You can become eligible for Social Security benefits via two main paths. The first is a qualifying disability at any adult age, but you need enough work credits for this. For example, if you become disabled at the age of 50, you'd need 28 work credits. But at age 56, you'd need 34 work credits. Work credits are earned by working a job and paying into the Social Security system via payroll taxes. You may also be able to qualify for this benefit based on your spouse's work history.
The second type of Social Security benefits are retirement benefits. You are eligible for these benefits if you are 62 years old or older and have worked and paid Social Security taxes in the past for at least 10 total years. Your spouse's work may also qualify you for benefits.
Yes, you can complete an online application when you're ready to retire and begin receiving your Social Security benefits. The Social Security Administration recommends that you complete the application around 4 months before you want to start receiving benefits to ensure time for the application to process.
If you're going to be 65 soon, you can also apply for Medicare benefits at the same time. The Social Security Administration notes that you should apply for Medicare 3 months before you turn 65, even if you aren't ready to receive retirement benefits from the SSA.
The amount of benefits you receive depends on how much you earned throughout your lifetime. Typically, it's based on what's called the "average indexed monthly earnings." The SSA uses a formula and data from up to 35 years of your work history to determine the average amount you made per month. The formula then calculates an amount to be paid to you based on that number. Note that your Social Security benefits are never equal to the average you previously made and tend to be lower — most financial advisors recommend that people make other savings plans to supplement their Social Security income.
You can increase the amount of your monthly benefit by delaying your retirement. The earliest you can receive SSA retirement benefits is age 62. However, for every year through age 69 that you delay receiving those benefits, your monthly payment amount increases slightly. If you're still working or you don't need the benefits yet, you may want to consider delaying them to increase how much you get every month for budgetary purposes. Many people find it helpful to discuss their options with a retirement financial advisor, as these decisions can be complex.
Whether your Social Security benefits are taxed depends on how much income you had total in the year. According to the Social Security Administration, you only pay taxes on up to 85% of your benefits in the following situations as of 2024:
Because we're not financial advisors at Cambridge Court assisted living community in Kearney, NE, this short guide is meant to provide some basic information and not money management or retirement planning advice. If you'd like to explore this topic further, we've provided some helpful resources below.
It can also be a good idea to work with a trusted financial advisor or retirement planning expert, especially if you have a decent-sized retirement portfolio to manage.
