The Social Security program in the U.S. was designed to provide financial support to Americans who are elderly, disabled, and to the families of those who qualify. Americans pay into the Social Security program in the form of taxes on their earnings. Their current payment supports the benefits of the people who are receiving benefits now. Contrary to what a lot of people think, the Social Security taxes taken from a person’s paycheck do not translate dollar-for-dollar into benefits that the same individual will receive when he retires. The Social Security Administration (SSA) uses a formula that calculates how much benefits a person is entitled to collect upon retirement.

How To  Earn Credits Toward your Benefits?

When you pay SS taxes, you earn credits toward your benefits. Right now, for every $1,300 that you earn (which is subject to change), you earn one credit. You can earn a maximum of four credits in a calendar year. In order to qualify for SS retirement benefits, you need to accumulate at least 40 credits. That is about 10 years of employment.

Other people who are eligible to receive benefits are people who are disabled, the spouse or ex-spouse of the primary beneficiary, eligible children of the primary beneficiary, and the family survivors of a primary beneficiary who passed away. The amount of their benefits is based on how much the primary beneficiary was eligible to receive.

Optimal Retirement Age

One of the biggest questions that people have is what is the optimal retirement age for collecting the highest benefits. A person can receive 100 percent of his benefits if he waits until his full retirement age (FRA) before he files. A person’s full retirement age can be anywhere from 65 to 67 years of age, and it is based on the year and month on which the person was born. However, a person is eligible to file for reduced benefits as early as 62-years-old. This reduction is based on a formula, and it permanently reduces the individual’s monthly benefits for the rest of his life. The SSA website has a table describing how much a person can expect his benefits to be reduced based on the age at which he files for benefits.

Spousal Benefits

The spouse of a beneficiary can also file for spousal benefits. This is 50 percent of what the primary beneficiary can collect. For example, if the husband files to collect 100 percent of his benefits at his full retirement age, his wife can also file to collect benefits equal to 50 percent of the husband’s benefits. If the husband decides to file before his full retirement age in order to collect reduced benefits sooner, the spousal benefit will be reduced as well.

The amount of the benefit can be affected if you choose to work and collect benefits at the same time. Also, benefits are taxable. Therefore, as you are planning for your retirement, it is important to set goals and explore your options so you will make the most of your Social Security benefits throughout your golden years. Get to know more at