5 Types Of Social Security Benefits: Retirement, Disability, Family, Survivors, And Medicare
Hello everyone, my name is Tan. I am an independent CERTIFIED FINANCIAL PLANNER™ practitioner. Today, I am going to talk about the 5 types of benefits Social Security pays; retirement, disability, family, survivors, and Medicare.
“Nearly nine out of ten individuals age 65 and older receive Social Security benefits (1).”
People are living longer. “A happily married couple at 65 years old statistically have a 72% chance of at least one spouse living to age 85 and a 45% chance that one will live to age 90 (2).”
“Seventy-two percent of the 39 million retired workers received reduced benefits (2).”
Based on these statistics, if we know people are living longer, why are so many people taking reduced Social Security benefits?
- One, they need the money to live and cannot wait until full retirement age. Full retirement age is when they get the full Social Security benefits.
- Or Two, they don’t know the Social Security benefits rules.
- Or Three, that could be their best option.
Social Security benefits is important to understand because you and/or your family could get "benefits" if qualified. Here is a sample 2018 statement provided by Social Security Administration.
Again, Social Security pays five types of benefits; Retirement, disability, family, survivors, and Medicare (3).
Let's start with disability. Disability, “if you become disabled before full retirement age, you can receive disability benefits after six months if you" are qualified (4).
Family. This is the type of benefit your family gets when you are still alive. “If you're eligible for disability or retirement benefits, your current or divorced spouse, minor children or adult children disabled before age 22 also may receive benefits. Each may qualify for up to about 50 percent of your benefit amount (4)."
Survivors. This is the type of benefit your family gets when you pass away. “When you die, certain members of your family may be eligible for benefits: your spouse age 60 or older (50 or older if disabled, or any age if caring for your children younger than age 16); and your children if unmarried and younger than age 18, still in school and younger than 19 years old, or adult children disabled before age 22. If you are divorced, your ex-spouse could be eligible for a widow's or widower's benefit on your record when you die (4)."
When you are deceased, “your spouse or minor child may be eligible for a special one-time death benefit of $255 (4)."
Medicare, "Medicare is our country’s health insurance program for people age 65 or older. Certain people younger than age 65 can qualify for Medicare, too, including those with disabilities and those who have permanent kidney failure (5)."
The last type of benefit Social Security provides is retirement. Let's look at this graph provided by Social Security Administration.
You get full retirement benefits at full retirement age. Full retirement age was 65 for many years. However, the full retirement age has gradually increased from age 65 to age 67 (3). I was born in the 1980s and my full retirement age is 67. Yours may be different.
The easiest and most accurate way to find out your full retirement age is to go to ssa.gov and log-in to view your online statement. If you don't have an account, you can create one.
Based on this graph, the investor full retirement age is 66 and the benefit is $1,000 a month.
Minimum retirement benefits. Some people retire early, “the minimum age for retirement (is) age 62 for workers, and age 60 for widows or widowers. You can choose a reduced benefit anytime before you reach full retirement age (3).”
If the investor collects at age 62, the benefit will be $750, at age 63 will be $800, age 64 will be $866, and age 65 will be $933.
If the investor collects between age 62 and full retirement age, their benefit will permanently be reduced.
The longer you delay collecting the benefits after full retirement age, the higher your benefits will be. The maximum age you want to collect Social Security benefit is age 70 because the benefit will not increase after age 70 (3).
Based on this graph, the investor benefit is $1,320 a month. If the investor collect after age 70, the benefit will still be $1,320. A rational investor will not wait longer than age 70 to collect benefit because the benefit is not going to increase after age 70.
The key takeaway is to log-into ssa.gov to see what benefits you and your family could receive.
Thank you for listening. This is Tan, your trusted advisor.
References
(1) - https://www.ssa.gov/news/press/factsheets/basicfact-alt.pdf
(2) - https://www.ssa.gov/policy/docs/statcomps/supplement/2015/supplement15.pdf
(3) - https://www.ssa.gov/agency/glossary/
(4) - https://www.ssa.gov/myaccount/materials/pdfs/SSA-7005-SM-SI%20Wanda%20Worker%20Near%20retirement.pdf
(5) - https://www.ssa.gov/benefits/medicare/
This material is for educational use only and does not constitute tax, legal, or investment advice. Information may be changed or updated without notice. Consult with a licensed professional regarding your personal circumstances.
Please do not excerpt or copy this information without prior consent from TAN Wealth Management.