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What is Social Security?

Social Security was established in 1935 to alleviate poverty among the elderly during the Great Depression. It was created as a self-financing program that would collect payroll taxes from workers which would immediately be paid out in benefits to retirees. 

Millions of Americans depend on Social Security. For many, it is their primary source of retirement income. For others, it is an important supplement to pensions and personal savings. 


What are the benefits of Social Security?

Unlike other sources of retirement income, Social Security offers a unique combination of benefits.

  • A predetermined amount of income. By the time you come to the end of a long working career, the amount of Social Security income you will be entitled to is pretty well known. The benefit is based on your earnings history as it is applied to a formula. While the amount may vary depending on when you apply for benefits (delaying benefits results in a larger amount), the relative accuracy of the estimate makes it easy to build the rest of your retirement income plan around it. 


  • Steady income. Once you have qualified for Social Security benefits, the amount of income you'll receive is set. Some people worry that benefits may be cut in the future, but that is highly unlikely that benefits paid to current retirees will be significantly affected by proposals to reform the Social Security system. 


  • Lifetime income. Social Security is one of the few sources of income that can be assured of never running out. Ida Mae Fuller, the first recipient of monthly Social Security benefits, continued to receive checks until her death at age 100. 


  • Inflation-adjusted income. Social Security benefits are usually increased each year based on the previous year's increase in the Consumer Price Index. These cost of living adjustments (COLAs) help retirees keep up with the rising cost of living. 


  • Survivor benefits. Although Social Security checks stop at death, benefits are paid to surviving spouses and dependents. 


How to apply for Social Security benefits

There are three ways to apply for Social Security:

  • Online at www.SSA.gov -for retirement, disability, and spousal benefits only. 
  • By phone at 800-772-1213
  • In person at a local Social Security office. Use the Social Security office locator at www.SSA.gov for the address, hours, and driving directions. 

Information and documents you will need to provide

Have ready the following when you make your application:

  • Social Security number
  • Name at birth
  • Date and place of birth
  • Citizenship status 
  • The beginning and ending dates of each period of active duty service, if service occurred before 1968
  • Whether you receive, or expect to receive, a pension or annuity based on employment with the federal government or one of its state or local subdivisions
  • Current marital status and spouse's name, date of birth, and Social Security number
  • The names, dates of birth, and Social Security numbers (if known) of any other spouses
  • The dates and places of each marriage and, for marriages that have ended, how and when they ended
  • Names of any unmarried children under age 18
  • The name and address of each employer for the last two years
  • Information about self-employment
  • Estimated earnings for last year and this year (and next year, if application is made between September and December)
  • If you are within three months of turning 65, whether you want to enroll in Medicare Part B 
  • Bank account numbers for direct deposit


What about Medicare?


Medicare and Social Security used to go hand in hand. When full retirement age was 65 for everyone, most people would apply for Social Security and Medicare at the same time. But now that full retirement age is increasing, baby boomers will become eligible for Medicare at 65, before they become eligible for full Social Security benefits at 66.

The most important thing to know about Medicare is that unless you are receiving Social Security benefits at age 65 (that is, you applied for early reduced benefits), you must proactively apply for medicare when you turn 65. If you don't apply in a timely manner, a 10% penalty will be added to your Part B premiums for each 12-month period that you go without applying after becoming eligible. This penalty will continue for the rest of your life. (An exception exists if you are covered under a group health plan that covers 20 or more employees and is based on current employment. In this case you have a Special Enrollment Period to sign up for Part B and may defer Medicare enrollment without penalty until your group coverage ends.)

For more information on Medicare, click here.