In
1935, President Franklin Roosevelt passed the Social Security Act that has ever
since helped and financially supported the American citizens who may be
struggling with money due to a number of reasons such as disability, old age,
etc. via the insurance scheme. This insurance is officially termed as the
Old-Age, Survivors and Disability Insurance program (OASDI). This insurance
falls under the Social Security Administration that is funded through the
payroll taxes collected by the Internal Revenue Service or IRS via Federal
Insurance Contributions Act tax (FICA) and Self Employed Contributions Act Tax
(SECA). These funds are then used to support the different people who are a
part of Social Security scheme.
Calculating the Social Security Benefits
The Social
Security program is collected through payroll taxes deducted from the
salary of the employees which they are deposited into the Social Security Trust
Fund. These payments are controlled and managed by government with the support
of Federal Reserve
Board.
The benefits under the social security are unique or different to each person
and their situation. The factors that determine the amount of social security
insurance and benefits received by the individual depend on a number of factors
–
- Lifetime earnings
- Marital status
- Retirement income saved over the years
- The retirement age
- The tax levied by the home state
So
while calculating the social security benefits, all of the above factors are
kept into the equation and are necessary elements.
What are the different types of benefits under Social Security Act?
At
present, there are a number of benefits that are listed under the Social
Security Act that cater to the financial needs of people under various issues
to help them stay afloat and survive without being falling into the abyss of
poverty. The main benefits under this scheme are –
- Retirement benefits
- Disability benefits
- Survivor’s benefits
- Supplemental Security Income (SSI)
Retirement Benefits
A
person who has worked hard and honestly for his entire life deserve to live
comfortably after retiring and should not have to worry about their financial
standing. So to be able to enjoy the financial freedom even after the
retirement, a person is required to plan their finances prudently and make sure
they should save while still earning, invest smartly and stay into the realm of
Social Security benefits.
Applying for the Retirement Benefits
A
person should apply for the retirement benefits at least four months before you
want to start receiving the benefits and it can also be done online by filling
up the retirement application offered by the Social Security and
it takes just about 15 minutes. Just filling the application is sufficient and
there is no need of submitting additional forms or documents. After that the
Social Security processes the application and contact the person for further
formalities. The person who is at least 61 years and 9 months old can apply for
the social security benefits can apply for the benefit, provided they are not
receiving the benefits of their Social Security records. The person can choose
to get the retirement benefits as early as the age of 62 years or maybe wait
till they are 70. Though the person who opts to receive the benefits before
reaching the full retirement age gets reduced amount in terms of monthly
benefit.
Disability Benefits
Life is fickle and the only thing
predictable about it is its unpredictability. That is why even if you do not
think about or do not want to think about the possibility of anything bad
happening such as an accident at work or some chronic illness that may render you
disable, still the studies show that over 1 in 4 people who are in their 20s
can become disabled before they reach the age of 67. Social Security’s
disability benefits provide a safety net to fall back on whilst something
undesirable and terrible happens in our life that may reduce comely severe the
possibility to earn a person’s livelihood. At present, the disability benefits
are paid under two programs -
The Social Security is determined on the
basis of length of time you have worked and paid into the social security taxes
which make you as well as the family members eligible to receive the benefit
along with the adult child if his or her disability started before the age of
22. The SSI disability also pays benefits to
adults and children who are disabled and have limited income or resources to
support themselves.
In most cases, the medical requirements or
eligibility to receive the disability payments are same under both programs. So
when you are going to apply either for Social Security or SSI disability, you
will be asked for the information based on the medical condition, work and
education history to determine if you can be qualified as a disability under
the specified laws.
Survivors Benefits
Though
it is somewhat an uncomfortable topic, still death is inevitable and most of
the times unpredictable. That is why it is wise to be prepared for what lies
after death in terms of leaving financial support to your family that is going
to survive you so that your loss may not translate into financial misery for
them. This is where Social Security can truly help your family if something is
to happen to you. The Survivors benefits under the social security are meant to
support the spouse and the children or the living relative dependent on the
person who has died. These benefits are paid based on the earnings of a person
and the number of social security credits they have earned through the work. To
avail the survivor benefits, you are required to notify the government as soon
as the person dies.
Can the US citizens living Overseas apply for Social Security benefits?
The
other great thing about Social Security Act is that even if a US citizen does
not live in America itself, but still can receive the social security benefits.
It does depend on the country you are currently residing and to find out
if you are eligible, you need to visit the Social Security
Administration’s (SSA) website where you will have to use the payment verification tool and see whether
the said nation appears in the drop-down menu option.
Work Credits Accrued by Working Overseas
If you work overseas then also your work credits get
acknowledged while calculating the social security benefits as the SSA has
formed an agreement with 24 countries.
