Additional Coverage:
- 14 Social Security Facts Retirees Often Overlook (#4 Is Crucial To Know) (financebuzz.com)
Decoding Social Security: What You Might Not Know About Your Retirement Lifeline
Social Security is a cornerstone of retirement planning for many Americans, yet its intricacies can often be a mystery. While it might seem early to think about it when you’re just starting your career, understanding your benefits from the outset can significantly impact your financial well-being throughout your adult life. By mid-career, it becomes even more crucial to make informed decisions for a truly stress-free retirement.
Let’s dive into some surprising facts about Social Security that you might not be aware of:
1. Children Can Receive Social Security Benefits
While often associated with retirees, Social Security can also provide benefits to certain children. Eligibility typically requires that children have retired parents or parents receiving Social Security-eligible disability benefits.
If a child’s parents are deceased, their eligibility hinges on the parents’ employment history and Social Security tax contributions. Even some children over 18 may continue to receive benefits under specific circumstances.
If you believe your child might qualify, it’s advisable to contact the Social Security Administration for clarification.
2. You Can Create a Social Security Account at 18
Take control of your future benefits early! As soon as you turn 18, you can create a “My Social Security” account. With just an email address and your Social Security number, you can track your contributions and estimate your potential benefits at various retirement ages, empowering you to plan ahead.
3. Spousal Benefits May Continue After a Spouse’s Death
The rules around spousal benefits after a death can be complex. If you remarry before age 60, you generally won’t be able to collect additional benefits.
However, if you are 60 years or older, you might still be eligible for spousal benefits, regardless of whether you remarry. If remarriage is in your plans, a thorough review of your Social Security and retirement benefits is essential to understand potential impacts on your retirement income.
4. Full Retirement Age Might Be Later Than You Expect
The “full retirement age” (FRA) isn’t universal. For those born in 1960 or later, the FRA is 67.
If you were born before 1960, your FRA is slightly lower. While you can opt to start receiving benefits at age 62, be aware that your monthly payment could be significantly reduced – by up to 30% – compared to waiting until your full retirement age.
5. You Can Designate Someone to Manage Your Benefits
As we age, managing financial matters can become challenging. Social Security offers an “advance designation” option, allowing you to choose up to three individuals who can represent you in benefit-related matters. If you become unable to manage your benefits independently, one of these designated individuals could become your representative payee.
6. Not All Workers Are Eligible for Social Security
While the majority of the workforce is covered, some employees may not be eligible for Social Security benefits. This primarily applies to certain federal employees who were part of the former Civil Service Retirement System (CSRS) before 1983.
Even if a federal employee remained under CSRS after 1983, they likely still received Medicare benefits through federal payroll taxes. For clarification, federal employees should contact the Social Security Administration, and state and local government employees should reach out to their State Social Security Administrator.
7. Benefits Remain Relatively Consistent Over Time
The age at which you begin collecting Social Security benefits will largely determine the monthly amount you receive for the rest of your life. Collecting at the earliest age of 62 will result in a considerably lower benefit than waiting until the maximum age of 70.
While the base amount remains consistent, you may see a boost from the annual cost-of-living adjustment (COLA), designed to help benefits keep pace with inflation. For instance, the COLA increase in 2026 is projected at 2.8%.
8. Millions Rely on Social Security
Social Security provides a vital safety net for a vast number of Americans. According to December 2024 data from the SSA, 72.9 million individuals received benefits, including 6 million new recipients. Additionally, approximately 7.4 million people received an average of $607 through Supplemental Security Income (SSI), which is funded by general revenues, not Social Security taxes.
9. It’s Likely Less Than You Anticipate
Many people are surprised by the relatively modest amount they receive in monthly Social Security benefits, even when waiting until full retirement age. It’s crucial to remember that Social Security was never intended to be your sole source of income in retirement. To ensure a comfortable retirement, it’s essential to save independently to supplement your Social Security payments.
10. Poverty Remains a Concern for Some Seniors
Despite Social Security, poverty remains a challenge for a segment of the senior population. As of 2024, 9.9% of adults over 65 were living below the poverty line, according to September 2025 data from the U.S.
Census Bureau. Eligibility for Social Security benefits plays a significant role in this demographic.
11. Women Form a Significant Demographic of Recipients
Women aged 65 and older represent a majority of both SSI and Social Security beneficiaries. In 2024, approximately 63% of SSI recipients in this age group were women, compared to about 37% men. More than half of these older SSI recipients also received Social Security benefits.
12. Your Social Security Number Once Indicated Your State
Before 1972, the first three digits of your Social Security number, known as “area numbers,” indicated the state where your Social Security card was issued. While this system is no longer in use, it’s a fascinating piece of history.
13. Current Workers Fund the System
The Social Security system is largely funded by current workers. Those currently in the workforce contribute employment taxes at a rate of 12.4% to support benefits for current recipients. In 2024, the Social Security Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) trust funds collected approximately $1.42 trillion in revenue, with roughly 91.2% stemming from payroll tax contributions by workers and employers.
14. Don’t Forget Income Taxes
It might come as a surprise, but your Social Security benefits could be subject to federal income tax. Approximately 40% of beneficiaries may owe taxes on their benefits if they have other income from wages, dividends, interest, or other taxable sources.
The Bottom Line
Taking the time to check your Social Security account can reveal how much you already have accrued. If that number is lower than you expected, it’s a clear signal to explore ways to supplement your retirement income.
As you approach retirement, creating a budget that reflects your desired lifestyle is paramount. Regardless of your personal circumstances, a solid understanding of your Social Security benefits forms the essential foundation of your retirement planning.
Smart Money Moves for Everyone:
No matter your financial standing, there are always opportunities to enhance your finances and build wealth. Here’s a quick guide to get started:
- Boost Your Income: If your budget feels stretched, consider exploring side hustles that can complement your full-time job or investigate legitimate ways to increase your earnings.
- Cultivate Your Wealth: Time and compound interest are powerful allies in wealth growth.
Begin by understanding your current financial position to create a strategic plan. Working with a financial professional can be invaluable, especially if you’re concerned about outliving your retirement savings.
- Seize Opportunities: Maximize your benefits by taking advantage of all available deals, discounts, and money-saving options. For car owners, ensuring you have the most competitive car insurance rate can lead to significant savings.
Conversely, be vigilant about avoiding money-wasting traps that can silently erode your bank account.
Read More About This Story:
- 14 Social Security Facts Retirees Often Overlook (#4 Is Crucial To Know) (financebuzz.com)