What Social Security Is and Who Runs It

Social Security is a federal insurance program run by the Social Security Administration (SSA). You pay into it through payroll taxes during your working years, and in return, you or your family members may receive monthly payments if you retire, become disabled, or if you die and leave behind may be able to access family members.

The program has three main parts: retirement benefits (the largest), disability benefits for workers under full retirement age, and survivor benefits for spouses and children of workers who have died. The money you pay in does not sit in an account with your name on it. Instead, current workers' taxes fund current retirees' checks, and your future benefits will be funded by future workers.

You earn the right to these benefits by working and paying Social Security tax. The SSA tracks your earnings record and uses it to calculate how much you will receive.

Key Takeaways

  • Social Security is funded by payroll taxes (6.2% from employees, 6.2% from employers), and you need 40 work credits earned over your lifetime to be may be able to access for retirement or survivor benefits.
  • Your monthly benefit amount is based on your highest 35 years of earnings, and waiting to claim until age 70 instead of 62 can increase your monthly payment by roughly 76%.
  • Full retirement age ranges from 66 to 67 depending on your birth year, and claiming before that age permanently reduces your monthly benefit.
  • Spouses, ex-spouses, and children of workers may also receive benefits based on that worker's earnings record, even if they never worked.
  • You can view your earnings record and get an estimate of your future benefits by creating a my Social Security account at ssa.gov.

How You Earn the Right to Benefits

To receive Social Security benefits, you must earn work credits. In 2024, you earn one credit for every $1,632 in wages you pay Social Security tax on, up to four credits per year. You need 40 credits total to be may be able to access for retirement or survivor benefits — that is roughly 10 years of full-time work, though the credits do not have to be consecutive.

If you become disabled before reaching retirement age, you may be may be able to access for disability benefits with fewer credits. The exact number depends on your age when you become disabled, but generally you need between 20 and 40 credits, with at least half earned in the 10 years before you became disabled.

Self-employed people pay both the employee and employer portions of Social Security tax (15.3% total), but they still earn credits the same way as wage earners. If you work part-time or have gaps in your employment, you can still accumulate credits over time.

How Your Benefit Amount Is Calculated

The SSA looks at your highest 35 years of earnings (adjusted for inflation) and calculates an average. From that average, they explore a formula that is weighted to replace a larger percentage of lower earners' income than higher earners' income. The result is your Primary Insurance Amount (PIA) — the benefit you would receive at your full retirement age.

If you claim before your full retirement age, your benefit is permanently reduced. If you claim at 62 (the earliest age), the reduction is roughly 30% for someone with a full retirement age of 67. If you delay claiming past your full retirement age, your benefit grows by roughly 8% per year until age 70, when growth stops.

Years with no earnings (such as time spent caregiving, in school, or unemployed) count as zeros in the calculation. However, the SSA drops your lowest-earning years, so a few years of zero earnings may not lower your benefit much if you have many high-earning years.

Retirement Benefits and Full Retirement Age

Your full retirement age is when you can claim your full benefit with no reduction. This age depends on your birth year: if you were born in 1943–1954, it is 66; if born in 1955, it is 66 and two months; and it gradually increases to 67 for anyone born in 1960 or later.

You can claim as early as age 62, but your monthly payment will be lower for the rest of your life. You can also delay claiming until age 70, and your monthly payment will be higher. The break-even point — when the total amount you have received catches up between an early claim and a delayed claim — is usually around age 80 or 81, though this varies based on your individual circumstances.

Once you claim retirement benefits, you can continue working, but if you are under full retirement age and earn more than a certain amount (in 2024, $23,400 per year), the SSA will withhold $1 in benefits for every $2 you earn above that limit. In the year you reach full retirement age, the limit is higher and the withholding applies only to earnings before the month you reach full retirement age.

Disability and Survivor Benefits

Social Security Disability Insurance (SSDI) provides monthly payments to workers under full retirement age who have a medical condition expected to last at least 12 months or result in death. You do not have to be completely unable to work; the SSA looks at whether your condition prevents you from doing substantial work. Family members (spouse, children, ex-spouse) may also receive benefits based on your earnings record while you receive disability benefits.

Survivor benefits go to your family if you die. Your widow or widower can claim at any age if caring for your child under 16, or at full retirement age (or as early as 60) for their own benefit. Your unmarried children under 19 (or 19 if still in high school) are may be able to access, as is your ex-spouse if the marriage lasted at least 10 years. Your parents may also be may be able to access if you were supporting them.

The total amount your family can receive is limited to roughly 150% to 180% of your Primary Insurance Amount, depending on family size. If multiple family members claim, the SSA divides this family maximum among them.

Spousal and Ex-Spousal Benefits

If you are married, your spouse may be able to claim a benefit based on your earnings record, even if they never worked or have a low earnings record of their own. A spouse can claim up to 50% of your Primary Insurance Amount at their full retirement age, or a reduced amount as early as 62.

An ex-spouse can also claim based on your record if the marriage lasted at least 10 years, you are at least 62 years old, and you have been divorced for at least two years (or you are already claiming benefits). The ex-spouse's benefit does not reduce your benefit or your current spouse's benefit — it is a separate payment from the SSA.

If you are caring for a child under 16 (yours or your spouse's), you may be able to claim a spousal benefit regardless of your age, though the amount will be reduced.

How to View Your Earnings Record and Plan Your Claim

The SSA maintains a record of all your earnings and the credits you have earned. You can view this record and get a benefit estimate by creating a my Social Security account at ssa.gov. You will need your Social Security number, email address, and a way to verify your identity (such as a driver's license or passport).

Your account shows your earnings history, your estimated retirement benefit at different claiming ages, and your estimated family benefits. The estimate assumes you continue working at your current earnings level until you claim. If your earnings change significantly, the estimate will change too.

If you do not have internet access or prefer to speak with someone, you can call the SSA at 1-800-772-1213 (TTY 1-800-325-0778) to request a benefit estimate by mail or to ask questions about your record. Wait times are often long, so calling early in the week or early in the day may be faster.

Frequently Asked Questions

Can I work and collect Social Security at the same time?

Yes, but if you are under full retirement age and earn above the annual limit (in 2024, $23,400), the SSA will reduce your benefits. Once you reach full retirement age, you can earn any amount without a reduction. If you are still working and delaying your claim, your benefit will grow by roughly 8% per year until age 70.

What happens to my benefits if I move out of the country?

If you are a U.S. citizen, you can receive benefits anywhere in the world. If you are not a U.S. citizen, the rules are more complex and depend on your country of residence and your visa status. Contact the SSA before you move to confirm your situation.

How much does Social Security cost, and where does the money come from?

Social Security is funded by payroll taxes: employees pay 6.2% of wages, employers pay 6.2%, and self-employed people pay 12.4%. These taxes go into the Social Security Trust Fund, which pays current benefits. The program is not funded by general tax revenue.

Can I change my mind after I claim benefits?

If you claimed within the last 12 months, you can withdraw your claim and repay the benefits you received. This restarts your benefit growth. After 12 months, you cannot withdraw, but you can suspend your benefits at full retirement age or later, which pauses your payments and allows your benefit to grow until age 70.

What if I think there is an error in my earnings record?

Log into your my Social Security account and review your earnings history. If you see an error, contact the SSA with documents that show the correct earnings (such as old tax returns or W-2 forms). The SSA can correct errors going back three years, three months, and 15 days from the date you report them.