3 Main Types of Social Security Benefits — It’s Not Just for Retirement!

fyi50+: Many of our readers older than 50 think about Social Security as a retirement program. Clearly, it’s a very important source of income. However, Social Security has two other essential programs for younger and older workers. Dave, what are the main types of Social Security benefits and why are they important parts of the Social Security system?

Dave: Heidi, you are correct. The Social Security system is three distinct and different benefit programs.

3 Main Types of Social Security Benefits

1. Retirement Benefits

main types of social security

Almost everyone relates to retirement benefits. At the end of 2021, based on current participation numbers from the 2022 Trustees Report, around 50 million Americans were collecting retirement checks.

These retirement checks, based on the highest 35 years of a worker’s career, support lifestyle needs for food, clothing, transportation cost, and healthcare. If it is not the single largest asset that most workers bring to the retirement table, it is one of the top three.

2. Disability Benefits

disabled man seeking social security benefits

The second most significant type of Social Security benefit is the assistance it affords people who are disabled and can no longer work. The Trustees report counted about nine million Americans currently collecting disability benefits.

Unlike many private disability insurance plans available through company benefit programs or individual programs from private companies, the Social Security disability income plan does not stop at 65. Workers who collect disability benefits from Social Security are not penalized for early filing like they would be for retirement benefits. At full retirement age, the disability benefit switches over, becomes the retirement benefit, and pays the worker for life.

This program is a great safety net for workers who pay FICA taxes. Plus, you do not always need 40 credits to qualify. Younger workers who are disabled before age 24 only need six credits to qualify for benefits.

If you’re between 24 and 31, you need more credits to qualify. You must have worked for half the time between 21 and 31 before the disability started.

The SSA website offers this example of a worker who is disabled at 27: “That worker would need 12 credits out of the past six years to qualify.” You can only earn four credits a year. So, it takes just three years of work for someone 27 to qualify for benefits.

The Social Security definition of disability is very strict. Still, the benefit is real for the nine million people who cannot work.

3. Survivor Benefits

Mother on social security survivor benefits crying next to her child

The third part of the Social Security program pays benefits to survivors of workers who died. Just over six million people are currently receiving survivor benefits.

This program is a form of life insurance, and its benefits are significant. Like the disability income program, you never need more than 40 credits to provide life insurance benefits to survivors. Usually, for younger workers, the number of credits is much less than 40.

Other than a one-time benefit of $255, these life insurance benefits are paid every month. Widows, widowers, dependent children, and sometimes dependent parents can qualify for benefits. Here is an excellent summary about the life insurance part of the Social Security program.

fyi50+: How much money do the three main types of Social Security benefits pay to workers and their families?

Dave: In 2021, these three programs paid just more than $91.45 billion a month in benefits. That is a huge number and represents the most extensive single government-sponsored program in the federal system.

Remember, Social Security is a safety net for workers in this country. It pays when you retire, it pays if you cannot work, and it pays your family if you die.

Social Security FAQs

Why are Social Security Benefits Important?

Social security benefits are a crucial source of income for many Americans. In addition to retirement and disability benefits, social security also provides survivors’ benefits for eligible dependents.

How Long Does it Take to Get Social Security After You Apply?

The social security administration reports that it normally takes about two to three months to process an application for social security benefits.

Do I Have to Pay Tax on My Social Security?

You may have to pay taxes on your social security benefits, depending on your income. Social security benefits are considered taxable income if your “combined income” is above $25,000 for the year.


David Freitag

David Freitag, an industry veteran in financial services and wealth management, brings a deep passion and unparalleled knowledge of Social Security filing strategies and retirement income planning to his current role as a financial planning consultant for the Advanced Concepts Design Group of Massachusetts Mutual Life Insurance Company (MassMutual). His also holds a Master of Education and Bachelor of Science degrees from the University of Maryland.

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