Understanding Social Security in the United States: Types and Eligibility for Retirement, Disability, and Survivors Benefits

What is the US Social Security System?

There are several types of social security programs in the United States that are designed to replace lost income due to retirement, disability, or death.

1.　Retirement Benefit： Retirement program provides financial support to retired workers. Workers can receive regular pension benefits if they pay certain social security taxes and meet certain conditions. Benefits are calculated based on your social security tax payment period and income.

２.　Family Benefit： A family benefit is a benefit received by the family of the recipient who paid certain social security taxes. This is a benefit program attached to a retirement benefit. Eligible family members are children, spouses and divorced ex-spouses. Recipients’ retirement benefit will not be reduced when family members receive family benefits.

3.　Survivor Benefit： A survivor’s benefit is a benefit that guarantees a minimum level of livelihood for the family in the event of an untimely death of a beneficiary who has paid certain social security taxes. This is a benefit program attached to a retirement benefit. Eligible family members are children, spouses and divorced ex-spouses, and parents who are considered dependents.

4.　Disability Benefit： Disability benefit provides financial assistance to people whose ability to work is limited by their disability. Workers can pay certain social security taxes and receive benefits when their ability to work is limited permanently or long-term.

5.　Medicare： Medicare is health insurance that provides benefits for medical services to older people and some people with disabilities. Workers who have paid premiums and their families can cover part of their medical expenses if they meet certain conditions.

If you are currently a company employee, you can pay Social Security Tax and Medicare Tax by deducting from your gross amount of each pay period.

Who will receive what kind of pension and when will they receive it?

１.　Retirement Benefit
Who： A person who has paid Social Security taxes for about 10 years in the United States (40 credits – 4 credits per year x 10 times).
If it falls under the Japan-U.S. Social Security Agreement, (1) about 2 years (6 credits – 4 credits per year x 1.5 times) social insurance tax paid in the United States, plus (2) about 10 years in Japan and the United States (40 credits combined), social security tax (US) or welfare pension insurance (Japan).
The amount of income required to earn one credit changes every year. In 2023, the amount of income required to earn one credit is $1,640. Earning up to 4 credits per year requires an income of $6,560.
When： You can receive your retirement benefit from the age of 62 if you take early benefits. Once you reach the full retirement age, you will receive your full benefits. If you delay taking benefits from the full retirement age to age 70, your benefits will increase. The full retirement age, formerly 65, has been raised by a few months for those born after 1938, to 67 for those born after 1960.

2.　Family Benefit
Who：
① A spouse of a retirement beneficiary who meets the following requirements:
・The beneficiary has started receiving the benefit、・Marital relationship with beneficiary、
・62-year-old+、・If under the age of 62, you are raising a child under the age of 16 of the beneficiary
If the spouse is entitled to his or her own’s retirement benefit, he/she will receive the higher of his/her retirement benefit or a family pension.
② Divorced ex-spouse of a beneficiary who meet the following requirements:
・More than 10 years of marital relationship with the beneficiary、・62-year-old+ and single
③ Child of a beneficiary who meet the following requirements:
・Single and under the age of 18, or high school students under the age of 19, or those who have become severely disabled by the age of 22 (no age limit)
When： Waiting until the full retirement age allows the spouse to receive 50% of the beneficiary’s basic benefit for life. As with the retirement benefit, family pension benefits are reduced if the spouse applies for the benefit earlier than the full retirement age. The full retirement age, formerly 65, has been raised by a few months for those born after 1938, to 67 for those born after 1960.

3.　Survivor Benefit： In a survivor’s benefit, there is a situation where a worker dies prematurely before earning 40 credits. Therefore, the minimum credit required is determined by the age at the time of death.
Who/When：
① A spouse who meets the following requirements:
・Marital relationship with the deceased、・Over 60-year-old、・If under the age of 60, care for children under the age of 16 of the deceased、・Be single at the time you start receiving the Survivor’s benefit
②A divorced ex-spouse who meets the following requirements:
・10+ years of marital relationship with the deceased、・Over 60-year-old、・Be single at the time you start receiving the survivor’s benefit
③Child who meet the following requirements
・Single and under the age of 18, or high school students under the age of 19, or those who have become severely disabled by the age of 22 (no age limit)
④Parent who meet the following requirements
・Over 62-year-old、plus・More than half of livelihood depends on the deceased

4.　Disability Benefit： To receive a disability pension, you must prove the following:
① You have been working、② You became unable to work due to your disability
Disability benefit applications are often rejected, and it is not easy to receive the benefit.

5.　Medicare： The Medicare system has Part A (Hospital), Part B (Medical), Part C (Medicare Advantage plan), and Part D (Prescription drugs).
Who/When： Generally, Medicare is for people 65 or older. You may be able to get Medicare earlier if you have a disability, end-stage renal disease, or ALS.
Part A (Hospital) is free if you meet the above basic conditions (age 65, disability, end-stage renal disease or ALS) and work period of approximately 10 years (40 credits).
However, in calculating the 40 credits for Part A (Hospital), you cannot include the period of coverage of the social insurance system in Japan under the Japan-US Social Security Agreement.
For Part B (Medicare Insurance), Part C (Medicare Advantage Plan), Part D (Drug Coverage), you need to pay a monthly premium.

If you work while receiving Social Security benefits, will your benefits be reduced?

Your retirement benefit are intended to fund retirement and require criteria to determine if a beneficiary is truly retired. Restricted income is the income you earn from working or the net income you earn as a self-employed person and does not include passive income such as interest income or rental income. In other words, whether the recipient is engaged in work or not is the criterion for judgment.

When receiving retirement benefit, family pensions, and survivors’ pensions, the upper limit of the recipient’s working income is stipulated as follows. (If the recipient was born after 1960 and the standard retirement age is 67.)
• Under age 67: The annual work income limit for 2023 is $21,240. $1 will be deducted from your pension for every $2 in working income that exceeds this cap.
• In the year you turn 67 and up to your 67th birthday: Annual work income limit for 2023 is $56,520. $1 will be deducted from your pension for every $3 you earn from work that exceeds this limit.
• 67 years old or older: No annual limit on working income, no reduction beyond the upper limit.

There are no restrictions on interest income or rental income, so if you have a certain amount of income other than working income before you receive your pension, you will be safe in your old age.

Do you have to pay income tax on Social Security benefits?

Your Social Security benefits may be taxable depending on your circumstances. Here’s how to check if you’re taxed:

First, let’s calculate the total income.
Total Income = Adjusted Gross Income (AGI) + Tax Exempt Interest + 1/2 Social Security Benefits

① If you declare as single
• If your total income is less than $25,000, you are not required to pay tax on your Social Security benefits.
• If your total income is between $25,000 and $34,000, you may be required to pay income tax on up to 50% of your benefits.
• If your total income exceeds $34,000, you may be taxed up to 85% of your benefits.

②If you file a joint return with your spouse
• If your total income is less than $32,000, you are not required to pay tax on your Social Security benefits.
• If your total income is between $32,000 and $44,000, you may be required to pay income tax on up to 50% of your benefits.
• If your total income exceeds $44,000, you may be taxed up to 85% of your benefits.

(3) If you are married and file a separate tax return from your spouse You will probably have to pay taxes on your benefits.

If you are required to pay taxes on your Social Security benefits, you can choose to pay the IRS estimated taxes on a quarterly basis or withhold federal taxes from your benefits

Let’s check your benefit on your social security statement.

You can view your social security statements online by opening a my Social Security account on this site under the Social Security Administration. This social security statement is useful for people of all ages who want to know about future social security benefits and current income history. Each individual will be automatically notified 3 months before their birthday.

Summary

The US Social Security system aims to replace income lost due to retirement, disability, and death, and there are types such as retirement benefit, family benefit, survivors’ benefit, disability benefit, and Medicare.

Retirement Benefit: Provides financial assistance to retired workers, which can be obtained by paying certain social security taxes and meeting certain conditions. The amount you receive is calculated according to the payment period and income.

Family Benefit: A pension available to family members who have paid certain Social Security taxes. Eligible family members include children, spouses, and divorced ex-spouses. Receiving the pension of a beneficiary family member does not reduce the beneficiary’s old-age pension.

Survivor’s Benefit: A pension that provides a minimum level of support for the family of a deceased beneficiary. Eligible family members include children, spouses, divorced ex-spouses, and purported dependent parents.

Disability Benefit: Provides assistance to people whose ability to work is limited by disability, pays certain social security taxes, and can be received in the event of long-term or permanent limitations in the ability to work.

Medicare: Medical insurance that provides benefits for medical services to the elderly and some people with disabilities and is available to eligible workers and families.

If you work while receiving these benefits, your benefits may be reduced by your working income. The specific upper limit and calculation of the reduction will vary depending on the age and circumstances of the beneficiary.

Social security benefits are also subject to income tax and may be taxed according to the income of the recipient. Income tax payments are calculated based on the recipient’s total income, but the exact amount will vary depending on individual circumstances as tax rates vary depending on income and family composition.

Creating an online account gives you access to your personal Social Security information.