What Are the 4 Main Types of Social Security Benefits, In 1935, President Franklin Roosevelt passed the Social Security Act that has ever since helped and financially supported American citizens who may be struggling with money due to a number of reasons such as disability, old age, etc. via the insurance scheme? This insurance is officially termed the Old-Age, Survivors, and Disability Insurance program (OASDI).
This insurance falls under the Social Security Administration which is funded through the payroll taxes collected by the Internal Revenue Service or IRS via the Federal Insurance Contributions Act tax (FICA) and Self Employed Contributions Act Tax (SECA). These funds are then used to support the different people who are a part of the Social Security scheme.
What Are the 4 Main Types of Social Security Benefits
Calculating the Social Security Benefits
The Social Security program is collected through payroll taxes deducted from the salary of the employees which are deposited into the Social Security Trust Fund. These payments are controlled and managed by the government with the support of the Federal Reserve Board.
The benefits of social security are unique or different for each person and their or situation. The factors that determine the amount of social security insurance and benefits received by the individual depend on a number of factors –
- Lifetime earnings
- Marital status
- Retirement income saved over the years
- The retirement age
- The tax levied by the home state
So while calculating the social security benefits, all of the above factors are kept in the equation and are necessary elements.
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What are the different types of benefits under the Social Security Act?
At present, there are a number of benefits that are listed under the Social Security Act that cater to the financial needs of people under various issues to help them stay afloat and survive without falling into the abyss of poverty. The main benefits of this scheme are –
- Retirement benefits
- Disability benefits
- Survivor’s benefits
- Supplemental Security Income (SSI)
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Retirement Benefits
A person who has worked hard and honestly for his entire life deserves to live comfortably after retiring and should not have to worry about their financial standing. So to be able to enjoy financial freedom even after retirement, a person is required to plan their finances prudently and make sure they should save while still earning, invest smartly and stay in the realm of Social Security benefits.
Applying for the Retirement Benefits
A person should apply for retirement benefits at least four months before you want to start receiving the benefits it can also be done online by filling up the retirement application offered by Social Security and it takes just about 15 minutes.
Just filling out the application is sufficient and there is no need of submitting additional forms or documents. After that the Social Security processes the application and contacts the person for further formalities.
A person who is at least 61 years and 9 months old can apply for the social security benefits can apply for the benefit, provided they are not receiving the benefits of their Social Security records. The person can choose to get the retirement benefits as early as the age of 62 years or maybe wait till they are 70.
Though the person who opts to receive the benefits before reaching the full retirement age gets reduced amount in terms of monthly benefits.
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Disability Benefits
Life is fickle and the only thing predictable about it is its unpredictability. That is why even if you do not think about or do not want to think about the possibility of anything bad happening such as an accident at work or some chronic illness that may render you disabled, still studies show that over 1 in 4 people who are in their 20s can become disabled before they reach the age of 67.
Social Security’s disability benefits provide a safety net to fall back on whilst something undesirable and terrible happens in our life that may reduce comely severe the possibility to earn a person’s livelihood.
At present, the disability benefits are paid under two programs -Social Security is determined on the basis of the length of time you have worked and paid the social security taxes which makes you as well as the family members eligible to receive the benefit along with the adult child if his or her disability started before the age of 22.
The SSI disability also pays benefits to adults and children who are disabled and have limited income or resources to support themselves.
In most cases, the medical requirements or eligibility to receive disability payments are the same under both programs. So when you are going to apply either for Social Security or SSI disability, you will be asked for information based on your medical condition, work, and education history to determine if you can be qualified as a disability under the specified laws.
Survivors Benefits
Though it is somewhat an uncomfortable topic, still death is inevitable and most of the time unpredictable. That is why it is wise to be prepared for what lies after death in terms of leaving financial support to your family that is going to survive you so that your loss may not translate into financial misery for them.
This is where Social Security can truly help your family if something is to happen to you. The Survivor’s benefits under social security are meant to support the spouse and the children or the living relative dependent on the person who has died.
These benefits are paid based on the earnings of a person and the number of social security credits they have earned through the work. To avail of the survivor benefits, you are required to notify the government as soon as the person dies.
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Can US citizens living Overseas apply for Social Security benefits?
The other great thing about Social Security Act is that even if a US citizen does not live in America itself, they but still can receive social security benefits. It does depend on the country you are currently residing and to find out if you are eligible, you need to visit the Social Security Administration’s (SSA) website where you will have to use the payment verification tool and see whether the said nation appears in the drop-down menu option.
Work Credits Accrued by Working Overseas
If you work overseas then also your work credits get acknowledged while calculating the social security benefits as the SSA has formed an agreement with 24 countries.