Recession Information Center

Recession Info Center

Recession information: Basics of Social Security benefits:

Given the ongoing recession, we thought many may want/need to gain a better
understanding of general government benefits programs, such as Social Security, Medicare,
and Medicaid. This article provides a very basic understanding of social security benefits:

Social security was established by the Social Security Act of 1935 and is meant to act as a
social safety net primarily for the elderly. Note, however, that social security is not just for
the elderly, and covers disability and survivor benefits as well. The program is mainly
supported through the contributions the employees and the employers make. In other
words, the annual contributions you make over the years from your income provide for a
safety net as you get older, or in specific cases of disability or in other unique
circumstances.

In practice, the way the program works is that, over the years, you accumulate credits
based on your earnings. In 2008, for instance, approximately every $1,050 of income
would earn 1 credit, up to a limit of four credits per year. You continue earning these
credits as long as you work. And you may become eligible for receiving social security
benefits once you reach the 40 mandatory credits. Note that 10 years is the minimum
amount of time required to earn the mandatory 40 credits. Moreover, you cannot start
receiving your social security payouts until you are 62 or older. Once you reach that age,
and assuming you have satisfied the 40 mandatory credits requirement and the ten years of
work requirement, you may be eligible for social security benefits.

The Social Security Administration (SSA) mails out a summary of your benefits each year,
and you can request the summary by calling the SSA (800-772-1213) and asking for your
SSA-7004, or online. The statement provides a record of your earnings history, the number
of credits you've accumulated, and an estimate of the retirement benefits available.

Given that social security benefits program is considered a social insurance or social
welfare program, it is subject of many controversies. Economists, social scientists, as well
as policy makers and politicians often have strong views either in favor or against the
program and as a result the program has gone through various changes and amendments
over the years.

Note that this article provides a very basic general understanding of the Social Security
program. For further information, contact the SSA directly.

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