What Is Social Security Retirement?


Social Security retirement is a benefit that the U.S. government pays monthly to 90 percent of people 65 and older, according to the Social Security Administration. As of December 2013, 38 million retirees received retirement benefits. Additional payments go each month to the survivors and dependents of workers covered under the plan.

You may need more than Social Security to fund your retirement dreams.
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Social Security retirement began during the Great Depression when President Franklin Roosevelt signed the Social Security Act on August 14, 1935. The government started collecting taxes in January of 1937, and Social Security began paying regular monthly retirement checks in 1940.

The original plan paid retirement benefits, but not survivor's or family benefits. Survivor's, spousal and children's benefits were signed into law in 1939, and disability and Medicare came later.

As of 2015, most workers must pay 6.2 percent of their income up to an annual limit toward Social Security, according to the Internal Revenue Service. Employers pay an equal percentage, and self-employed people pay both the employer and the employee's portions. This payroll tax goes toward funding Social Security benefits.

The Internal Revenue Service holds the Social Security tax money in the Old-Age and Survivors Insurance Trust Fund. Another fund, the Disability Insurance Trust Fund, holds the money for disability. By law, the government can use these funds only for benefits and administrative expenses. In 2013, more than 98 percent of the money spent from these funds went to benefit payments, according to the Social Security Administration.

Approximately 96 percent of workers pay into Social Security, according to the Social Security Administration. If you were born in 1929 or after, you must work at least 10 years under the program to qualify for retirement benefits.

Even if you never had Social Security withheld from your earnings, you can still collect retirement benefits on the record of your qualifying spouse.

You can start collecting retirement benefits at age 62, but Social Security will reduce your payments by a percentage until you reach full retirement age. This age is 66 for people born between 1943 and 1966. If you postpone taking retirement benefits, your amount will increase up to the age of 70.

You can claim spousal benefits beginning at age 62, but you must wait until full retirement age to get the maximum amount.

When you're ready to apply for Social Security, you can use the online Social Security application. The government will automatically enroll you in Medicare if you're already receiving Social Security at age 65.

The amount of your Social Security retirement depends on your lifetime earnings under the program and your age when you start collecting. People with higher lifetime earnings receive more.

As of 2015, the maximum monthly benefit for a person retiring at full retirement age is $2,663, but the average monthly retirement benefit is $1,328, according to the Social Security Administration. The maximum spousal benefit at full retirement age is 50 percent of your spouse's benefit.

You can estimate your future benefit using the online Social Security Retirement Estimator.

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