Know The Basics: How Much Can I Earn While On Social Security?

The Social Security Administration was created in August 1935 when President Franklin Roosevelt signed the Social Security Act. Initially, social security was meant to provide retirement income to workers in the United States. However, the administration expanded and nowadays, people who qualify as disabled—including families and spouses of workers who die in the line of duty—can benefit from the program. You can check here Sassa payout date.

Although the program doesn’t fully pay for your retirement, recent research has found that social security provides 12% of retired men and 15% of retired women with 90% of their income. In comparison, 37% of men and 42% of elderly women get 50% of their income from it. This tells you that this program is essential among the elderly community. As such, it’s important for everyone to be knowledgeable on how it works, the benefits it includes, and how much they can earn from it as they plan their retirement. 

This article will cover all the social security facts to help you understand the essential basics.  

What Is Social Security? 

Social security is a program run by the federal government in the USA that seeks to provide income security and health care to individuals and households during retirement, and in case of disability, loss of the breadwinner, work injury, maternity, and being incapacitated.  

Each party must meet a set of requirements to be eligible for social security benefits. For example, you can’t access your social security retirement benefits before getting to full retirement age (FRA). The retirement age depends on the year you were born. For people born in 1955, the FRA is 66 years and two months, and it gradually increases so that people born in 1960 reach their retirement age at 67 years.  

Generally, you can’t access your retirement benefits before the age of 62, and you must have paid for your social security for ten years or more by then. Additionally, if you wait until 70 years to collect your social security, you get higher benefits than a person who withdrew their benefits earlier. 

How Social Security Works

Before you can understand how social security works, you must be wondering who funds it. Is the federal government that stable and generous to take care of its citizens in large numbers? Well, unfortunately, no, the federal government doesn’t fund the program.  

Citizens fund the social security program through the payment of taxes. About 85% of your tax is secured for social security. Additionally, employees pay for the program through payroll withholdings, while self-employed people pay social security taxes when filing their tax returns.  

This money doesn’t go into an individual’s account. Since you pay the money while you’re still young, healthy, and capable of working, it’s used to benefit the retired, disabled, or bereaved spouses and family who are in need at that time. When your time comes, your social security will be covered by the taxes of the younger generation. You can’t, therefore, pay more taxes to accumulate more benefits. Moreover, any unused money is channeled to the social security trust fund, governed by a Board Of Trustees.  

Once the money is collected, your social security earnings are calculated in the form of credits. As of 2022, one credit is equal to UDF$1,510, which is subject to increase every year. You can only accumulate four credits in a year, equaling an amount of USD$6,040. However, for full social security benefits, a single person is allowed to accumulate a maximum of 40 tokens. Ideally, to earn 40 tokens, you must have worked for at least ten years. So, how much exactly can you earn with social security? 

How Much You Can Earn From Social Security

How much can I earn from social security? Well, it depends on two things:  

1. Your income at the moment
2. When you choose to start receiving your benefits

• Income

The higher you earn, the more the social security tax deductions and the likelihood of achieving 40 tokens is possible. Since not everyone is privileged to have a well-paying job, you can compensate for your low income by working longer. The goal is to earn as many tokens as possible to enjoy more social security earnings. 

Similarly, if you had a period in your life where you weren’t working, working longer can help fill those gaps. It also allows you to reach the requirement of working for at least ten years to enjoy social security benefits.  

• Age Of Retirement

Age of retirement, in this case, is used to refer to the age when you choose to start reaping your social security benefits. As discussed above, the minimum age is 62 years. But the full age of retirement is 66 years and two months for those who are born in 1955. However, the longer you wait to receive, the more the monthly benefits increase. When you start receiving your benefits at 62 years, the monthly earnings are usually reduced by half. It’s therefore recommended that you at least wait until your specific full retirement age if you’re looking to enjoy maximum earnings.   

In 2022, the maximum earning you can receive monthly is USD$2,364 for people who file at 62 years and USD$3,345 for those who wait for full retirement age.  

Types Of Social Security Benefits

Now that you understand how social security works, it’s time to learn about the different types of social security benefits provided by the federal government  

• Retirement Benefits

This article has dwelt chiefly on this type of social security benefit. As the name suggests, the program is meant to benefit people who retire at a certain age. It covers part of the retirement income. This means that you can’t rely on social security for your entire retirement. Experts recommend that you develop a retirement plan that will help you get other sources of income in your golden years.  

Besides the retiree, their spouse can also benefit from the retirement social security. The spouse can either show their record of work or that of their spouse. Additionally, a divorced spouse who isn’t remarried can also benefit from the program. 

Children of the retiree are also listed as part of the beneficiaries. This is in case the child is disabled or is still a student. According to the law, a child is not eligible for their parent’s retirement benefits upon reaching 16 years of age. 

• Survivors Benefits

Survivors benefit social security is meant for the spouse, children, and family of a person who dies. The spouse has to be 50 years or older and not remarried to be eligible for the benefits. If the spouse is looking after a child who is 16 years and younger or disabled, they’re suitable for the benefit. 

This social security also benefits parents who are more than 62 years old who were depending on the dead worker. They can earn at least half of the worker’s income. Given some circumstances, adopted children, stepchildren, grandchildren, and step-grandchildren may benefit from this program. 

Disability Benefits

This program is meant for people who can’t work due to either a mental or physical disability that’s expected to last for more than a year. These people have to undergo a test to determine if they meet the social security benefit requirement.  

The family members of the disabled person are also beneficiaries of the program. 

To Sum It Up

With the newly acquired knowledge on social security and how much you can earn from it, you’re at a better place to plan your retirement. To enjoy maximum benefits, you can opt to work longer. But also remember that you need to find alternative options that can help supplement your social security retirement income.