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Life Advice
Social Security
This Life Advice pamphlet about Social Security was produced by the Metlife Consumer Education Center and reviewed by the Social Security Administration. Editorial services provided by Meredith Integrated Marketing.

What is Social Security?

Social Security is a method of providing a continuing income to you and your family if your earnings stop or are reduced by retirement, disability or death. Social Security payments will not replace all lost income, however, and you should be prepared to supplement it with savings, investments, other insurance or pensions.

When Social Security took effect in 1937 it applied to workers in industry and commerce, which accounted for only 60 percent of all working people. With a goal of universal coverage, the Social Security Act has been amended over the years.

Who is Covered?

Today Social Security protects more than 145 million workers and their families, and pays benefits to nearly 44 million people. Although most people associate Social Security with retirement funds, it also includes the Medicare hospital and supplementary medical insurance programs, which cover a portion of health care expenses for beneficiaries who are over 65. It pays survivor benefits to the families of deceased workers. It also pays benefits to blind and disabled persons and their families.

Today almost everyone in the United States is paying Social Security taxes or receiving benefits. Major exceptions include:

  • Most federal government employees hired before 1984.
  • About 25 percent of state and local government employees. Each state and local government unit with a pension plan decides for itself whether to join Social Security/Medicare.
  • Railroad workers are covered under the federal Railroad Retirement system.
Do I Need a Social Security Card?

Everyone is required to have a Social Security number in order to work, to file a federal income tax return, or to be claimed as a dependent on someone else’s return. In most states, the application for a birth certificate also serves as an application for a Social Security number. Others should contact their nearest Social Security office.

How You Earn Social Security

In order to be eligible for Social Security and Medicare benefits, you must have worked long enough and in some cases, recently enough, to qualify. As you work and pay taxes, you earn Social Security quarters of coverage or credits. A maximum of four credits can be earned within one calendar year. The amount of money you must earn each quarter to obtain one credit goes up every year based on wage inflation.

Social Security and Medicare are financed by taxes, paid by you and your employer. When you work as a salaried employee, your employer withholds a percentage of your earnings (up to the maximum taxable amount), adds a matching amount as the employer's contribution and pays the total to the Internal Revenue Service (IRS) as a payroll tax. It's called FICA (Federal Insurance Contributions Act) on your check.

If you are self-employed, you pay all the tax (15.3 percent) as SECA (Self-Employment Contributions Act) to the IRS yourself. Although self-employed people pay double the Social Security taxes of a salaried person, half of their tax is deductible on their tax return as a business cost.

How Do I Qualify for Retirement Benefits?

The number of credits needed to qualify for benefits also depends upon the type of benefit. A general “rule of thumb” is that people need 40 credits (or 10 years of work) to obtain retirement benefits. It does not matter when the credits are earned, nor is the dollar amount of the benefit based on the number of credits. All credits that you have earned remain on your record, even if you have not worked for a period of time. Your benefit amount is based on your earnings averaged over most of your working career—higher lifetime earnings result in higher benefits. If you have some years of no or low earnings, your benefit amount will probably be lower than if you worked steadily.

When Can I Begin Receiving Social Security Retirement Benefits?

You can retire as early as age 62 and receive benefits the rest of your life. However, the age at which you choose to retire is a very important consideration and can have a substantial impact on how much money you receive each month. Consider these possibilities:

  • Full Retirement Age — Age 65. The current Full Retirement Age will gradually increase to age 67. The formula is designed so that if you have average earnings throughout your working life and retire at the Full Retirement Age, the benefit you receive in your first year of retirement will equal approximately 42 percent of what you earned in the year just before you retired. No matter what your earnings, the maximum benefit you can receive at retirement is determined by the Social Security law. The maximum amount changes from year to year.
  • Early Retirement — If you start your Social Security benefits as early as age 62, the benefit amount you receive is permanently reduced because of the longer period over which you will be receiving payments. You would continue receiving the lower amount even after you turned 65. If you retire early because you cannot work due to poor health, you should consider applying for Social Security disability benefits. The amount of disability benefit is the same as a full retirement benefit.
  • Delayed Retirement — If you decide to retire later than your Full Retirement Age, you can increase your benefit in two ways:
- Each added year of work adds another year of earnings to your Social Security record. Higher lifetime earnings could result in higher benefits once you do decide to retire.
- Your benefit will be increased by a certain percentage if you delay retirement. These increases will be added automatically from the time you reach your Normal Retirement Age until you start receiving your benefits, or until you reach age 70.

If you decide to delay your retirement, be sure you sign up for Medicare at age 65. In some circumstances, medical insurance costs more if you delay applying for it.

Age to Receive Full Social Security Benefits

Before 1938
1960 and later
65 and 2 months
65 and 4 months
65 and 6 months
65 and 8 months
65 and 10 months
66 and 2 months
66 and 4 months
66 and 6 months
66 and 8 months
66 and 10 months
How Much Will I Receive In Monthly Benefits?

The Social Security law includes a complex formula for determining your retirement benefits. In general, the formula will be applied to your record of lifetime earnings through the year before your retirement. Since October 1999, Social Security has been sending personalized benefit statements to all workers over age 25 not now receiving benefits. The annual Social Security Statement contains a complete earnings history along with estimates of benefits payable at age 62, full retirement age (now age 65), and at age 70. You should receive it three months before you birthday; if not, you should call Social Security and request one. When you receive the statement, you should check for errors so they can be corrected promptly. Verify that the amounts listed equal your own record of earnings, from pay stubs or income tax records. Call the Social Security helpline at 800/772-1213 to report any inaccuracies.


  • You — Age 62 or over
    Your Spouse — Age 62 or over
    — Any age if caring for a child under 16, or older than 16 and disabled before 22
  • Your Divorced Spouse — Age 62 or over if the marriage lasted at least 10 years (These benefits may be paid before the worker actually retires.)
  • Your Unmarried Child — Under 18, or 18 if in high school, or any age if disabled before 22


  • You — Any age before "Normal Retirement Age"
    Your Spouse — Age 62 or over
    — Any age if caring for a child under 16, or older than 16 and disabled before 22
  • Your Unmarried Child — Under 18, or 18 if in high school, or any age if disabled before 22


  • Your Spouse — Age 60 or older, or 50 or older is diabled
    — Any age if caring for a child under 16, or older than 16 and disabled before 22
  • Your Unmarried Child — Under 18, or 18 if in high school, or any age if disabled before 22
Can I Work After I Begin Receiving Social Security Retirement Benefits?

You may wish to work in some capacity after you retire. In April 2000, the law that determines what happens when you work and get benefits at the same time changed. While you’re working, your benefit amount will now be reduced only until you reach your full retirement age, not up to age 70. You can use the following formula to determine how much your benefit will be reduced:

If you are under full retirement age (currently age 65) when you start collecting Social Security payments, $1 in benefits will be deducted for each $2 you earn above the annual limit (the annual limit, or retirement earnings exempt amount, is determined by an automatic adjustment procedure that will be adjusted periodically). In the year you turn full retirement age, $1 in benefits will be deducted for every $3 you earn above a different limit, but only counting earnings before the month you reach the full benefit retirement age. Starting with the month you reach full retirement age, you will receive your benefits with no limit on your earnings.

When figuring out how much is deducted from your benefits, only the wages you make from a job, or your net profit if you’re self-employed is counted. This includes bonuses, commissions and vacation pay, but not pensions, annuities, investment income, interest, veterans or other government or military retirement benefits. It is important to remember that when you continue to work while you get benefits, Social Security will check your record every year to see if those additional earnings will increase your monthly payment. If there is an increase, they will send you a notice of your new benefit amount.

Survivor's Insurance

If you are the family member of a deceased worker, you may be able to apply for Social Security survivor benefits. Social Security now pays monthly survivor benefits to over seven million Americans, including almost two million children. Family members who may qualify for all or a portion of a deceased worker’s benefits include:

  • A widow or widower. The most typical situations are as follows: Today a widowed spouse age 65 or older will receive 100 percent. A widowed spouse age 60 to 64 may receive 71-99 percent; a spouse at any age with a minor child will generally receive about 75 percent.
  • Divorced spouses may qualify for benefits if they are presently unmarried and if the marriage lasted at least 10 years and the surviving ex-spouse is at least 60 years of age.
  • Children, for Social Security purposes, are defined as biological children, adopted children, step children and in some cases even dependent grandchildren. A child must be under 18 (or still in high school at age 18) and unmarried in order to receive benefits, which are generally 75 percent of the worker’s benefits. Benefits cease if the child marries.
  • Parents also will probably be entitled to benefits if they are 62 or older and were dependent on the deceased worker as their principal means of support.

Note:A lump-sum death benefit of $255 is payable to any surviving spouse living with the deceased at the time of death. Children who are eligible for benefits are also eligible for the lump-sum death payment of $255 if there is no surviving spouse. Otherwise, the benefit is not payable. You must apply for this one-time payment within two years of a worker’s death. The number of credits needed for earnings to be eligible for survivor’s benefits depends upon the age of the deceased. The younger a person is when he or she dies, the fewer credits needed for his or her family to be eligible. In general, a worker must have 11/2 to 10 years Social Security-covered work in order for his or her family to receive benefits.

If You Become Disabled

More than 4 million disabled workers under 65 and 1.6 million dependents (including over 1 million children) are currently receiving disability benefits. Social Security does not pay for partial disability or for short-term disability. Generally, working families have other resources to provide support during periods of short-term disabilities (such as sick pay, worker’s compensation, insurance, savings and investments).

Disability payments cannot begin until after a five-month waiting period from the first full month of disability has expired. When a worker has received disability benefits for two years, he or she becomes eligible for Medicare.

You can file a disability claim at your local SSA office. The process is lengthy and requires a review by the State Disability Determination Service to decide if you qualify. You will be required to provide:

  • Your Social Security card and birth certificate
  • Your medical records, dates of hospitalization and doctors' visits, copies of prescriptions, etc.
  • A detailed work history and explanation of how your disability has affected your work. You may be examined by a medical professional, as well as having all your records verified. If you are denied disability, you will have 60 days to file an appeal. If you receive disability benefits, your case will be periodically reviewed.
Supplemental Security Income

Supplemental Security Income (SSI), which should not be confused with Social Security disability, pays monthly benefits for people who are in financial need and are blind, disabled or over age 65. It is supplemental support paid for by the U.S. Treasury, not Social Security taxes. Blind, mentally challenged or disabled children also may be eligible for SSI, regardless of their age.

Eligibility and the amount received depends upon your assets, income, living arrangements, and whether your state government supplements the federal payment. Those people eligible for SSI are almost always eligible for Medicaid—another needs-based program. Medicaid provides significant hospital, physician, nursing home, and community-based long-term care benefits.


Medicare is our country’s national health insurance program for people age 65 or older, certain people with disabilities who are under age 65, and people who have permanent kidney failure. It is administered by the Health Care Financing Administration. After you become 65, you will be eligible for Medicare whether you continue to work or not. Medicare has two parts:

  • Part A is hospital insurance that helps pay for inpatient hospital care and some follow-up services.
  • Part B is medical insurance that helps pay for doctors’ services, outpatient hospital care, diagnostic tests, prosthetic services, physical therapy and other medical services. Part B is an optional program and you pay a fee for benefits.

Medicare will not pay for 100 percent of your medical expenses. Therefore, you should:

  • Make sure that any other health insurance coverage you have, such as an HMO or employer’s plan, knows you are eligible for Medicare.
  • Consider obtaining a medigap insurance policy that may cover Medicare’s deductibles and “fill in the gaps” in your Medicare coverage.
  • Study the Medicare Handbook and other resources to understand exactly what health coverage you have under Medicare.
How Do I Apply for Medicare

Go to your local SSA office three months before your 65th birthday and complete an application. Ask for a copy of the Medicare Handbook. If you are already receiving Social Security benefits when you turn 65, you will automatically be enrolled in Medicare. If you are disabled, you will automatically be enrolled in Medicare after you have been getting disability benefits for 24 months.

How Do I Sign Up for Social Security Benefits?

Social Security will not start your benefits until you file an application. You can start the process by telephoning (800-772-1213) or by going to a Social Security office. You will need to bring the following information with you:

  • Your Social Security number and card. If you lose your card, call the Social Security office and give them the information they request. They will arrange for a replacement card with the same number.
  • Your birth certificate
  • Your W-2 or self-employment tax return from last year
  • Your military discharge papers if you had military service
  • Your spouse's birth certificate and Social Security number if he or she is applying for benefits
  • Your children's birth certificates and Social Security numbers if applying for children's benefits.
  • The name of your bank and account number so your benefits can be deposited directly into your account.
Please note: These documents must be originals or copies certified by the issuing office.
When Should I Contact the Social Security Administration?
  • Persons reaching age 62 should contact Social Security three months prior to age 62 if you have retired or are planning to retire.
  • Survivors of deceased workers should contact Social Security as soon as possible after the death of the worker.
  • Disabled workers should contact Social Security as soon as their physician tells them their medical condition is expected to last at least 12 months.
Where Does Your Money Go?

Few people really know exactly where their Social Security tax dollars are going. Payroll taxes are credited to the two Social Security trust funds: the Old Age and Survivors Insurance (OASI) and the Disability Insurance (DI) trust funds. Money not used to pay benefits and administrative costs is invested in U.S. government bonds. The government uses the money invested in savings bonds to pay for all the services and the projects it provides to U.S. citizens.

For the most part, out of every dollar you pay:

  • 70 cents goes to a trust fund that pays monthly benefits to retirees and their families and to widows, widowers and children of workers who have died
  • 19 cents goes to a trust fund that pays for the health care of all Medicare beneficiaries
  • 11 cents goes to a trust fund that pays benefits to people with disabilities and their families
  • Less than one cent goes to administering Social Security
What Does the Future Hold?

While Social Security has been a part of life for most Americans for 60 years, it has been modified many times to meet the changing economic needs of the public. It will undoubtedly have to change again to meet the needs of people in the 21st century. Today, Social Security is taking in more than enough money to pay benefits and continues to save money in trust funds. While there is no immediate crisis, demographic and economic changes, such as longer life expectancies and the impending retirement of the baby boomers, will undoubtedly lead to new financing challenges that will have to be addressed.

For More Information

If you have not received one in the mail, you can get a personalized Request for Earnings and Benefit Estimate Statement by calling Social Security at 800/772-1213. Complete the appropriate paperwork and receive a complete earnings history along with estimates of your benefits for early retirement, full retirement and when you reach age 70.

You can get recorded information 24 hours a day by calling Social Security’s toll-free number: 800/772-1213. Service representatives are available from 7:00 A.M. to 7:00 P.M., E.S.T., Monday through Friday. The following are just a few of the publications available free of charge.

  • Social Security — Basic Facts (Publication No. 05-10080)
  • Social Security — Understanding the Benefits (Publication No. 05-10024)
  • Retirement Benefits (Publication No. 05-10035)
  • Disability Benefits (Publication No. 05-10029)
  • Medicare (Publication No. 05-10043)
  • Supplemental Security Income (Publication No. 05-11000)
  • Survivor's Benefits (Publication No. 05-10084)
  • Your Taxes . . . What They're Paying for . . . Where the Money Goes (Publication No. 05-10010)
  • Your Number and Card (Publication No. 05-10002)

You can also access Social Security information on the Internet at Information includes:

Social Security e-news, a free electronic newsletter. Go to and select the monthly newsletter and any of 10 subjects for regular updates. You will receive the newsletter by e-mail. The newsletter can help you keep up with changes in Social Security programs that may affect you and your family.

The Social Security Retirement Planner will let you compute estimates of your future Social Security benefits online. And you can get important information on factors affecting your retirement benefits, such as military service, household earnings, and federal employment.

Plus other valuable information, such as the location of the nearest Social Security offices, copies of publications, and copies of your Form 1099 benefit statement showing the benefits you received during the year.


Comprehensive Guide to Social Security and Medicare
Ken Stern, Career Press $11.99

Social Security, Medicare and Pensions: Get the Most Out of Your Retirement and Medical Benefits
Joseph L. Matthews with Dorothy Matthews Berman,
Sixth Edition, Nolo Press $25.95

Related Life AdviceŽ pamphlets
See other Life AdviceŽ pamphlets on related topics: Building Financial Freedom, Choosing a Financial Advisor, Planning for Retirement, Enjoying Retirement, and Lump Sum Distribution. To order up to three free pamphlets at a time, call 1-800-Met-Life, that's 1-800-638-5433.

For Information on Special Needs Estate Planning, call 1-800/MET-DESK

If you're on the Net, check us out. We're part of Metlife Online (

Additional Sources

Social Security Administration: This site provides the most current information and up-to-date services to help you understand the history, benefits, and financing of our Social Security system.

Center for Medicare and Medicaid Services: - The federal agency that administers Medicare, Medicaid and the State Children's Health Insurance Program.

National Council on Disability (NCD): - NCD's overall purpose is to promote policies, programs, practices, and procedures that guarantee equal opportunity for all individuals with disabilities.

Metropolitan Life Insurance Company
New York, NY

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