The Three Major Components of the Social Security System

The major social insurance program in the United States began with the Social Security Act of 1935. Named the OASDI program, for Old-Age, Survivors, and Disability Insurance, it is now commonly called Social Security. This program partially replaces income lost when a worker retires, dies or becomes disabled. Thus, the U.S. Social Security system has three major components: retirement benefits, survivors' benefits and disability insurance.

Social Security covers 96 percent of U.S. workers, according to the Social Security Administration. Workers born after 1928 need 40 credits to earn retirement benefits. This translates to 10 years of work during which you paid Social Security taxes that do not have to be continuous. Your lifetime earnings determine the amount you receive in monthly benefits. The retirement age to receive full benefits is gradually increasing, from 65 for workers born in 1937 or earlier to 67 for workers born in 1960 or later. Retiring at an earlier age can reduce benefits significantly, while working beyond the eligible retirement age can increase benefits.

A worker's spouse and dependents may be eligible for survivors' benefits if the worker dies. The surviving spouse of a worker who has paid into the Social Security program may be eligible to receive reduced benefits at age 60 or full benefits at age 50 if disabled. A surviving spouse who cares for a young or disabled child of the deceased worker can receive benefits at any age. In many situations, the deceased worker's dependent unmarried children are also eligible for benefits until adulthood.

For the purpose of receiving Social Security disability benefits, federal law defines a disability as a medical condition expected to last at least one year or be fatal. The SSA uses a complex set of rules to determine how long an individual must work at various ages to be eligible for disability benefits. For example, workers who become disabled before age 28 need 1.5 years of work. The years gradually increase depending on the worker's age up to 9.5 years needed at age 60.

The SSA recommends that you apply for retirement benefits approximately three months before you want the benefits to begin. To apply for retirement or disability benefits online, visit the SSA's website (http://www.socialsecurity.gov), where you can look up the address of your local Social Security office if you wish to apply in person. To apply for survivors' benefits, visit your local Social Security office or call 1-800-772-1213.