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Social Security FAQ
by Nolo.com
From the Nolo.com Retirement & Elder Care Center
Learn about Social Security benefits.
What's Below:
Social Security is the general term that describes a number of related programs: retirement, disability, dependents and survivors benefits. These programs together provide workers and their families with some money when their normal flow of income shrinks because of retirement, disability or death.
How much can I expect to get in Social Security benefits?
The amount of benefits to which you are entitled under any Social Security program is not related to need, but is based on the income you have earned through years of working. In most jobs, both you and your employer have paid Social Security taxes on the amounts you earned. Since 1951, Social Security taxes have also been paid on reported self-employment income. Social Security keeps a record of these earnings over your working lifetime, and pays benefits based upon the average amount earned.
To learn how to check that the Social Security Administration has correctly calculated your Social Security benefits, see Checking Your Earnings.
Who is eligible to collect Social Security benefits?
The specific requirements vary depending on the type of benefits, the age of the person filing the claim and, if you are claiming as a dependent or survivor, the age of the worker. There is a general requirement, however, that everyone must meet to receive one of these Social Security benefits: the worker on whose earnings record the benefit is to be paid must have worked in "covered employment" for a sufficient number of years -- that is, earned what Social Security calls work credits -- by the time he or she claims retirement benefits, becomes disabled or dies. To find out about your eligibility, call the Social Security Administration, 800-772-1213.
Note that Social Security eligibility rules have recently changed for some specific types of workers including federal, state and local government workers, workers for nonprofit organizations, members of the military, household workers and farm workers. If you have been employed for some time as one of these types of workers, check with the Social Security Administration for special rules that may affect your eligibility.
How are my Social Security benefit amounts calculated?
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The amount of any benefit is determined by a formula based on the average of your yearly reported earnings in covered employment since you began working. To further complicate matters, Social Security computes your average earnings differently depending on your age. If you reached age 62 or became disabled on or before December 31, 1978, the computation is simple: Social Security averages the actual dollar value of your total past earnings -- and bases the amount of your monthly benefits on that amount.
If you turn 62 or become disabled on or after January 1, 1979, Social Security divides your earnings into two categories: earnings from before 1951 are credited with their actual dollar amount, up to a maximum of $3,000 per year; and from 1951 on, yearly limits are placed on earnings credits, no matter how much you actually earned in those years.
Can I collect more than one type of benefit at a time?
No. You may qualify for more than one type of Social Security benefit, but you can collect just one. For example, you might be eligible for both retirement and disability, or you might be entitled to benefits based on your own retirement as well as on that of your retired spouse. You can collect whichever one of these benefits is higher, but not both.
Can I claim spousal benefits if I'm divorced?
You are eligible for dependents benefits if both you and your former spouse have reached age 62, your marriage lasted at least ten years and you have been divorced for at least two years. This two-year waiting period does not apply if your former spouse was already collecting retirement benefits before the divorce.
You can collect benefits as soon as your former spouse is eligible for retirement benefits. He or she does not actually have to be collecting those benefits for you to collect your dependents benefits.
If you are collecting dependents benefits on your former spouse's work record and then marry someone else, you lose your right to those benefits. You may, however, be eligible to collect dependents benefits based on your new spouse's work record. If you divorce again, you can return to collecting benefits on your first spouse's record, or on your second spouse's record if you were married for at least ten years the second time around.
Can I keep a job even after I start collecting retirement, dependents or survivor benefits?
Yes, and many people do just that. People who are past full retirement age (currently 65 years of age) may work and earn any amount without losing any of their Social Security benefits. However, people who collect Social Security before the year in which they reach the age of 65 will lose one dollar of those benefits for every two dollars they earn over a set yearly limit. For the year 2000, that limit is $10,080. The limit applies only to earnings from work; it does not apply to income from such things as savings, investments, pensions or rental property.
The Social Security Admininstration has added a special twist for the year in which you turn 65. During the months of that year that are prior to your 65th birthday, you will lose one dollar of benefits for every three dollars you earn over a set yearly limit. For the year 2000, that limit is $17,000 (only counting earnings in the months prior to your birthday). After your birthday, you can earn any amount of money without losing benefits.
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