A:

On August 14, 1935, U.S. President Roosevelt signed into law the Social Security Act, a social insurance program designed to pay retired workers a continuing income. Over the years, Social Security has evolved to pay four different types of benefits:

  • Retirement
  • Disability
  • Family
  • Survivors

Most American workers include Social Security as part of their retirement plans. As you work and pay Social Security (FICA) taxes, you earn “credits” toward Social Security retirement benefits. In general, you need 40 credits, or about 10 years of work, to be eligible to receive Social Security retirement benefits. The amount of your benefit is based on how much you earned while working, and the age at which you begin receiving benefits.

The earliest you can start receiving Social Security retirement benefits is when you turn 62, but your monthly amount will be permanently reduced. Your full retirement age is the age at which you can start collecting full or unreduced benefits (the maximum payout), and it is based on the year in which you were born. The following table shows the full retirement age for various birth years:

Birth Year

Full Retirement Age

1937 or earlier

65

1938

65 and 2 months

1939

65 and 4 months

1940

65 and 6 months

1941

65 and 8 months

1942

65 and 10 months

1943-1954

66

1955

66 and 2 months

1956

66 and 4 months

1957

66 and 6 months

1958

66 and 8 months

1959

66 and 10 months

1960 and later

67

You will receive close to the same lifetime benefit whether you start receiving benefits at age 62, full retirement age, or age 70 if you live to the average life expectancy for someone your age. That’s because if you start early, you will receive lower monthly payments for a longer period of time, and if you delay benefits, you will receive higher monthly payments for a shorter period of time. The Social Security Administration web site has a Retirement Planner that gives detailed information about retirement benefits under current law. You can find information on your life expectancy, how your family members may qualify for benefits, and use benefit calculators to test different retirement ages or future earnings amount. Check it out at www.ssa.gov/retire2.

RELATED FAQS
  1. Why is Social Security running out of money?

    On August 14, 1935, U.S. President Roosevelt signed into law the Social Security Act. Originally implemented to assist older ... Read Full Answer >>
  2. Can my spouse and children collect my Social Security when I die?

    Social Security pays four different types of benefits: retirement, disability, family and survivor. Under survivor benefits, ... Read Full Answer >>
  3. Am I losing the right to collect spousal Social Security benefits before I collect ...

    The short answer is yes, if you haven't reached age 62 by December 31, 2015. The Bipartisan Budget Act of 2015 disrupted ... Read Full Answer >>
  4. What is the maximum I can receive from my Social Security retirement benefit?

    The maximum monthly Social Security benefit payment for a person retiring in 2016 at full retirement age is $2,639. However, ... Read Full Answer >>
  5. Are target-date retirement funds good investments?

    The main benefit of target-date retirement funds is convenience. If you really don't want to bother with your retirement ... Read Full Answer >>
  6. What's the difference between Social Security Disability Insurance (SSDI) and Supplemental ...

    Disabled persons can receive payments through two programs: Social Security Disability Insurance and Supplemental Security ... Read Full Answer >>
Related Articles
  1. Retirement

    5 Social Security Alternatives

    Social Security is predicted to run out in the next few decades. Read on to see how you can offset the shortfall.
  2. Savings

    What Your Credit Score Means for Your Love Life

    Wondering if your significant other wants to commit and is reliable? The Fed might have the answer.
  3. Mutual Funds & ETFs

    Top 3 VALIC Funds for Retirement Diversification in 2016

    Learn about the VALIC fund family, its performance relative to its peers and the top three VALIC funds to consider for retirement diversification in 2016.
  4. Your Clients

    Tips for Making Your Nest Egg Last Longer

    If you’re trying to figure out how to make your hard-earned nest egg last, there’s one piece of advice that stands above the rest.
  5. Retirement

    The Gay Couple's Guide to Social Security Benefits

    The recent U.S. Supreme Court decision on marriage equality affords same-sex couples access to Social Security benefits. Here's how it works.
  6. Personal Finance

    10 Ways to Protect Your Social Security Number

    Identify theft thrives in part because people must give their Social Security number for so many types of interactions. How can you protect yourself?
  7. Mutual Funds & ETFs

    Top 3 Lazard Funds for Retirement Diversification in 2016

    Learn about Lazard Asset Management, its long history of strong performance and the top three Lazard funds to consider for retirement diversification.
  8. Retirement

    Early Out: A Realistic Plan to Retire Younger

    If you want to retire ahead of schedule, it'll take some extra planning.
  9. Mutual Funds & ETFs

    Which Fund Share Class is Best for Retirement?

    Mutual funds are a popular investment for retirement. Here's how to choose the best share class when investing in them.
  10. Mutual Funds & ETFs

    Top 3 Voya Funds for Retirement Diversification in 2016

    Learn about Voya Investment Management's mutual fund offerings and the three Voya funds to consider for retirement diversification in 2016.
RELATED TERMS
  1. Social Security Act

    A law enacted by President Franklin D. Roosevelt in 1935 to create ...
  2. Social Security

    A United States federal program of social insurance and benefits ...
  3. Modified Tenure Payment Plan

    A way to receive reverse mortgage proceeds that gives the borrower ...
  4. Sequence Risk

    The risk of receiving lower or negative returns early in a period ...
  5. Skilled Nursing Facility

    A special facility or part of a hospital that provides services ...
  6. Nursing Home Placement Service

    A business that specializes in helping families and patients ...
Trading Center