Social Security FAQ

From the Nolo Retirement & Elder Care Center

Learn about Social Security benefits, including eligibility requirements and how much money you will get.

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 on the average amount earned.

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 one general requirement, however: 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 enough of what Social Security calls work credits -- by the time he or she claims retirement benefits, becomes disabled or dies. This usually means a total of at least ten years of work at which you or your employer paid into Social Security. To find out about your eligibility, call the Social Security Administration at 800-772-1213.

Note that Social Security has separate eligibility rules 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 the rules that may affect your eligibility.

Since its inception in 1936, Social Security considered 65 to be full or normal retirement age for the retirement benefit. Benefits amounts were calculated on the assumption that most workers will stop working full time and will claim retirement benefits when they reach age 65. While the system has long provided for early retirement, to give incentive for people to delay making their retirement claims, Social Security offers higher benefits for people who wait to make their claims after reaching full retirement age.

Now that people are generally living longer, however, the Social Security rules for what is considered full retirement age are changing. Age 65 is still considered full retirement age for anyone born before 1938. However, full retirement age gradually increases from age 65 to 67 for people born in 1938 or later.

Retirement Age for Those Born After 1937

Year Born	Full Retirement Age
1938	65 years, 2 months
1939	65 years, 4 months
1940	65 years, 6 months
1941	65 years, 8 months
1942	65 years, 10 months
1943 - 1954	66 years
1955	66 years, 2 months
1957	66 years, 6 months
1958	66 years, 8 months
1959	66 years, 10 months
1960 or later	67 years

How are my Social Security benefit amounts calculated?

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 survivors benefits?

Yes, and many people do just that. People who are past full retirement 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 full retirement age will lose one dollar of those benefits for every two dollars they earn over a set yearly limit. For the year 2003, that limit is $11,520. 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 Administration has added a special twist for the year in which you reach full retirement age. During the months of that year that are prior to your birthday, you will lose one dollar of benefits for every three dollars you earn over a set yearly limit. For the year 2003, that limit is $30,720 (only counting earnings in the months prior to your birthday). After your birthday, you can earn any amount of money without losing benefits.

Click here for related information and products from Nolo.

This publication is provided by NOLO.com and is for general informational purposes only. The publication is not intended to provide legal, tax or other advice to any reader or specific authority or recommendations regarding any particular situation. NOLO and LifeCare, Inc. encourages you to consult with an appropriate professional or professionals (e.g., attorney, tax, financial advisor, etc.) regarding any specific questions you may have or any legal, tax, financial or other implications relating to your particular situation.

Copyright Nolo. All rights reserved.