Social Security 101
- ashley5822
- 22 hours ago
- 3 min read
Written by Ashley Mills, June 2025
Social Security is a complicated topic with many common misconceptions. If you’ve ever wondered who qualifies, the filing ages and what that means for your benefit amount, how much you can earn while drawing your benefit, what happens when someone taking social security passes away, how it’s calculated, and how you can find your own projected payout, don’t skip this post!
Why was social security created?
The Social Security Act was signed in 1935 by President Roosevelt and created as a social insurance to help people avoid poverty in retirement. The first check was issued in January of 1940 to Ida Mae Fuller, in the amount of $22.54! Interesting fact: Life expectancy of a woman in 1940 was 65 years old but Ida lived to be 100 years old, probably so she could keep collecting that check!
Who pays in to social security?
Social security is collected primarily through payroll tax from workers. The current tax rate for social security is 6.2% for the employer and 6.2% for the employee, for a total of 12.4%. This is calculated on the amount of earnings up to $168,600 in 2024. Self-employed people pay the entire 12.4%.
Who qualifies for social security?
A worker aged 62 or older, or a person with disability or blindness. The worker must be “insured” by having enough work credits (an average of one work credit for each calendar year between age 21 and the year in which you reach age 62, up to a maximum of 40 credits), or be a person with a disability or blindness. A minimum of 6 work credits is required, regardless of age.
What is social security disability (SSDI)?
This pays benefits to you and certain family members if you are “insured” (after working at least 10 years - earning 40 social security credits in a job where he or she paid Social Security taxes) and meet the social security’s definition of disabled. There are eligibility screening tools available on www.ssa.gov to assist you with determining what programs you may qualify for.
What is Supplemental Security Income (SSI)?
These benefits are not based on prior work and are administered by SSA but financed by the general funds of the U.S. Treasury and not by social security tax. In most states, SSI recipients can also get Medicaid and food assistance. To qualify for SSI, you must be disabled, blind or at least 65 years old and have limited income and resources.
How is my monthly social security benefit calculated? I plan to work less as I approach retirement, will this decrease my future benefits?
They are normally computed using your average indexed monthly earnings, using the highest 35 years of income. These wages are indexed to account for inflation. Using the highest years of income helps the benefit if you started or ended your career with a lower salary than you averaged in the best years.
How can I find my projected social security benefit?
The official social security website is packed full of information. Go to www.ssa.gov where you can establish an account and pull your own social security projections to see the various payout ages and amounts. They stopped mailing these reports, so you’ll need to access them this way to see your estimates.
What is the earliest I can file for social security?
The earliest filing age is 62, which is considered an early filing age. Your full retirement age (FRA) ranges from 66-67 depending on your year of birth; see the chart below to find your full retirement age. Waiting until your FRA to file will get you the full retirement benefit with no reduction, and imposes no penalties to continue earning income. At age 70, the benefits stop growing but are still adjusted for inflation.
References:
https://www.ssa.gov/retirement; accessed April 2025
