The Social Security Administration has three types of benefit programs available to you and other U.S. citizens who meet the federal agency’s requirements. Each program -- retirement, disability and survivor's -- pays monthly benefits to you and your family. However, your benefit amounts are determined by several factors including whether you are still working, the age you start receiving payments and how much you made during your lifetime.
The Social Security Administration determines your benefit amounts based on your earnings' record. The more you made when you worked, the higher your benefit rate. For retirement benefits, the agency uses 35 years of your earnings to calculate your benefit amount. If you have years when you had little to no income, those years may be averaged into the 35 years, which lowers your benefit rate. Your disability and survivor's benefits are determined by your earnings as well. Each year, the agency calculates your benefit amounts and sends you an annual Social Security statement detailing what you’re entitled to receive.
There are several factors that affect your Social Security benefit payments. One is the age you receive your benefits. For example, your surviving spouse or ex-spouse receives 100 percent of your full-benefit rate if she is at her full retirement age, but only 71.5 percent if she is between 50 and 59. You can receive your retirement benefits before or after reaching your full retirement age, which can affect your benefits as well. Your retirement age depends on when you were born; it is 65 if you were born after 1937 and 67 if you were born after 1960. The younger you are, the less you receive. Another factor is work. You can continue to work and receive benefit payments from the three programs, but it will lower the amounts you receive.
Your benefit amounts are also affected by taxation. If you have other taxable compensation such as wages, dividends and interest, the amounts can cause your Social Security benefits to be taxed by the Internal Revenue Service if the total exceeds income guidelines. For example, if your total income tops $25,000, the IRS taxes 50 percent of your Social Security benefits at normal income tax rates, and if it is over $34,000, up to 85 percent is taxed. If you are receiving benefits and you are married, up to 50 and 85 percent of your Social Security payments are taxed if your combined household income exceeds $32,000 and $44,000, respectively.
Besides you, the Social Security Administration pays benefits to your spouse, ex-spouse and dependent children. Each benefit program pays different amounts to your family members. Disability and retirement programs pay up to 50 percent of your benefit rate to your family members, while benefit payments from the survivor's program is based on their ages. For example, your dependent children receive survivor's benefits totaling 75 percent of your benefit rate until they reach 18 or 19 if they’re attending secondary schools.