Learn About Social Security Programs

Your Social Security benefits are the foundation on which you can build a secure retirement. The three major elements of your retirement portfolio are:

• Benefits from pensions,
• Savings and investments, and
• Social Security benefits.

Most financial advisors say you'll need about 70 percent of your pre-retirement earnings to comfortably maintain your pre-retirement standard of living. If you have average earnings, your Social Security retirement benefits will replace only about 40 percent. The percentage is lower for people in the upper income brackets and higher for people with low incomes. You'll need to supplement your benefits with a pension, savings or investments.

To help you plan for retirement, each year we send you your personal Social Security Statement, which gives you an estimate of the monthly benefit amounts you and your family may qualify for now and in the future. If you've received your Social Security Statement and have questions about it, visit the My Statement website.

We also provide a Benefits Planner to help in the event of disability or loss of your family’s wage earner.

Your benefit amount is based on your earnings averaged over most of your working career. Higher lifetime earnings result in higher benefits. If you have some years of no earnings or low earnings, your benefit amount may be lower than if you had worked steadily.

Your benefit amount also is affected by your age at the time you start receiving benefits. If you start your retirement benefits at age 62 (the earliest possible retirement age) your benefit will be lower than if you wait until your full retirement age.
 

Self-employed people must report their earnings and pay the taxes directly to the IRS. You are self-employed if you operate a trade, business or profession, either by yourself or as a partner.

You report your earnings for Social Security when you file your federal income tax return. If your net earnings are $400 or more in a year, you must report your earnings on IRS Schedule SE for Social Security purposes, in addition to the other tax forms you must file.
 

If you work for a federal, state or local government where you do not pay Social Security taxes, the pension you receive from that agency may reduce any Social Security benefits for which you are qualified. There are two factors that may reduce your benefits.

• The first factor affects the way your Social Security retirement or disability benefits are figured. Our Windfall Elimination Provision fact sheet provides answers to questions you may have about this provision.

• The second factor affects Social Security benefits you receive as a spouse or widow/widower. Our Government Pension Offset fact sheet provides answers to questions you may have about this provision.

You can get more information on our website for Federal, State & Local Government Employees.
 

If you work outside the United States (U.S.) for an American company or, in some cases, an affiliate company of an American company, you and your employer may have to pay Social Security taxes on the same earnings to both the U.S. and the foreign country. But, if you work in one of the agreement countries shown in our fact sheet, How International Agreements Can Help You:

• Your Social Security coverage will be assigned to either the U.S. or the foreign country, and

• You and your employer don't have to pay taxes to both countries.

You can get more information about work outside the U.S. on our International Programs website.

Medicare is a health insurance plan for people who are 65 or older and people who are disabled or have permanent kidney failure. Medicare has three parts—hospital insurance, medical insurance and prescription drug coverage. Most people have all three parts.

• Hospital insurance, sometimes called Part A, covers inpatient hospital care and certain follow-up care. You already paid for it as part of your Social Security taxes while you were working.

• Medical insurance, sometimes called Part B, pays for physicians' services and some other services not covered by hospital insurance. Medical insurance is optional, and you must pay monthly premiums.

• Prescription drug coverage, sometimes called Part D, pays for prescription drugs. Prescription drug coverage is optional, and you must pay monthly premiums. However, you also may be able to get extra help paying the monthly premiums, annual deductible and prescription co-payments.

If you are already getting Social Security benefits when you turn 65, your Medicare (Part A) starts automatically. If you are not getting Social Security, you should sign up for Medicare close to your 65th birthday, even if you aren't ready to retire. For more information, see our Medicare booklet.

If you are receiving disability benefits when you reach full retirement age, nothing will change, except that your benefits will be called retirement benefits instead of disability benefits.

If you are receiving survivors benefits and you also are eligible for your own higher retirement benefits, you can switch from survivors to retirement benefits as early as age 62. (In many cases, widows/widowers can begin receiving one benefit at a reduced rate and switch to the other benefit at an unreduced rate at full retirement age.) However, if you switch, you will be paid only the higher of the two benefits, not both.