, Social Security provides about 40% of the average retiree’s income.
In 1935, the worker/retiree ratio was about 160:1. Today it is about 3:1. When the program began, Social Security paid out about $35 million in benefits annually. Today it pays out over $675 billion annually.
Finally, in 1935, the poverty rate for seniors exceeded 50%. Today the poverty rate for Seniors is less than 9.5%.
Approximately 35% of Americans over the age of 65 rely almost entirely on Social Security payments alone.
1. In general, what requirements must be met to qualify a person for retirement benefits?
An individual is entitled to a retirement benefit if he or she: (1) is fully insured, (2) is at least age 62 throughout the first month of entitlement, and (3) has filed an application for retirement benefits.
2. Must a person be fully insured to qualify for retirement benefits?
Yes. (But a small monthly benefit is payable to some men who became age 72 before 1972 and some women who became age 72 before 1970).
3. What is the earliest age at which a person can start to receive retirement benefits?
Age 62. A retired worker who is fully insured can elect to start receiving a reduced benefit at any time between ages 62 and full retirement age (which is gradually increasing from 65 to 67; see below) when he would receive the full benefit rate. A person is not required to be completely retired to receive retirement benefits. A person is considered “retired” if the retirement test is met.
The retirement age when unreduced benefits are available (previously age 65) increased by two months per year for workers reaching age 62 in 2000-2005. It is age 66 for workers reaching age 62 in 2006-2016. It will increase again by two months per year for workers reaching age 62 in 2017-2022. Finally, the retirement age will be age 67 for workers reaching age 62 after 2022 (i.e., reaching age 67 in 2027).
The full retirement age for spouse’s benefits (also previously age 65) moves upward in exactly the same way as that for workers. The full retirement age for widow(er)’s benefits also rises but in a slightly different manner (beginning for widow(er)s who attain age 60 in 2000 and reaching a full retirement age of 67 in 2029).
Reduced benefits will continue to be available at age 62, but the reduction factors are revised so that there is a further reduction of up to a maximum of 30% for workers entitled at age 62 after the retirement age is increased to age 67 (rather than only 20% for entitlement at age 62 under previous law).
4. Must a person file an application for retirement benefits?
Yes. A person can file an application within three months before the first month in which he becomes entitled to benefits. The earliest date for filing would be three months before the month of attaining age 62.
As evidence of age, a claimant must ordinarily submit one or more of the following: birth certificate; church record of birth or baptism; Census Bureau notification of registration of birth; hospital birth record; physician’s birth record; family Bible; naturalization record; immigration record; military record; passport; school record; vaccination record; insurance policy; labor union or fraternal record; marriage record; other evidence of probative value.
If a person is receiving Social Security disability benefits for the month before the month he reaches full retirement age, no application is required; the disability benefit ends and the retirement benefit begins automatically.
5. What is the amount of a retirement benefit?
A retirement benefit that starts at full retirement age (see Q 31) equals the worker’s Primary Insurance Amount (PIA). But a worker who elects to have benefits start before full retirement age will receive a monthly benefit equal to only a percentage of the PIA. The PIA will be reduced by 5/9 of 1% for each of the first 36 months the worker is under full retirement age when payments commence and by 5/12 of 1% for each such month in excess of 36.
As a general rule, a person taking reduced retirement benefits before full retirement age will continue to receive a reduced rate after normal retirement age.
An individual can obtain higher retirement benefits by working past full retirement age.
6. What is the first month for which a retired person receives a retirement benefit?
A monthly benefit is available to a retired worker when he reaches age 62, provided he is fully insured.
Workers and their spouses (including divorced spouses) do not receive retirement benefits for a month unless they meet the requirements for entitlement throughout the month. The major effect of this provision is to postpone, in the vast majority of cases, entitlement to retirement benefits for persons who claim benefits in the month in which they reach age 62 to the next month. Only in the case of a person who attains age 62 on the first or second day of a month can benefits be paid for the month of attainment of age 62. Note that a person attains his age on the day preceding the anniversary of his birth. For example, if an individual was born on May 2, 1951, he is considered 62 years old on May 1, 2013.
Most entitlement requirements (other than the entitlement of the worker) affecting young spouses or children of retired or disabled workers are deemed to have occurred as of the first of the month in which they occurred. However, in the case of a child who is born in or after the first month of entitlement of a retired or disabled worker, benefits are not payable for the month of birth (unless born on the first day of the month).
Retroactive benefits are usually prohibited if permanently reduced benefits (as compared with what would be payable for the month the application is filed) would occur in the initial month of eligibility. However, retroactive benefits may be applied for if: (1) with respect to widow(er)’s benefits, the application is for benefits for the month of death of the worker, if filed for in the next month, and (2) retroactive benefits for any month before attaining age 60 are applied for by a disabled widow(er) or disabled surviving divorced spouse.
7. Can a person receive retirement benefits regardless of the amount of his wealth or the amount of his retirement income?
Yes, a person is entitled to retirement benefits regardless of how wealthy he is. Also, the amount of retirement income a person receives (e.g. dividends, interest, rents, etc.) is immaterial. A person is subject to loss of benefits only because of excess earnings arising from his personal services.
8. Can a person lose retirement benefits by working?
Yes, a person can lose some or all monthly benefits if she is under the full retirement age (see Q 31) for all of 2014 and his or her earnings for the year exceed $15,480. A person may lose benefits if she reaches full retirement age in 2014 and if she earns over $41,400, but only those earnings earned before the month he or she reaches full retirement age count towards the $41,400 limit. The amount of loss depends on the amount of earnings in excess of these earnings limits. In no case will a person lose benefits for earnings earned after reaching full retirement age. For the initial year of retirement of a person who is under the full retirement age for all of 2014, the monthly earnings limit is $1,290. For purposes of this test, “earnings” include not only earnings in covered employment, but also earnings in noncovered employment in theUnited States. As to noncovered employment outside theUnited States, benefits are lost for any month before reaching full retirement age when so employed for more than 45 hours, regardless of the amount of earnings.
The dollar exempt amounts mentioned above will be increased automatically after 2014 as wage levels rise.
9. When do retirement benefits end?
At the worker’s death. No retirement benefit is paid for the month of death.
10. Can a husband and wife both receive retirement benefits?
11. Is the spouse of a retired or disabled worker entitled to benefits?
An individual is entitled to spouse’s benefits on a worker’s Social Security record if:
- The worker is entitled to retirement or disability benefits; and
- The individual has filed an application for spouse’s benefits; and
- The spouse is not entitled to a retirement or disability benefit based on a primary insurance amount equal to or larger than one-half of the worker’s primary insurance amount; and
- The spouse is either age 62 or over, or has in their care a child under age 16, or disabled, who is entitled to benefits on the worker’s Social Security record.
The spouse of a worker must also meet one of the following conditions: (1) the spouse must have been married to the worker for at least one year just before filing an application for benefits; (2) the spouse must be the natural mother or father of the worker’s biological child; (3) the spouse was entitled or potentially entitled to spouse’s, widow(er)’s, parent’s, or childhood disability benefits in the month before the month of marriage to the worker; or (4) the spouse was entitled or potentially entitled to a widow(er)’s, parent’s, or child’s (over 18) annuity under the Railroad Retirement Act in the month before the month of marriage to the worker. A spouse is “potentially entitled” if he or she meets all the requirements for entitlement other than the filing of an application and attaining the required age.
12. What is meant by having a child “in care”?
Having a child in care is a basic requirement for spouse’s benefits when the spouse is under age 62 and for mother’s and father’s benefits. “In care” means that the mother or father: (1) exercises parental control and responsibility for the welfare and care of a child under age 16 or mentally incompetent child age 16 or over, or (2) performs personal services for a disabled mentally competent child age 16 or over.
13. Is the divorced spouse of a retired or disabled worker entitled to a spouse’s benefits?
The spouse is entitled to a divorced spouse’s benefit on the worker’s Social Security record if: (1) the worker is entitled to retirement or disability benefits, (2) the spouse has filed an application for divorced spouse’s benefits, (3) the spouse is not entitled to a retirement or disability benefit based on a primary insurance amount that equals or exceeds one-half the worker’s primary insurance amount, (4) the spouse is age 62 or over, (5) the spouse is not married, and (6) the spouse was married to the worker for at least 10 years before the date the divorce became final.
A divorced spouse who is age 62 or over and who has been divorced for at least two years is able to receive benefits based on the earnings of a former spouse who is eligible for retirement benefits, regardless of whether the former spouse has retired or applied for benefits. This two-year waiting period for independent entitlement to divorced spouse’s benefits is waived if the worker was entitled to benefits prior to the divorce. A spouse whose divorce took place after the couple had begun to receive retirement benefits, and whose former spouse (the worker) returned to work after the divorce (thus causing a suspension of benefits), will not lose benefits on which he or she had come to depend.
14. What is the amount of a spouse’s benefit?
If the spouse of a retired or disabled worker is caring for the worker’s child under age 16 or disabled child, the monthly benefit equals half of the worker’s PIA, regardless of his age. If the spouse is not caring for a child, monthly benefits starting at full retirement age likewise equal half of the worker’s PIA; but if the spouse chooses to start receiving benefits at or after age 62, but before full retirement age, the benefit is reduced.
If the spouse chooses to receive, and is paid, a reduced spouse’s benefit for months before full retirement age, the spouse is not entitled to the full spouse’s benefit rate upon reaching full retirement age. A reduced benefit rate is payable for as long as the spouse remains entitled to spouse’s benefits.
A spouse will not always receive a spouse’s full benefit; under the following circumstances a spouse will receive a smaller amount:
(1) If the total amount of monthly benefits payable on the worker’s Social Security account exceeds the Maximum Family Benefit, all benefits (except the worker’s benefit) will be reduced proportionately to bring the total within the family maximum limit.
(2) If a spouse who is not caring for a child elects to start receiving a spouse’s benefit at age 62 (or at any time between age 62 and full retirement age), the benefit will be reduced by 25/36 of 1% for each of the first 36 months that the spouse is under full retirement age when benefits commence, and by 5/12 of 1% for each such month in excess of 36.
(3) If the spouse is entitled to a retirement or disability benefit that is smaller than the spouse’s benefit rate, the spouse will receive a spouse’s benefit equal to only the difference between the retirement or disability benefit and the full spouse’s benefit rate.
(4) The amount of a spouse’s monthly benefit is usually reduced if the spouse receives a pension based on his or her own work for a federal, state, or local government that is not covered by Social Security on the last day of such employment. However, the Social Security Protection Act of 2004 generally requires that a person work in a situation covered by Social Security for five years to be exempt from this Government Pension Offset (GPO). See Q 66 for more information on the GPO.
If a spouse is entitled to a retirement or disability benefit that is larger than the spouse’s benefit rate, he or she will receive only the retirement or disability benefit.