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Every American hears about — or participates in — Social Security at some point in their lives. However, many don’t know what the program actually entails. It’s a benefit over 64 million people use when they reach retirement age — and you’ll likely eventually be in a similar position.

How do Social Security benefits work? Check out what you should know about them.

What Is Social Security?

Social Security operates as a public benefit through the United States government. Americans can access the program when they turn a certain age, which depends on their birth year. Essentially, Social Security works as a financial safety net you can use to afford expenses after you quit working.

Every year, you and your employer put money into Social Security through taxes. Therefore, your future benefits are based on the yearly income you earn over your lifetime. Currently, high earners can cap their taxed contributions at $137,700. These taxes then end up in a Social Security Administration trust fund that pays out benefits for qualifying individuals.

When Can You Access Social Security?

Americans can elect to receive Social Security benefits when they turn 62. However, you need to note your designated retirement age, as choosing to sign up for yours before that time results in repercussions. There are specific ages based on birth years that determine when you can receive the full benefits.

While Social Security does help people who stop working when they hit retirement age, you can access your benefits even when you keep working through your 60s.

If you don’t wait until that age, you won’t get your Social Security in full. That’s a choice you have to make according to your situation. Similarly, you can put off signing up for benefits, which the program will reward with an added 8% for each year until you turn 70 years old.

If You Still Work, Do You Receive Social Security?

While Social Security does help people who stop working when they hit retirement age, you can access your benefits even when you keep working through your 60s.

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If you reach your designated full retirement age, you can earn Social Security alongside your income. Remember that your benefits will only be reduced when you aren’t officially old enough to receive them.

How Much Are Social Security Benefits?

Because your Social Security benefits are unique to your financial situation, you have to calculate them to figure out what you’ll eventually receive. Throughout your lifetime, you collect one Social Security credit for every $1,470 you earn. These credits max out at four credits annually.

Those born after 1929 must have 40 credits to be eligible for Social Security benefits when they retire. If you work full-time for 10 years, you can receive the benefits. This amount is decided according to your highest earnings over 35 years, as well as other factors.

Who Else Can Get Social Security?

Besides retirees themselves, spouses can also receive Social Security benefits. It doesn’t matter whether your spouse has worked in their lifetime. If you elect to get your Social Security, your spouse will earn the same amount, as long as they’re 62. Keep in mind that the full retirement age rule still applies here.

Additionally, widowed spouses can earn what would’ve been their spouse’s benefits. However, people who make more than their spouse did, and would have a higher Social Security payment as a result, won’t qualify. There are instances where divorced individuals can earn Social Security based on their ex’s qualifications, too.

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How Does Social Security Work? These Points Can Help

Social Security can be a bit tricky to navigate — but every American should know what benefits they’ll receive when they reach retirement age. This way, they can plan for the future more thoroughly.

Hopefully, you can use the information listed here to answer the question, “What is Social Security?” and start planning your future accordingly.

Ginger Abbott