What is Social Security?
Social Security is a federal program that was created to provide economic security to workers in the United States. Social Security benefits are funded by payroll taxes collected from workers and self employed people.
Social Security actually has two main programs, the Old Age, Survivor and Disability Insurance (OASDI) program and Unemployment Insurance. This article will focus on retirement benefits provided under the OASDI program.
Social Security Retirement Age
When Social Security was first created in 1935, the sole purpose was to provide retirement benefits to workers. There were no survivor, disability or family benefits in the original act.
The Social Security retirement age back then was 65; you didn’t have the option to retire early like you do now.
In 1956, women were allowed to apply for retirement benefits (spousal benefits) at age 62; this was based on the assumption that women were younger than their spouses and allowed wives to collect benefits at the same time as their husbands. Note that men were not allowed to apply for retirement benefits at age 62 until the law was changed again in 1961.
There have been many changes to the retirement age since the original act. Under the current system, the retirement age is the same for both men and women; you can apply as early as age 62 or as late as age 70 for retirement benefits.
The Full Retirement Age is Increasing
Full retirement age is the starting point for calculating your retirement benefits and varies based on the year you were born. In the original Social Security Act the full retirement age was 65, however it has been increased to account for people living longer and in an effort to allow funds in the Social Security trust to last longer.
The full retirement age for people retiring now (including baby boomers born between 1943 and 1954) is age 66. This age will gradually increase for people born after 1954 until it reaches age 67 (for people born in 1960 or later).
The minimum age has not changed; workers can still collect early retirement benefits beginning at age 62. However if you choose to collect benefits early they will be reduced for each month that you collect them before you reach the full Social Security retirement age. People who retire at age 62 and start collecting Social Security at that time will only receive 75% of the benefit they would receive at full retirement age.
Note that if you collect benefits before you reach full retirement age those benefits will be reduced; conversely, if you wait to collect benefits after you have reached your full retirement age, your benefit will be higher when you finally start collecting them. By waiting to collect your benefits, you could increase your benefit amount up to 132% of the benefit you would receive at your normal retirement age.
Social Security Eligibility Age for Other Programs
If you’re not confused by the various ages already, Social Security has different age requirements for its different programs. For example, survivor benefits start at age 60 or age 50 if you are disabled. In addition, if you are caring for the dependent child of a deceased worker, you can be any age to collect benefits. Disabled workers can be any age to collect benefits as long as they meet the other requirements.
How to Apply for Benefits
If you are ready to apply for benefits, there are several ways to do so. In an effort to reduce costs, the SSA has improved their website and now allow you to apply for retirement benefits online. To get started go to www.socialsecurity.gov and click on “apply online for retirement benefits”. You can also apply for disability and Medicare benefits online. In addition, you can call 800-772-1213 to apply for benefits by telephone, or you can visit your closest SSA office.