Social Security provides benefits to a wide range of Americans, including both workers and their family members. Yet it can be almost impossible to keep track of exactly how much money every Social Security recipient is entitled to receive. Not only is the formula for calculating benefits complicated, but the percentages of that calculated amount that various recipients can get differ greatly from person to person.
To find out exactly what you'll get from Social Security, your Social Security statement is the best place to start. But to help give you a starting point and to understand what various family members can receive as well, this simple guide will get you moving in the right direction.
The starting point
For all benefits, the place where the Social Security Administration first starts is your work history. For determining retirement benefits, the SSA looks at the 35 top-earning years in your career adjusted for inflation. It then figures the average indexed monthly earnings from work record, and plugs the result into a formula that comes up with what's known as the primary insurance amount.
The primary insurance amount determines what you'd receive in monthly Social Security retirement benefits if you start receiving them at your full retirement age. If you claim earlier or later than that date, then you'll get less or more in your monthly checks.
Disability benefits are calculated in a similar way, except that the SSA doesn't require a 35-year work record. Instead, your average earnings over a shorter period of time that better reflects your age will determine the primary insurance amount for disability purposes.
The percentages every family member needs to know
Eligible family members can receive benefits from Social Security based on a worker's earnings history, and that's where things can get extremely complicated. Different percentages apply to family benefits depending on whether the worker is still alive or has passed away.
For family benefits while the worker is still alive, family members can receive the following percentage of the worker's benefit:
- Spousal benefits at full retirement age are 50% of the worker's primary insurance amount.
- Spousal benefits taken prior to full retirement age are reduced and can be as little as 32.5% of the worker's benefit.
- Spousal benefits are available at any age if the spouse is caring for a child younger than 16.
- Children under 18 or in high school and no older than 19 get a 50% benefit.
If the worker has died, then the following survivor benefits are available, as a percentage of the deceased worker's benefit:
- The surviving spouse gets 100% of the deceased worker's benefit if the surviving spouse claims at full retirement age or later.
- Surviving spouses claiming early can get reduced benefits of 71.5% or higher, depending on age.
- Surviving spouses who are caring for children younger than 16 get 75%.
- Children under 18 or who are in high school and no older than 19 get 75%.
- The worker's parents can receive 75% to 82.5% of the worker's benefit if they were dependents of the worker. The lower amount applies when both parents are eligible survivors, and each one gets the 75% amount.
One last caveat
Finally, be aware that there's a maximum amount that Social Security will pay out based on any one person's work history. That amount is typically between 150% to 180% of the worker's benefit amount. As a result, large families will often see their individual benefit percentages come in much less than those listed above.
Nevertheless, knowing what Social Security will provide is valuable information for workers and their families to have. That way, you can make contingency plans for a number of scenarios and have the certainty that there won't be any surprises in the future.