The current Social Security system in the U.S. is funded by people who work and pay Social Security tax. The tax money is then used to pay benefits to:
- People who have already retired
- People who are disabled
- Survivors of workers who have died
- Dependents of beneficiaries
Your link to Social Security is your Social Security Number (SSN). Your earnings while working and consequent benefits after you retire are tracked using your SSN. If you need to apply for a new number, the authorities ask for the following documents:
- A birth certificate or some form of identification
- A marriage certificate or divorce papers if divorced, if you are applying for a name change
The process of procuring the SSN is simple and free of charge. As you work and pay your taxes, you earn your 'credits'. Typically, you would require 40 credits to qualify for benefits. Social Security benefits replace a percentage of your actual earnings when you retire, become disabled or die. You receive a 'Statement' showing your earnings history, and an estimate of the retirement, disability and survivors' benefits you and your family may receive based on your earnings.
You can choose to have an early retirement or a delayed retirement. If you choose to receive delayed benefits beyond your full retirement age, you have two choices, namely work and get full retirement benefits irrespective of how much you earn, or decide not to collect any benefits until you reach 70 and then get a higher benefit when you retire. The benefits are increased by a certain percentage, depending on the year when you were born.
However, if you choose to have an early retirement, for example, if you start receiving benefits by the age of 62, your benefits are reduced permanently.
You are eligible for disability benefits if you are unable to work due to a physical or mental condition that is expected to last at least for a year or result in death. When you apply for the same, the following documents are necessary to process a disability claim:
- All medical records from your doctors, therapists, hospitals, and clinics
- Laboratory tests and test results
- Contact information of all your doctors, clinics, and hospitals
- Names of all medications prescribed to you
- Names of your former employers and job responsibilities for the last 15 years
When you die, your family is eligible for benefits based on your work. The family members who are eligible include a widow or widower who is:
- 60 years or older; or
- 50 years or older and disabled; or
- any age if she/he is caring for your child who is younger than 16 years of age, or disabled and receiving Social Security benefits
- Your children are also eligible for benefits, if they are unmarried and
- younger than 18 years of age; or
- between 18 - 19 years of age, but in an elementary or secondary school as full-time students
- 18 years of age or older and severely disabled
Additionally, your parents can receive benefits on your earnings if they were dependent on you for at least half of their support. If you are divorced, your ex-spouse may be eligible for survivors benefits on your record when you die. Your survivors receive a percentage of your basic benefit, usually in the range of 75 to 100 percent each. Social Security benefits are generally paid by direct deposit.