FAQs: Social Security - Hilton Head Monthly, July 2009

 Nearly every American has Social Security protection, either as a worker or a dependent of a worker. Yet conflicting political agendas and personal uncertainties complicate our perception and understanding of the program. There are deep seated concerns that the system may run out of money. In addition, it is a complex system, and benefits and eligibility are affected by many of the personal changes we experience in our lifetime. In this two part article we’ll try to outline the major benefits Social Security provides, as well as answer some of the frequently asked questions concerning the program.


How safe is Social Security?

The Trustees for Social Security and Medicare issued their annual report in May 2009 and, while it expressed some serious concerns, it also put into perspective some of the overwrought anxiety concerning the system. Social Security forecasts that it will begin paying out more than it receives in 2016. At that point the government would begin to tap the Social Security trust funds, a $2.4 trillion account adequate to cover promised benefits for at least a few more decades, according to the Congressional Budget Office. New revenues paid in by future workers would likely cover over 80 percent of scheduled Social Security benefits well into the 2080’s. This doesn’t include future adjustments to benefits, tax rates and the retirement age, all of which could be used to preserve benefits and improve the overall health of Social Security system.

How are Social Security benefits calculated?


When you work and pay Social Security taxes, you earn Social Security credits that can qualify you and your family for disability and survivor’s insurance coverage as well as retirement and Medicare coverage. Each quarter worked earns one credit toward Social Security; most people need 40 credits (10 years of work) to qualify for benefits, which are based upon your 35 highest quarters of earning. Your employer reports your earnings to the Social Security Administration and work credits are added to your account. Higher lifetime earnings result in higher benefits. Years with no earnings or low earnings will adversely affect your benefit amount.


What if I’ve never worked?


If you’ve never been employed you may still be eligible for Social Security benefits based upon your spouse’s or ex-spouse’s work record, provided you were married more than ten years.






When can I take benefits?


Unless you are widowed or disabled, the earliest age you can collect a (reduced) benefit is 62. Your standard benefit can be taken upon reaching full retirement age, which, depending on your year of birth, can range between 65 and 67, as shown in the chart below. The longer you wait, the larger your monthly benefit. You can choose to defer taking your benefits until age 70, after which there is no increase.


If you were born in ...

Your "normal" retirement age is ...

1937 or earlier



65 and 2 months


65 and4 months


65 and6 months


65 and 8 months


65 and10 months




66 and2 months


66 and4 months


66 and6 months


66 and8 months


66 and10 months

1960 or later





Is there an advantage to waiting?


Simply put, larger monthly payments. However, starting later means fewer checks over your remaining lifetime. An often overlooked advantage to delaying initiation of payments is the annual cost of living adjustment applied to benefits. The larger benefit attained by delaying the start date will increase the impact of the annual cost of living adjustment, yielding an increased benefit over the years. Whether to delay onset of benefits ultimately depends upon health, family longevity, and most of all, immediate need for the income. According to Social Security, though, the choices are all actuarially neutral after reaching full retirement age.


What if I want to work past age 62?


What matters here is your age when you begin taking benefits. If you take benefits prior to your full retirement age you will be subject to a Social Security penalty for earnings over the 2009 general earnings limit of $14,160. Earnings over and above this will result in a $1 reduction in Social Security for each $2 dollars in excess earnings. The year you attain full retirement age, the threshold rises to $37,680, with a $1 reduction in benefits for each $3 in excess earnings. After full retirement age you can earn as much as you want without any reduction.


If you are approaching Social Security age your first step is to find out whether you’re eligible to receive Social Security and the amount of monthly benefits to which you are entitled. You can call toll free 1-800-772-1213 (anytime) and request form SSA-7004 (request for a Social Security Statement). You should receive your statement within four to six weeks. The most complete and comprehensive resource for information is the Government’s website, It can provide a wealth of explanation and detail, as well as forms and replacement social security or Medicare cards. If you have a hearing disability you can call a special line, TTY 1-800-325-0778. You can also contact our local Social Security office, which is located at 2212 Mossy Oaks Road in Beaufort, and can be reached at (843) 524-5795.

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