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How To Get The Maximum Amount
Decisions about retirement are among the most important ones you will ever make. Social Security will be part of the retirement plans of almost every individual in the United States. This Financial Guide provides information you need about Social Security benefits to help you plan for your retirement years.

Eligibility For Retirement Benefits
Amount Of Your Retirement Benefit
Choosing Your Retirement Date
Benefits For Widows/Widowers
How Work Affects Your Benefits
Your Family's Benefits
How To Apply
Your Right To Appeal
How Work Affects Your Benefits
Taxability Of Benefits
Pensions From Work Not Covered By Social Security
Leaving The United States
Medicare Insurance


When you work and pay Social Security taxes (referred to as FICA on some pay stubs), you earn Social Security credits. Most people earn four credits per year. The number of credits you need to get retirement benefits depends on your date of birth. If you were born in 1929 or later, you need 40 credits (10 years of work). People born before 1929 need fewer than 40 credits (39 credits if born in 1928, 38 credits if born in 1927, etc.).

If you stop working before you have enough credits to qualify for benefits, your credits will remain on your Social Security record. If you return to work later on, you can then add credits so that you may qualify. No retirement benefits can be paid until you have the required number of credits.

If you are like most people, however, you will earn many more credits than you need to qualify for Social Security. While these extra credits do not increase your Social Security benefit, the income you earn while working will increase your benefit.


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 is also 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 a later age.

Planning Aid Planning Aid: Social Security will give you a personalized benefit estimate at your request. Call 800-772-1213 and ask for a Request for Earnings and Benefit Estimate Statement. Upon completion, and return of the form you will receive a statement of your complete earnings history along with estimates of your benefits for early retirement, full retirement, and delayed retirement (discussed below). You’ll also receive an estimate of the disability benefits you could receive as well as the amount of benefits payable to your spouse and children due to your retirement, disability. or death. If you are age 60 or older, you can get an estimate of your retirement benefits by telephone.

Social Security law provides for automatic cost-of-living increases. Once you start receiving benefits. the amount will go up automatically as the cost of living rises.

Full Retirement

The usual retirement age for people retiring now is age 65. Social Security calls this full retirement age, and the benefit amount that is payable is considered the full retirement benefit.

Because of longer life expectancies, the full retirement age will be increased in gradual steps until it reaches age 67. This change starts in the year 2000, and it affects people born in 1938 and later. The chart below shows what your full retirement age will be:

Year Of Birth

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

Early Retirement

You can start your Social Security benefits as early as age 62, but your benefit amount will be less than your full retirement benefit. If you take early retirement, your benefits will be reduced based on the number of months you will receive checks before you reach full retirement age. If your full retirement age is 65, the reduction for starting your Social Security is about 20% at age 6-2; 13-1/3% at age 63, and about 6 2/3% at age 64.

If your full retirement age is older than 65 (that is, if you were born after 1937), you will still be able to take your retirement benefits at age 62, but the reduction in your benefit amount will be greater than for people retiring now.

Example Example: John is retiring this year when he turns 62 and will receive monthly benefits equal to about 80% of the benefit amount he would have received had he waited until age 65 to retire. His son, James, was born in 1962 and, based on the revised retirement age schedule, would be eligible for full retirement benefits at age 67. If James takes early retirement benefits at age 62 like his father, his monthly check will be about 70% of the full benefit he would receive if he waited until age 67 to retire.
TIP TIP: As a general rule, early retirement will give you about the same total Social Security benefits over your lifetime, but in smaller amounts to take account of the longer period you will receive them.


TIP: If you are unable to continue working because of poor health, you should consider applying for Social Security disability benefits. The amount of the disability benefit is the same as a full, unreduced retirement benefit. For more information on disability benefits, request a copy of the booklet Disability (Publication No. 05-10029).

Delayed Retirement

If you decide to continue working full-time beyond your full retirement age, you will increase your Social Security benefit in two ways:

  • You will be adding a year of earnings to your Social Security record.  (As stated earlier, higher lifetime earnings results in higher benefits.)
  • Your benefit will increase by a certain percentage for each additional year you work. These increases will be added in automatically from the time you reach your full retirement age until you either start taking your benefits or reach age 70.  The percentage varies depending on your year of birth.  The chart below shows the increase that will apply to you.

Year Of Birth

Yearly Rate of Increase

1917-1924 3%
1925-1926 3.5%
1927-1928 4%
1929-1930 4.5%
1931-1932 5%
1933-1934 5.5%
1935-1936 6%
1937-1938 6.5%
1939-1940 7%
1941-1942 7.5%
1943 or later 8%


Example Example: If you were born in 1943 or later, your benefit will increase by 8% (2/3 of one percent per month) for each year you delay signing up for Social Security beyond your full retirement age.
TIP TIP: If you decide to delay your retirement, be sure to sign up for Medicare at age 65. In some circumstances, medical insurance costs more if you delay applying for it.


If you plan to start your retirement benefits at age 62, contact Social Security in advance to determine the best retirement month to claim your benefits. In some cases, your choice of a retirement month could mean additional benefits for you and your family.

TIP TIP: It may be to your advantage to have your Social Security benefits start in January, even if you don't plan to retire until later in the year. Depending on your earnings and your benefit amount, it may be possible for you to start collecting benefits even though you continue to work. Under current rules, many people can receive the most benefits possible with an application that is effective in January.

If You plan to start collecting your Social Security when you turn 62, you should apply for benefits three months before the date you want your benefits to start.  If you are not working your annual earnings fall below the earnings limits (discussed below), or


TIP TIP: Because the rules are complicated, you should discuss your plans with a Social Security claims representative in the year before the year you plan to retire.


Many people do not realize that widows and widowers can begin receiving Social Security benefits at age 60 (or age 50 if disabled) on the deceased spouse’s account. If you are receiving widows/widowers (including divorced widows/widowers) benefits, you can switch to your own retirement benefits (assuming you are eligible and your retirement rate is higher than your widow/widower's rate) as early as age 62.

In many cases, a widow or widower can begin receiving one benefit at a reduced rate and then switch to the other benefit at an unreduced rate at age 65. Since the rules vary depending on the situation, talk to a Social Security representative about the options available to you.


If you are receiving retirement benefits, some members of your family can also receive benefits. Those who can include:

  • Your wife or husband age 62 or older;
  • Your wife or husband under age 62 if she or he is taking care of your child who is under age 16 or disabled;
  • Your former wife or husband age 62 or older (see below);
  • Children up to age 18;
  • Children age 18-19 if they are full-time students through grade 12;
  • Children over age 18, if they are disabled.

The full benefit for a spouse is one-half of the retired worker's full benefit. However, if your spouse takes benefits before age 65, the amount of the benefit is reduced to 37.5% at 62 unless she or he is taking care of a child who is under 16 or disabled.

If you are eligible for both your own retirement benefits and for benefits as a spouse, you will be paid your own benefit first. If your benefit as a spouse is higher than your retirement benefit, you will get a combination of benefits equaling the higher spouse benefit.

Example Example Mary Ann qualifies for a retirement benefit of $250 and a wife's benefit of $400. At age 65, she will receive her own $250 retirement benefit and an additional $150 from her wife's benefit for a total of $400.

A divorced spouse can get benefits on a former husband's or wife's Social Security record if the marriage lasted at least 10 years and the divorced spouse is 62 or older and unmarried. For the divorced spouse to get benefits, the worker also must be 62 or older. If divorced for at least two years, the divorced spouse can get benefits even if the worker is not retired. This two-year waiting period is waived if the worker got benefits before the divorce. The amount of benefits a divorced spouse gets has no effect on the amount of benefits a current spouse can get.

If you have children eligible for Social Security, each child will receive up to one-half of your full benefit. However, there is a limit to the amount of money that can be paid to a family. If the total benefits due your spouse and children exceed this limit, their benefits will be reduced proportionately – but your benefit will not be affected.


You can apply for benefits by telephone or by going to any Social Security office. Depending on your circumstances, you will need some or all of these documents:

  • Your Social Security number;
  • Your birth certificate;
  • Your W-2 forms or self-employment tax return for last year;
  • Your checking or savings account information for direct deposit.
  • Your military discharge papers if you had military service;
  • Your spouse's birth certificate and Social Security number if he or she is applying for benefits;
  • Your children's birth certificates and Social Security numbers if applying for children's benefits.

You will need to submit original documents or copies certified by the issuing office. You can mail or take them to Social Security, which will make photocopies and return your documents.

TIP TIP: Don't delay your application because you don't have all the information. If you don't have a document you need, Social Security can help you get it.


If you disagree with a decision made on your claim, you can appeal it. The steps you can take are explained in the fact sheet, The Appeals Process (Publication No. 05-10041), which is available from Social Security. You have the right to be represented by an attorney or other qualified person of your choice. More information is in the fact sheet, Social Security and Your Right to Representation (Publication No. 05-10075), also available from Social Security.


A Retirement Earnings Test limits the amount of Social Security benefit a person between the ages 62 and full retirement age can receive while still working. For those born before 1938, full retirement age is 65; for those born in 1938, it is 65 and 2 months; for those born in 1939 it is 65 and 4 months; for those born in 1940, it's 65 and 6 months. Persons born in 1939 and 1940 may reach full retirement age in 2005.

For those reaching full retirement age in 2005, $1 in benefits will be deducted for every $3 in earnings above the limit ($2,650 a month for 2005—increasing in future years). This applies for months before full retirement age. No limit applies beginning the month full retirement age is reached.

For those under full retirement age throughout 2005, $1 in benefits will be deducted for each $2 in earnings above the limit ($12,000 for 2005—increasing in future years).

If other family members receive benefits on your Social Security record, the total family benefits will be affected by your earnings. Not only will your benefits be offset, but those payable to your family will be offset as well. If a family member works, however, the family member’s earnings affect only his or her benefits.

A special rule applies to your earnings for one year, usually your first year of retirement. Under this rule, you can receive a full Social Security check for any month you are retired, regardless of your yearly earnings. Your earnings must be under a monthly limit. If you are self-employed, the services you perform in your business are taken into consideration as well.

If you earn more than the earnings limit and receive Social Security benefits, you must report this to Social Security. You do not have to fill out a report if you are full retirement age all year.


About 20% percent of people who get Social Security have to pay taxes on their benefits. This provision affects only people who have substantial income in addition to their Social Security.

At the end of each year, you will receive a Social Security Benefit Statement (Form SSA-1099) in the mail showing the amount of benefits you received. You can use this statement when you are completing your income tax return to find out if any of your benefits are subject to tax.


If you get a pension from work where you paid Social Security taxes, it will not affect your Social Security benefits. However, if you get a pension from work which was not covered by Social Security (for example, the Federal civil service or some State or local government employment), your Social Security benefit may be lowered or offset.

TIP TIP: For more information, call Social Security to ask for the fact sheets, Government Pension (for government workers who may be eligible for Social Security benefits on the record of a husband or wife) (Publication No. 05-10007) and A Pension From Work Not Covered By Social Security (for government workers who also are eligible for their own Social Security benefits) (Publication No. 05-10045).


If you are a U.S. citizen, you can travel or live in most foreign countries without affecting your eligibility for Social Security benefits. Your checks can be sent there. However, there are a few countries where Social Security will not send your checks. If you work outside the United States, different rules apply in determining whether you can get your benefit checks.

Most people who are neither U. S. residents nor U.S. citizens will have up to 15 % of their benefits withheld for federal income tax.

TIP TIP: For more information, ask Social Security for a copy of the booklet Your Social Security Checks While You Are Outside the United States (Publication No. 05-101373).


Medicare is a health insurance plan for people who are 65 or older. (People who are disabled or have permanent kidney failure can get Medicare at any age.) Medicare has two parts (most people have both):

  • Hospital insurance (Part A), which covers inpatient hospital care and certain follow-up care. You have already paid for it as part of your Social Security taxes while you were working.
  • Medical insurance (Part B), which pays for physicians' services and some other services not covered by hospital insurance. Medical insurance is optional, and a premium is charged for it.

Most people are already getting Social Security benefits when they turn 65, and their Medicare starts automatically.

TIP TIP: If you are not getting Social Security, sign up for Medicare close to your 65th birthday, even if you do not plan to retire. For more information, ask Social Security for a copy of the booklet, Medicare (Publication No. 05-10043.)






















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