What Is the Difference Between SSI & Social Security Benefits?

Name similarity can create confusion between Supplemental Security Income and Social Security. The Social Security Administration administers them both, and the U.S. Treasury Department issues monthly payments to their beneficiaries. Taxes fund both programs. However, SSI offers need-based financial support to blind or disabled adults and children, and those 65 or older, while Social Security provides income to retirees and eligible dependents based on employment earnings.

SSI recipients must meet income and asset ownership limits, be at least 65 and meet U.S. residency requirements or hold U.S. citizenship. Disabled or blind adults and children who meet the SSA's impairment standards also can qualify for SSI. Social Security recipients, however, must have paid Social Security taxes or be the dependent of a worker who paid them. People can get SSI and Social Security if they meet eligibility requirements for both programs.

One key difference between the two programs is how dependents are treated. Dependents may be eligible to collect Social Security after monthly benefits begin. Family members can receive a combined total equaling 150 to 180 percent of your Social Security benefit after you die. Child eligibility extends to age 18 unless the child is a student, in which case benefits continue until he graduates, or becomes disabled before age 22. Ex-spouses also may qualify two years after the divorce, provided the marriage lasted 10 years and they are at least 62.

Unlike Social Security, SSI benefits do not extend to dependents upon the recipient's death. However, a disabled or blind child whose parent has limited resources and income may qualify for SSI. Children under 18 who have an SSA-defined physical or mental disability and do not earn more than the annual amount set by SSA, may be eligible for Supplemental Security Income. Upon reaching age 18, children must have their income, resources and continued disability status reevaluated to remain SSI eligible.

Three factors determine a retiree's monthly Social Security benefit: • retirement age • lifetime career earnings • money earned prior to reaching full retirement age.

SSA sets an annual earnings limit and deducts $1 from your Social Security payment for each $2 you make when you retire early. It also reduces your payment by $1 for every $3 you earn during the year you reach full retirement age. According to the SSA, benefits equal approximately 40 percent of pre-retirement earnings. Those unable to work due to a disability and meet the SSA's strict definition of a disabling condition can receive Social Security payments based on their lifetime earnings, although any other financial assistance received from other governmental agencies reduces their monthly benefit.

The Social Security Administration bases your SSI monthly benefit on the federal benefit rate that can change year to year to allow for cost of living increases. The amount you receive depends on your marital status, if you pay for housing or live rent-free, any state supplements you get and other income you have. Not all income reduces your SSI benefit. For example, tax refunds and wages spent by the disabled or blind on transportation in order to work do not count as income for SSI.