What is Social Security

Social Security numbers were first assigned in 1936 so the government could track the earnings histories of U.S. workers, determine benefit entitlements, and decide how much you should receive in benefits. Every U.S. natural-born citizen receives a Social Security card with their identifying number at birth. This number is nine digits long and its first three digits correspond to the area of the U.S. where you were born. You use this number as a highly secure identifier for important documents, such as your tax return and hiring contracts.

Social Security Benefits

Benefits from Social Security are intended to replace a portion of your pre-retirement income based on your earnings. Your full retirement benefit is calculated based on the average of your highest 35 years of earnings. To live comfortably in retirement, you should bring in 70% of your earned income from all sources, including any savings, investments, life insurance cash values, and your Social Security benefit.

The money that you pay in taxes while working goes into the Social Security trust to pay for the benefits of those already receiving them. It is not set aside in an account for you. 85 cents of every dollar you pay go into a fund for workers and the remaining 15 cents go into a fund for those with disabilities. That means that the security of your future retirement benefits rests on the administration’s management and future workers paying for your benefits.

Who Qualifies for Benefits?

Social Security is not only a retirement system. The administration also supports those who are disabled, dependents of those receiving Social Security, divorced spouses of those receiving Social Security, a spouse of a worker who died, a child of a worker who died, a divorced spouse of a worker who died, or a dependent parent of a worker who died.

As a worker, you need 10 years of work (40 credits) to qualify for benefits. Each work credit is based on your earnings. In 2021, you earn one credit for each $1,470 earned during the year, up to a maximum of four credits.

When to Start Receiving Benefits

If you were born in 1960 or later, your full retirement age is age 67. You can start receiving benefits as early as age 62, but will only receive around 70% of your full benefit. You receive your full benefit if you claim them when you reach full retirement age and can potentially increase your benefit by 8% each year you wait to receive benefits until age 70.

Social Security


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Disability benefits are available to those who are unable to work due to a disability. Your benefits will be taxed if you make more than $25,000 as an individual or more than $32,000 in combination with your spouse. Your spouse can also receive benefits if they are 62 or older or are caring for your dependent children younger than 16. Your unmarried children can receive benefits if they are under 18, full-time students, or disabled. Your family members’ benefits can be up to half of your monthly benefit.

To learn more about Social Security and how to qualify, give us a call today at 512-900-3008.

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