Part 1: What is Social Security, How Does it Work, Types of Social Security Benefits, Eligibility Criteria
Part 2: How to Claim Social Security, Amount of Benefit, Best Age to Claim Social Security Benefits
Introduction to Social Security for Kids and Teens
This video explains the concept of social security in a simple, concise way for kids and beginners and answers some frequently asked questions. It could be used by kids & teens to learn about social security, or used as a money & personal finance resource by parents and teachers as part of a Financial Literacy course or K-12 curriculum.
Suitable for students from grade levels:
- Kindergarten
- Elementary School
- Middle School
- High School
The topics covered are:
- What is social security
- How does social security work
- Types of Social Security benefits
- Eligibility criteria for claiming social security
- How can you claim Social Security
- How much money can you expect as social security retirement benefit
- What’s the best age to claim social security benefits
- Do you need to save for retirement on your own if you’ll get social security
What’s social security?
Social security is a federal program run by the Social Security Administration that provides various benefits to qualifying people in the US.
It’s formal name is the “Old-Age, Survivors, and Disability Insurance” (OASDI) program.
It was created in 1935 by President Roosevelt to help solve poverty among the elderly Americans during the Great Depression.
The largest part of social security is its retirement benefits, but it also includes survivor and disability benefits, guaranteeing steady income to meet the basic needs of food and shelter.
How does social security work?
Social security works like an insurance program with a pay-it-forward approach.
When people are working, they pay social security taxes up to 12.4% of their income. This money is pooled into Social Security trust funds and used to pay the current beneficiaries.
Any left over money remains in the fund for future use.
Are there different types of Social Security benefits?
There are a few different types of social security benefits paid to people who qualify.
Retirement benefit represents a monthly check that replaces part of your income and is paid for the rest of your life after you start claiming.
An important factor to qualify for retirement benefits is that you should be at least 62 years old and should have worked and paid Social Security Tax for at least 10 years. Spouses, ex-spouses and minor children may also qualify for up to half of your monthly retirement benefits, in addition to your monthly payment.
Survivor benefits are monthly payments made to spouses, ex-spouses, and dependent children or parents of the deceased worker, if they meet certain conditions.
In most cases, these benefits are also paid life long, but there could be some restrictions.
Disability benefits are monthly payments made to workers with an underlying medical condition that is expected to last at least a year and prevents them from working, if they meet certain eligibility criteria. Family members of disabled workers may also be eligible.
Although there is no expiration date on the disability benefits, Social Security will check periodically to make sure the medical condition is still impacting the worker’s ability to work.
Dependent Benefits are monthly payments made to children under 18 who have a retired, disabled or deceased parent, and are paid until they turn 18, or 19 in some cases.
What is the eligibility criteria for claiming social security? How do you qualify for Social Security?
To be eligible to claim social security retirement benefits, you need to have worked – and paid social security taxes – for at least 10 years.
The earliest you can actually claim social security retirement benefits is 62, but you can wait until 70 before claiming to maximize your monthly benefit.
How can I claim Social Security?
To claim social security benefits either due to retirement or disability, you simply need to fill out an application online or at a local Social Security Administration (SSA) office.
Once it’s determined that you meet the necessary criteria, you will receive a certain amount of money every month.
Retirement and survivor benefits are paid using one pool of money and disability benefits are funded using another pool.
How much money can I expect as social security retirement benefit?
On average, the retirement benefits replace around 40% of a worker’s pre-retirement income. The average monthly social security benefit for 2023 is around $1,800.
The actual amount of social security retirement benefit varies greatly from person to person, because it primarily depends on two factors.
The first is the age at which you start claiming benefits. It goes from 70% of your eligible amount if you start claiming at 62, which is the earliest you can claim, to 100% if you wait until your Full Retirement Age (66 or 67 depending on when you were born) to 132% if you wait until you are 70.
The second factor is how much you earned and contributed to Social Security during your 35 highest-earning years. If you worked for more than 35 years, the years with lower income or a part time job will not impact your benefits.
What’s the best age to claim social security benefits?
The exact age you should claim social security benefits depends on your individual situation. You can start claiming at 62, but the amount you qualify for increases every year you wait until you reach age 70.
For example, in 2023, the maximum monthly benefit is $2,572 for people aged 62, and $4,555 for people who are 70. That’s an increase of over 75% for waiting 8 years!
Therefore, if you can afford to live off of your own personal retirement savings for some time (or even continue working), then you should wait before claiming social security benefits as you will receive significantly more money.
Do I even need to save & invest for retirement on my own if I’ll get social security?
You should definitely save for retirement on your own!
Social security benefits are supposed to cover just the bare minimum expenses. If you want to lead an even moderately comfortable life in retirement, social security benefits alone will definitely not be enough. Because of this, it is very important that you save money for retirement on your own.
You should also start saving for retirement as early as possible so you can take advantage of compounding and maximize your returns.
Download Transcript: Ideal for Use by Teachers in their Lesson Plan to Teach Kids & Teens
Part 1: What is Social Security, How Does it Work, Types of Social Security Benefits, Eligibility Criteria
Part 2: How to Claim Social Security, Amount of Benefit, Best Age to Claim Social Security Benefits
