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What Are Social Security Benefits? Definition, Types, And History
What Are Social Security Benefits? Social Security benefits are payments made to qualified retired adults and people with disabilities, and to their spouses, children, and survivors. Social Security—officially the Old-Age, Survivors, and Disability Insurance (OASDI) program in the U.S.—is a comprehensive federal benefits program designed to provide partial replacement income for retired adults and their spouses, those whose spouse or qualifying ex-spouse has died, and people with disabilities. Under specified conditions, it also supports the children of beneficiaries. Key Takeaways Social Security benefits provide partial replacement income for qualified retired adults and individuals with disabillities, as well as for their spouses, children, and survivors. An individual must pay into the Social Security program during their working years and accrue 40 credits in order to qualify for benefits. The benefit amount someone receives is based on their earnings history, the year they were born, and the age when they start to claim Social Security. Spouses who don't work or haven't amassed the requisite number of credits can receive benefits based on their spouse's work record. Benefits may be taxed depending on one's income and tax filing status. How Social Security Benefits Work President Franklin Roosevelt signed the original Social Security Act into law in 1935. The current law, after a number of amendments, encompasses several social insurance and social welfare programs, including the issuance of Social Security benefits. Benefits are determined by a specific set of criteria issued by the Social Security Administration (SSA). Payroll taxes under the Federal Insurance Contributions Act (FICA) or the Self Employed Contributions Act (SECA) (for self-employed individuals) fund Social Security and all of its benefits. The Internal Revenue Service (IRS) collects tax deposits and formally entrusts them to the Social Security Trust Fund, which is actually made up of two separate funds: the Old-Age and Survivors Insurance (OASI) Trust Fund and the Disability Insurance Trust Fund. How Do You Qualify for Social Security Benefits? You qualify for Social Security old age (or retirement) benefits by paying into the program during your working years. Full insurance is based on accumulating 40 quarters or "credits" from covered wages, and a worker can earn up to four credits a year. One credit is awarded for every $1,730 in earnings for 2024 (and $1,640 in 2023), an amount that is adjusted annually to keep up with inflation. A payroll tax cap sets the maximum amount of earned income that is subject to the Social Security payroll tax. The payroll tax cap in 2023 is $160,200 (and rises to $168,600 in 2024). The SSA keeps track of your earnings throughout your career, indexes each year's total earnings, and uses the 35 highest-earning years to determine your average indexed monthly earnings (AIME). Next, your AIME is used to arrive at your primary insurance amount (PIA), the monthly amount you can begin to collect when you reach full retirement age. For individuals born in 1938 or later, the full retirement age gradually increases from 65 until it hits 67 for those born after 1959. You can collect Social Security retirement benefits at age 62, but the amount of the benefit will be reduced to compensate for receiving it earlier and, presumably, for a longer period of time. If you wait until you're 70 instead of 62 to collect benefits, you'll get an extra 8% a year, which means you'll collect 132% of your PIA for the rest of your life. Once you reach age 70 the increases stop. In 2023, the maximum monthly Social Security payment for retired workers is $3,627, rising to $3,822 in 2024. The SSA's retirement calculators can help you determine your full retirement age, the SSA's estimate of your life expectancy for benefit calculations, rough estimates of your retirement benefits, actual projections of your retirement benefits based on your work record, and more. Retired adults with non-FICA or SECA-taxed wages will require additional help because rules for those individuals are more complex. Types of Social Security Benefits Spousal Benefits Spouses who didn't work or who didn't earn enough credits to qualify for Social Security on their own can receive benefits starting at age 62 based on their spouse's work record. Similar to claiming benefits on one's own record, a spouse's benefit will be reduced if they claim benefits before reaching full retirement age. The highest spousal benefit someone can receive is half the benefit their spouse is entitled to at their full retirement age. Survivor Benefits When a spouse dies, the surviving spouse is entitled to file for a survivor's benefit as early as age 60. The benefit will be reduced if they file prior to reaching their full retirement age. They are permitted to switch to their own benefit at any point they wish starting at age 62 and through age 70 if that benefit is higher than the survivor's benefit. People who were married for 10 years or longer—and are divorced and have not remarried—are entitled to collect the spousal benefit and the spousal survivor benefit. The rules are complicated so review them carefully. Special Considerations If an individual taxpayer's income exceeds $25,000, or a married couple filing jointly has income that's more than $32,000, they will be required to pay taxes on their Social Security benefits. The portion of benefits that is subject to taxation depends upon income level, but no one pays taxes on more than 85% of their Social Security benefits, regardless of income. Benefits received due to disability are, in most cases, tax-free. If your child receives dependent or survivor benefits, this money does not count towards your taxable income. What Happens to Unused Social Security Benefits? Unused Social Security benefits are kept in the Social Security trust funds and used to pay individuals receiving payments right now. Money contributed to Social Security cannot be refunded and contributions are not returned if an eligible worker dies before collecting benefits. Which States Tax Social Security Benefits? There are 11 states that currently tax Social Security benefits—Colorado, Connecticut, Kansas, Minnesota, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, and West Virginia. What Percentage of Social Security Benefits Does a Widow Receive? Widows can receive up to 100% of the deceased spouse's primary insurance amount (PIA). Widows of a divorced spouse (married for at least 10 years) are also eligible to collect up to 100% of the former spouse's PIA—assuming they have not remarried. When Does Social Security Benefits Recalculate? Social Security benefits are evaluated each year. That is, the Social Security Administration reviews benefits each year for the previous year's income. If the latest year is one of your highest-earning years, your benefit is recalculated to reflect the increased benefit due—which is retroactive to January of the year after you earned the money. Which Types of Income Reduce Your Social Security Benefits? If you're younger than full retirement age, certain types of income that contribute to your yearly earnings limit can reduce your benefit amount. Such income includes wages paid to you for working and net earnings from self-employment. Income that does not reduce benefits includes interest, annuities, capital gains, investment earnings, pensions, and other government benefits.Social Policy And Welfare Pluralism
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Q&A: Researcher Finds Immigration Doesn't Threaten Welfare States
It is often thought that immigration threatens the solidarity on which redistribution relies. But looking at the post-war period, Ph.D. Candidate Emily Anne Wolff finds that this is not the case.
The post-war period was an age of welfare expansion but also of decolonization and migration. What can this time tell us about immigration, race, and welfare today? Wolff studied the social inclusion of postcolonial migrants from (present-day) Indonesia, Algeria, and the Caribbean in the Netherlands, France and the U.K., respectively, between 1945 and 1970. Wolff will defend their thesis on Tuesday 18 June.
You set out to measure the inclusion of migrant groups in their new home countries. How do you measure inclusion?Good question! I came up with a framework for evaluating inclusion that focused on different dimensions. One dimension was the extent to which individuals had access to material welfare. Were they eligible for social assistance or social security? And did they actually receive these benefits? A second dimension focused on whether people were treated with respect, as a moral equal.
The need for these dimensions became especially clear when I realized that sometimes people had a lot, but the type of thing they got was demeaning or degrading, forcing them into cultural practices or jobs that they might not have wanted to be in.
What patterns of exclusion or inclusion did you find?I found a lot of cases where, as time went by, policymakers and members of the national community at large—the national media, civil servants, the general public—constructed identities of specific migrant groups as particularly deserving or undeserving of welfare. In France and the Netherlands, these efforts led to several different forms of inclusion in the welfare state.
One of the clearest examples is the harkis, Algerians who supported French military efforts during the Algerian independence war. Some 50,000 of them came to France. They were formally eligible for French social assistance, but rarely received it, and were explicitly redirected towards occupations in isolated forests such as forest ranger or cattle herder.
One of the reasons given by French policymakers at the time was that certain Harki characteristics made them better suited to these professions. For instance, that the harkis were from a rural background and were unprepared for urban life. Which was racialized and untrue: in one 1962 survey, more harkis had training in industrial or construction than in agriculture, and Algerians had been powering the French automobile sector for decades.
The U.K. Responded to these migrations somewhat differently. Caribbeans were eligible for social assistance on (formally) equal terms. However, civil servants and politicians used this to justify their exclusion under immigration reforms of the 60s and 70s.
What do you think was the real reason for constructing these identities?Its easy to underestimate how disruptive the Second World War and decolonization had been for Europeans understanding of who they were. The war, coupled with a flurry of UN reports debunking race as a biological concept, delegitimized the racial order that had powered the empire-state. I think that introduced a lot of confusion about what it meant to be French or Dutch and which migrants deserved welfare. National identity needed a new source of fuel.
What does your research tell us about immigration today?There's lots of concern in academic circles and the public sphere about the impact of immigration on welfare states. The reigning idea is that if we have immigration, it will introduce cultural and racial diversity and decrease the publics willingness to share their resources.
My research shows that diversity flows from our ideas of who is like us and that these ideas are subject to change and vulnerable to influence from political, cultural and social actors. So its possible that immigration has an effect on a welfare state. But if it does, its not because of diversity, but because of vigorous efforts to police the boundaries of, and at the same time give meaning to, national identity.
In other words, it comes from a process in which were constantly telling each other who's in and who's out.
Citation: Q&A: Researcher finds immigration doesn't threaten welfare states (2024, May 2) retrieved 22 May 2024 from https://phys.Org/news/2024-05-qa-immigration-doesnt-threaten-welfare.Html
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