Your Complete Guide to Social Security!

Social Security, Medicare & Government Pensions

Get the Most out of Your Retirement & Medical Benefits

Your complete guide to Social Security retirement and medical benefits

Social Security, Medicare, SSI and more explained in this all-in-one resource that gets you the most out of your retirement benefits.  Learn all about:

  • Social Security benefits (including current rules on spousal and dependents benefits)
  • Medicare & Medicaid
  • veterans, FERS, and CSRS benefits

Completely updated for 2023. See below for a full product description.

  • Product Details
  • The rules for claiming Social Security benefits have changed. Find out if you can still choose between your own benefits and spousal benefits. Learn this and more with Social Security, Medicare & Government Pensions—completely updated for 2023.

    Social Security benefits. Figure out how to get retirement, disability, dependents, and survivors benefits, or Supplemental Security Income (SSI). Decide whether it’s best to claim benefits early, at full retirement age, or not until you turn 70—and how to time your claims so you and your spouse get the best benefits.

    Medicare & Medicaid. Learn how to qualify for and enroll in both programs, including Medicare Part D drug coverage.

    Medigap insurance & Medicare Advantage plans. Compare Medigap and Medicare Advantage plans, and choose what’s best for you.

    Government pensions & veterans benefits. Discover when and how to claim the benefits you have earned.

    What’s New in 2023?

    • Lower drug costs under Part D
    • New Medicare costs and Social Security amounts for 2023, and
    • Changes to some Medigap plans.

    Whether you’re looking for yourself or helping a parent, you’ll find valuable information here to help get the benefits you’ve earned.

    “Guide[s] you through the maze of Social Security and Medicare in simple English….”—Wall Street Journal

    “The inside scoop on how to get the most out of the current system…”—Accounting Today

    Number of Pages
  • About the Author
  • Table of Contents
  • Introduction:
    Your Social Security, Medicare & Government Pensions Companion

    • Locating Chapters That Fit Your Needs

    1.  Social Security: The Basics

    • History of Social Security
    • Social Security Defined
    • Eligibility for Benefits
    • Earning Work Credits
    • Determining Your Benefit Amount
    • Your Social Security Earnings Record
    • U.S. Citizens’ Rights to Receive Benefits While Living Abroad
    • Receiving Benefits as a Noncitizen

    2. Social Security Retirement Benefits

    • Work Credits Required
    • Timing Your Retirement Benefits Claim
    • The Amount of Your Retirement Check
    • Working After Claiming Early Retirement Benefits

    3. Social Security Disability Benefits

    • Who Is Eligible
    • What Is a Disability?
    • Amount of Disability Benefit Payments
    • Collecting Additional Benefits
    • Continuing Eligibility Review
    • Returning to Work

    4. Social Security Dependents Benefits

    • Who Is Eligible
    • Calculating Dependents Benefits
    • Eligibility for More Than One Benefit
    • Working While Receiving Benefits
    • Government Pension Offset

    5. Social Security Survivors Benefits

    • Work Credits Required for Eligibility
    • Who Is Eligible
    • Amount of Survivors Benefits
    • Eligibility for More Than One Benefit
    • Working While Receiving Benefits
    • Government Pension Offset

    6. When to Claim Social Security Benefits, and Which One to Claim

    • Considerations for All Beneficiaries
    • Considerations for Specific Situations

    7. Supplemental Security Income

    • Who Is Eligible
    • Benefit Amounts
    • Reductions to Benefits

    8. Applying for Benefits

    • Retirement, Dependents, and Survivors Benefits
    • Disability Benefits
    • Supplemental Security Income (SSI)
    • Finding Out What Happens to Your Claim

    9. Appealing a Social Security Decision

    • Reconsideration of Decision
    • Administrative Hearing
    • Appeal to the National Appeals Council
    • Lawsuit in Federal Court
    • Lawyers and Other Assistance

    10. Federal Civil Service Retirement Benefits

    • Two Retirement Systems: CSRS and FERS
    • Retirement Benefits
    • Disability Benefits to Federal Workers
    • Payments to Surviving Family Members
    • Applying for CSRS or FERS Benefits

    11. Veterans Benefits

    • Types of Military Service Required
    • Compensation for Service-Connected Disability
    • Pension Benefits for Financially Needy Disabled Veterans
    • Survivors Benefits
    • Medical Treatment
    • Getting Information and Applying for Benefits

    12. Medicare

    • The Medicare Maze
    • Medicare: The Basics
    • Part A Hospital Insurance
    • How Much Medicare Part A Pays
    • Part B Medical Insurance
    • How Much Medicare Part B Pays
    • Part D Prescription Drug Coverage
    • Medicare Coverage for People With End-Stage Renal Disease (ESRD)

    13. Medicare Procedures: Enrollment, Claims, and Appeals

    • Enrolling in Part A: Hospital Insurance
    • Enrolling in Part B: Medical Insurance
    • Medicare’s Payment of Your Medical Bills
    • Paying Your Share of the Bill
    • Your Medicare Summary Notice
    • Appealing the Denial of a Claim
    • Medicare Part D: Enrollment, Exceptions, and Appeals
    • Switching Part D Plans
    • State Health Insurance Assistance Programs (SHIPs)

    14. Medigap Insurance

    • Gaps in Medicare
    • Standard Medigap Benefit Plans
    • Terms and Conditions of Medigap Policies
    • Finding the Best Medicare Supplement

    15. Medicare Part C: Medicare Advantage Plans

    • Medicare Advantage Managed Care Plans
    • Medicare Advantage Fee-for-Service Plans
    • Choosing a Medicare Advantage Plan
    • Comparing Medigap and Medicare Advantage Plans
    • Your Rights When Joining, Leaving, or Losing a Medicare Advantage Plan

    16. Medicaid and State Supplements to Medicare

    • Medicaid Defined
    • Who Is Eligible
    • Medical Costs Covered by Medicaid
    • Requirements for Coverage
    • Cost of Medicaid Coverage
    • Other State Assistance
    • Applying for Medicaid, QMB, SLMB, or QI
    • What to Do If You Are Denied Coverage


  • Sample Chapter
  • Social Security: The Basics

    Social Security is the general term that describes a number of related programs—retirement, disability, dependents, and survivors benefits. These programs operate together to provide workers and their families with some monthly income when their normal flow of income shrinks because of the retirement, disability, or death of the person who earned that income.

    The Social Security system was initially intended to provide financial security for older Americans. It was meant to help compensate for limited job opportunities available to older people in our society. And it was intended to help bridge the financial gaps created by the disappearance of the multigenerational family household—a breakup caused in large measure by the need for American workers to move around the country to find decent employment.

    Unfortunately, this goal of providing financial security is today increasingly remote. The combination of rapidly rising living costs, stagnation of benefit amounts, and penalties for older people who continue to work has made the amount of support offered by Social Security less adequate with each passing year. This shrinking of the Social Security safety net makes it that much more important that you get the maximum benefits to which you are entitled.

    This chapter explains how Social Security programs operate in general. It is helpful to know how the whole system works before determining whether you qualify for a particular benefit program and how much your benefits will be. Once you understand the basic premises of Social Security, you will be better equipped to get the fullest benefits possible from all Social Security programs for which you might qualify. (See Chapters 2, 3, 5, and 6.)

    History of Social Security

    Public images of our society generally render invisible many millions of economically hard-pressed older Americans. The older person with little income and assets is left out of the standard media pictures of two-car, two-kid suburbanites and of wealthy retired couples in gated luxury communities. Modern Western capitalism produces expendable workers. And the most vulnerable, such as people older than 65, are the most easily expended.

    In what is commonly thought to be the most advanced of modern societies, the United States, there is a shockingly large economic gap between most working people and the wealthy few. The richest 1% of U.S. households control more than 42% of the nation’s financial wealth, with the richest 10% controlling more than 85% of that wealth. On the other end, the lower 80%—that is, the vast majority of us—control less than 10% of the nation’s financial wealth, with the bottom 40% having less than 1%.

    During periods of extreme economic retrenching, the number of people cast off by the economy spills over the normal barriers of invisibility. And with so many people during these crises sharing their complaints about economic injustice, it is sometimes difficult to keep them all under control. One such period of extreme economic dislocation was the Depression of the 1930s. Many millions of people were displaced—not only from job, home, and family, but from any hope for a place in the economy.

    The Beginning of Social Security

    Faced with the crisis of the Depression and with the possibility of massive social upheaval, Franklin Roosevelt and Congress decided to act. Roosevelt pushed through a number of programs of national financial assistance—one of which was a system of retirement benefits called “Social Security,” enacted into law in 1935.

    When benefits began, Social Security retirement cushioned slightly the crushing effects of the Depression. But retirement benefits were set at levels that were never enough to guarantee a standard of living above the poverty line. In 1939, Social Security benefits were extended to a retired worker’s spouse and minor children; in 1956, to severely disabled workers. These extensions helped cover more people in need, but neither new program deviated from the basic premise of Social Security: Provide just enough to keep starvation from the door, but not enough to guarantee a decent standard of living.

    Benefits Now Provide Diminished Security

    The economic position of many older Americans is increasingly precarious. People are living longer, their private pensions are disappearing, and their Social Security benefits—despite cost- of-living increases in most years—are not keeping up with their true living expenses.

    The Social Security system is facing pressure to lower benefits even more. Due to longer life spans, an overall population increase, and the bubble of Baby Boomers beginning to reach retirement age, there is a steady increase in the number of people collecting Social Security benefits. If the system continues as is, the total benefits that retirees, dependents, and survivors collect will eventually surpass the amount of taxes paid into the system by younger workers. If the system is not altered, at some point—although experts disagree widely about exactly when—the system will no longer be able to pay the full benefits currently promised.

    “Saving” Social Security

    Clearly, the Social Security system requires some adjustment to ensure its continued health. But most discussion about this subject from recent political campaigners is nothing more than ideological hot air, giving the false impression that the system is about to collapse. There are simple ways to fix the Social Security system, but they are ignored by politicians who want nothing less than to end all public pensions and other support systems and force all retirement savings into the stock market. There, people’s savings would be bled by the financial institutions and other corporate profiteers that run Wall Street—a happy prospect for the people who bankroll presidential candidates, but a disaster for working Americans.

    Instead, simple adjustments to the system—none raising the basic Social Security tax rate—could address its financial problems without introducing investment risk or siphoning off funds to Wall Street. Remove cap on earnings subject to Social Security (FICA) tax. At present, the Social Security system does not tax earned income over $160,200 per year (the amount goes up slightly most years). This makes it a regressive tax (a tax that takes a larger percentage of the income of low-income people than of high-income people). For example, someone earning $30,000 per year pays about 6.2% of their income in FICA tax while someone earning $300,000 pays only 3.3% of their total income. The Congressional Research Service has found that removing this cap on taxed income, by itself, would keep the Social Security retirement system solvent for the next 75 years. So far, however, national politicians and their high-income supporters have resisted this change.

    Setoff against early benefits for nonearned income. Under current rules, people may claim Social Security retirement or dependents benefits as early as age 62 and survivors benefits as early as age 60. During any year before full retirement age, if someone collects any of these Social Security benefits but continues working, the benefits are reduced by income the beneficiary earns over a certain amount. The rule does not apply, however, to someone who has income from sources other than current work—such as investments, real estate, trusts, and so on. This rule penalizes those who must continue to work in order to survive, at the same time permitting others to collect their full benefit amount despite any amount—no matter how enormous—of nonearned income. If the same rule were applied to nonearned income, the system could save significantly without taking anything away from those who most need benefits.

    Delay full retirement age. The original standard age for full Social Security retirement benefits was 65. That age has been raised for people born in 1938 or later, saving a great deal of money for Social Security. The age at which most people stop working continues to rise, so there is no reason why the full retirement age for collecting Social Security benefits should not also rise again to parallel this changing reality. Slight reduction in benefits for high-income recipients. This limit on benefits could happen in one of two ways. There could be a yearly reduction in retirement benefits to people who continue to have a high income from work or investments. Or, there could be progressive price-indexing, by which initial retirement benefit levels are slightly reduced for upper-income claimants.

    Any one of the adjustments discussed above would make a significant contribution to the long-term stability of Social Security. Several of them together could put the system on sound financial footing for many decades to come.

    What You Can Do

    In response to this deteriorating situation, anyone facing retirement should take two important steps.

    First, understand the rules regarding Social Security benefits. (These are described in Chapters 1 through 5.) That will enable you to plan wisely for your retirement years, including answering the basic questions of when to claim your benefits and how much you can work after claiming them.

    And second, become aware and active concerning proposed moves by Congress regarding the Social Security and Medicare programs. Local senior centers and national seniors organizations such as the Alliance for Retired Americans in Washington, D.C. ( are good sources of current information.

    If you are even beginning to think about your retirement, it is not too early to begin trying to safeguard it.

    Social Security Defined

    Social Security is a series of connected programs, each with its own set of rules and payment schedules. All of the programs have one thing in common: Benefits are paid—to a retired or disabled worker, or to the worker’s dependent or surviving family—based on the worker’s average wages, salary, or self-employment income from work covered by Social Security.

    The amount of benefits to which you are entitled under any Social Security program is not related to your need. Instead, it is based on the income you have earned through years of working. In most jobs, both you and your employer will have paid Social Security taxes on the amounts you earned. Since 1951, Social Security taxes have also been paid on reported self-employment income.

    Social Security keeps a record of your earnings over your working lifetime and pays benefits based upon the average amount you earned. However, the only income considered is that on which Social Security tax was paid. Income such as interest or dividends, or income from the sale of a business or investments, and unreported income is not counted in calculating Social Security benefits.

    Four basic categories of Social Security benefits are paid based upon this record of your earnings: retirement, disability, dependents, and survivors benefits.

    Retirement Benefits

    You may choose to begin receiving Social Security retirement benefits as early as age 62. But the amount of your benefits permanently increases for each year you wait, until age 70. The amount of your retirement benefits will be between 20% of your average income (if your income is high) and 50% (if your income is low). For a 66-year-old single person first claiming retirement benefits in 2023, the average monthly benefit is about $1,825; $2,975 for a couple. The highest earners first claiming their benefits in 2023 (at full retirement age) would receive about $3,625 per month; $5,400 for a couple (receiving benefits on one spouse’s earnings record). These benefits usually increase yearly with the cost of living. (See Chapter 2 for a full description of retirement benefits.)

    Disability Benefits

    If you are younger than full retirement age but have met the work requirements and are considered disabled under the Social Security program’s medical guidelines, you can receive disability benefits. The amount of these benefits will be roughly equal to what your retirement benefits would be. (See Chapter 3 for a full discussion of disability benefits.)

    Dependents Benefits

    If you are married to a retired or disabled worker who qualifies for Social Security retirement or disability benefits, you and your minor or disabled children may be entitled to benefits based on your spouse’s earning record. This is true whether or not you actually depend on your spouse for your support.

    Married recipients should determine whether they will receive a greater sum from the combination of one Social Security benefit and one dependent benefit or from two Social Security retirement benefits (assuming both partners are entitled to one). A spouse may be awarded retirement or dependents benefits, but not both. (See Chapter 4 for a full discussion of dependents benefits.)

    Note for same-sex spouses. Same-sex spouses are entitled to Social Security dependents and survivors benefits on the same terms as other spouses.

    Survivors Benefits

    If you are the surviving spouse of a worker who qualified for Social Security retirement or disability benefits, you and your minor or disabled children may be entitled to benefits based on your deceased spouse’s earnings record. (See Chapter 5 for a full discussion of survivors benefits.)

    You can choose the program from which to claim benefits. You may meet the eligibility rules for more than one type of Social Security benefit. For example, you might be technically eligible for both retirement and disability, or you might be entitled to benefits based on your own retirement as well as on that of your retired spouse. You can collect whichever one of these benefits is higher, but not both.

    Eligibility for Benefits

    The specific requirements vary for qualifying to receive retirement, disability, dependents, and survivors benefits. The requirements also vary depending on the age of the person filing the claim and, if you are claiming as a dependent or survivor, on the age of the worker.

    However, there is a general requirement that everyone must meet to receive one of these Social Security benefits. The worker on whose earnings record the benefit is to be paid must have worked in “covered employment” for a sufficient number of years by the time they claim retirement benefits, becomes disabled, or die.

    Earning Work Credits

    All work on which Social Security taxes are paid is considered covered employment. About 95% of all American workers—around 175 million people—work in covered employment, including self- employment. For each year you work in covered employment, you receive up to four Social Security work credits, depending on the amount of money you have earned. Once you have enough work credits, you can qualify for Social Security benefits.

    The amount of work credits you need in order to qualify for specific programs is discussed in Chapter 2 (retirement benefits), Chapter 3 (disability benefits), Chapter 4 (dependents benefits), and Chapter 5 (survivors benefits).

    The Social Security Administration keeps track of your work record through the Social Security taxes paid by your employer and by you through FICA taxes.

    The self-employed—that is, people who take a draw from a self- owned or partnership business, or who receive pay from others without taxes being withheld—earn Social Security credits by reporting income and paying tax for the net profit from that income on IRS Schedule SE. Income that is not reported won’t be recorded on your earnings record. Although many people fail to report income to avoid paying taxes, a long-term consequence is that the unreported income won’t count toward qualifying for Social Security retirement or other benefits, and will reduce the amount of benefits for those who do qualify.

    The Importance of Names and Numbers

    The Social Security system does everything—records your earnings, credits your taxes, determines and pays your benefits—according to your Social Security number. On every form you fill out or correspondence you have with the Social Security Administration, you must include your Social Security number. You should also use your name exactly as it appears on your Social Security card. This will make it easier for Social Security to track the correct records.

    If you have used more than one name on work documents, indicate all names you have used on correspondence with the Social Security Administration. As long as you have used the same Social Security number, your records should reflect all of your earnings.

    If you have changed your name and want to ensure that all your future earnings will be properly credited to your Social Security record, you can protect yourself by filling out an Application for Social Security Card. This form allows you to register your new name and match it with your existing Social Security number. You will be sent a new Social Security card with your new name, but the same number.

    To complete this form, you must bring to your local Social Security office the originals or certified copies of documents that reflect both your old and new names. If your name has changed because you married or remarried, bring your marriage certificate.

    If your name change is due to divorce, bring the final order of divorce, which includes reference to the return of your former name.

    If you have any questions, particularly concerning the type of documents you may bring to show your old and new names, call Social Security at 800-772-1213.


    Coverage for Specific Workers

    There are special Social Security rules for coverage of some workers in certain sorts of employment.

    Federal Government Workers

    If you were hired as an employee of the federal government on or after January 1, 1984, all your work for the government since then has been covered by Social Security.

    If you worked for the federal government before 1984, your work both before and after January 1, 1984 has been covered by the separate federal Civil Service Retirement System. (See Chapter 10 for a full description of civil service retirement benefits.)

    State and Local Government Workers

    Many state and local government workers are not covered by Social Security. State government employees are usually covered by their own pension or retirement systems, and local government employees have their own public agency retirement system, or PARS.

    However, some state and local government employees are covered by Social Security instead of—or in addition to—a state or PARS pension system. If so, these governments and their workers pay at least some Social Security taxes. And workers under these plans are entitled to Social Security benefits if they meet the other regular requirements.

    If you are a government employee and aren’t sure whether you are covered by Social Security, check with the personnel office at your workplace. And remember, even if your employment at a state or local agency does not entitle you to Social Security benefits, any other work you have done during your lifetime may qualify you, if you paid Social Security taxes.

    Workers for Nonprofit Organizations

    Since 1984, all employment for charitable, educational, or other nonprofit organizations is covered by Social Security. (Some churches and religious organizations, however, are exempt from this rule.) Before that time, nonprofit organizations were permitted to remain outside the Social Security system, and many chose to do so. Because people who worked for such organizations were left out of any retirement plan, the Social Security system now permits some of them to qualify for benefits with about half of the normal number of years of work credit. If you reached age 55 before January 1, 1984, and you worked for such a nonprofit organization, you and your family can qualify for Social Security benefits with a reduced number of work credits.

    Members of the Military

    Whether your military service was considered by Social Security to be “covered employment” depends on when you served and whether you were on active or inactive duty. From 1957 on, all service personnel on active duty have paid Social Security taxes, and so all active service from that date is covered employment. Since 1988, periods of active service, such as reserve training, while on inactive duty have also been covered.

    Household Workers

    Household work—cleaning, cooking, gardening, child care, minor home repair work—has been covered by Social Security since 1951; work before that date is not credited on a worker’s earnings record.

    A major problem for household workers is that most employers don’t report their employees’ earnings to the Internal Revenue Service (IRS) and don’t pay Social Security taxes on those earnings. Of course, a lot of domestic workers don’t want their earnings reported. They are paid so little that they prefer to receive the full amount, often in cash, without any taxes withheld.

    One result of this nonreporting, however, is that the earnings don’t get credited to the worker’s Social Security record. So when the worker or worker’s family later seeks Social Security benefits, they may have trouble qualifying and, if qualified, may have lower benefit amounts.

    If you want your earnings from household work reported to Social Security, you have several options. If you work for different employers and make less than $1,000 per year from any one of them, you can report that income yourself as self-employment income and pay 15.3% self-employment tax on it in addition to income tax. Paying self-employment tax, on federal income tax Form 1040, Schedule SE, credits the earnings to your Social Security earnings record.

    If you work for any one employer who pays you a total of $2,400 or more over the course of a year, you can ask that employer to withhold Social Security taxes from your pay, report your income to Social Security, and pay the employer’s share of the Social Security tax on that income, as the law requires. (See “Employer’s Duty to Report Earnings of Household Workers,” below.)


    Farm and ranch work is covered by the Social Security system. If you do crop or animal farmwork, your employer must report your earnings and pay Social Security taxes on them. The employer must also withhold your share of Social Security taxes from your paycheck if you earn $150 or more from that employer in one year, or if the employer pays $2,500 or more to all farm laborers, regardless of how much you earn individually. Any amounts you are paid in housing or food don’t have to be reported by the employer.

    Farmworkers have long faced problems with employers who don’t pay their share of the Social Security tax. To make sure your farmwork is counted toward your Social Security record, check your pay stub to see if Social Security taxes—labeled FICA—are being withheld. Also ask the person who handles payroll to give you paperwork indicating that Social Security taxes are being paid on your earnings. If your employer is not paying Social Security taxes on your earnings, or you get the runaround and you are unsure what the employer is doing, ask your local Social Security office to find out for you.

    If you are worried about your employer’s finding out that you are checking on this, ask the Social Security field representative to make a confidential inquiry. Social Security can request all the employer’s wage records without letting the employer know which employee in particular has brought the matter to its attention.

    Employer’s Duty to Report Earnings of Household Workers

    If an employer hires a household worker—cleaner, cook, gardener, child sitter, home care aide—who is not employed by and paid through an agency, and the employer pays that worker a total of $2,400 or more during the year, the employer is required by law to report those payments and pay Social Security taxes on them. This rule exempts any worker who was younger than 18 during any part of the year.

    Employers can report these taxes on their own Form 1040 federal income tax returns, and pay the Social Security tax obligation along with their personal income taxes. To file and pay these taxes, the employer will need the names of the employees as they appear on their Social Security cards, the employees’ Social Security numbers, and the amount of wages paid.


    Earning Work Credits

    To receive any kind of Social Security benefit—retirement, disability, dependents, or survivors—the person on whose work record the benefit is to be calculated must have accumulated enough work credits. The number of work credits you need to reach the qualifying mark—what Social Security calls “insured status”—varies depending on the particular benefit you are claiming and the age at which you claim it.

    You can earn up to four work credits each year, but no more than four, regardless of how much you earn. Before 1978, work credits were measured in quarter-year periods: January through March, April through June, July through September, and October through December. You had to earn a specific minimum amount of income to gain a work credit for that quarter:

    • Before 1978, you received one credit for each quarter in which you were paid $50 or more in wages in covered employment, or each quarter in which you earned and reported $100 or more from self-employment.
    • Beginning in 1978, the rules were changed to make it easier to earn credits. From 1978 on, you receive one credit, up to four credits per year, if you earn at least a certain amount in covered employment, regardless of the quarter in which you earn it. That means that if you earn all your money during one part of the year and nothing during other parts of the year, you can still accumulate the full four credits. The amount needed to earn one credit increases yearly. In 1978, when the new system was started, it was $250; in 2023, it is $1,640.

    Example 1: In 1975, Ulis was paid $580 between January and March, nothing between April and July when he could not work because of a back injury, $340 in August, and $600 in cash from self-employment in October and November. For the year 1975, Ulis earned three credits: one credit for the first quarter, in which he was paid more than the $50 minimum; nothing in the second quarter, so he got no credit; one credit in the third quarter, because he earned well over the $50 minimum even though he worked only one month; and one credit for the last quarter, because in 1975 self-employment income was covered by Social Security.

    Example 2: Eve was paid $800 in January 1978, but did not earn anything the rest of the year. Based on the earnings test in effect in 1978, she got three credits for the year—one for each $250 in earnings—based on her earnings for January alone.

    Example 3: Rebecca was paid $600 a month in 2023 at her part-time job, for total earnings for the year of $7,200. Because her earnings of $7,200 divided by $1,640 (the amount needed to earn one credit in 2023) is more than 4, she received the maximum four credits for 2023.

    Determining Your Benefit Amount

    If you are eligible for a Social Security benefit, the amount of that benefit is determined by a formula based on the average of your yearly reported earnings in covered employment since you began working. Social Security adjusts your earnings records every year that you have Social Security–taxed earnings. This is true even after you begin collecting benefits.

    How Your Earnings Average Is Computed

    Social Security computes the average of your yearly earnings, but places a yearly limit on the amount you can be credited with, no matter how much you actually earned that year. These yearly income credit limits are shown in the following table, “Yearly Dollar Limit on Earnings Credits.”

    Only employment-related income counts, and you must have paid Social Security taxes on that income. Other income that you may have earned, such as interest, dividends, capital gains, rents, and royalties, won’t be considered in calculating your Social Security benefits.

    Benefit Formula

    Based on a worker’s earnings record, the Social Security Admin- istration computes what is called the worker’s “Primary Insurance Amount,” or PIA. This is the amount a worker will receive in retirement benefits at full retirement age, which is 66 for everyone born in 1943 through 1954. The full retirement age is 67 for those born in 1960 or later. The exact formula applied to each worker’s earnings record depends on the year the worker was born.

    There is no “minimum” Social Security benefit amount. If your average earnings were quite low, your check will also be low.

    Yearly Dollar Limit on Earnings Credits
    1951–1954 $ 3,600 1995 61,200
    1955–1958 4,200 1996 62,700
    1959–1965 4,800 1997 65,400
    1966–1967 6,600 1998 68,400
    1968–1971 7,800 1999 72,600
    1972 9,000 2000 76,200
    1973 10,800 2001 80,400
    1974 13,200 2002 84,900
    1975 14,100 2003 87,000
    1976 15,300 2004 87,900
    1977 16,500 2005 90,000
    1978 17,700 2006 94,200
    1979 22,900 2007 97,500
    1980 25,900 2008 102,000
    1981 29,700 2009–2011 106,800
    1982 32,400 2012 110,100
    1983 35,700 2013 113,700
    1984 37,800 2014 117,000
    1985 39,600 2015 118,500
    1986 42,000 2016 118,500
    1987 43,000 2017 127,200
    1988 45,000 2018 128,400
    1989 48,000 2019 132,900
    1990 50,400 2020 137,700
    1991 53,400 2021 142,800
    1992 55,500 2022 147,000
    1993 57,600 2023 160,200
    1994 $ 60,600


    Social Security benefits for a disabled worker (as described in Chapter 3), or for a worker’s dependents (as described in Chapter 4) or survivors (as described in Chapter 5), are based on a percentage of the worker’s PIA. Social Security will give you an estimate of your future retirement or disability benefits, or those of a worker on whose earnings record you will receive dependents or survivors benefits.

    Veterans May Receive Extra Earnings Credit

    If you’re a veteran of the U.S. Armed Forces, you may be eligible for extra earnings credit, including:

    • an extra $300 per quarter for active duty from 1957 through 1977, and
    • $100 of credit for each $300 of active duty basic pay, up to a maximum credit of $1,200 per year for active duty from 1978 through 2001. No extra credit is given if you enlisted after September 7, 1980 and did not complete at least 24 months’ active duty or your full tour. Notice that no extra credit is given for active duty after 2001.

    Don’t be alarmed if you don’t see your extra credits reflected on your Social Security Statement. These will be added to your record when you actually apply for benefits, at which time you’ll have to provide proof of your military service. Active duty earnings from 1968 on should be included in the benefit estimates on your statement, although the extra credit amounts won’t show up in the statement’s year-to-year list of your earnings.


    Taxes on Your Benefits

    A certain amount of Social Security benefits may be taxable, depending on your total income. In determining whether you owe any income tax on your benefits, the Internal Revenue Service looks at what it calls your combined income. This consists of your adjusted gross income, as reported in your tax return, plus any nontaxable interest income, plus one-half of your Social Security benefits. If your combined income as an individual is between $25,000 and $34,000 (or, for a couple filing jointly, between $32,000 and $44,000), you may have to pay income taxes on 50% of your Social Security benefits. If your combined income is more than $34,000 ($44,000 for a couple filing jointly), you may owe income taxes on up to 85% of your benefits.

    The way to calculate any income taxes you may owe on your Social Security benefits is explained in the instruction booklet that accompanies the Form 1040 federal tax return. The IRS also publishes a free information booklet explaining numerous tax rules pertaining to older people. It is called Tax Guide for Seniors, Publication 554. To get the booklet, call the IRS at 800-829-3676 or download it from the website

    Taxes paid on Social Security benefits go back into the Social Security Trust Fund, not the general fund.

    Unpaid Student Debt May Reduce Benefits

    More and more people still have student loan debt when they become eligible to collect Social Security benefits. You should be aware that if you have defaulted on federally guaranteed student debt when you begin receiving retirement, disability, dependents or survivors benefits, the Social Security Administration may reduce the amount of your benefit until the debt is paid off. The size of the benefit reduction depends on the amount of your remaining debt and the amount you are supposed to be paying off monthly. The maximum the government can take is 15% of benefits, and no one’s benefits can be reduced to less than $750 per month.

    Note: If you are collecting Social Security disability benefits and your disability might be considered “total and permanent” by special Social Security rules, your entire remaining student debt might be discharged (wiped off the books). For discussion of this discharge of debt, see Chapter 3.


    Your Social Security Earnings Record

    The Social Security Administration keeps a running account of your earnings record and the work credits it reflects. (It tracks these by use of your Social Security number.) Based on those figures, Social Security can give you an estimate of what your retirement benefits would be if you took them at age 62, full retirement age, or age 70. It can also estimate benefits for your dependents or survivors, or your disability benefits, should you need them.

    It makes good sense to find out what your Social Security retirement benefits will be several years before you actually consider claiming them. You’re probably curious, and finding out can help you plan for the future. And because so much is riding on your official earnings record, it is important to check the accuracy of that record every few years. You want to make sure that all your covered earnings are credited to you.

    To check your earnings record and estimate of benefits, go to the Social Security Administration’s website at

    A Social Security Statement is supposed to be mailed yearly to everyone age 60 and older who is not currently receiving Social Security benefits and who has not signed up to receive a benefit statement online through the Social Security Administration website. If you have not received a Social Security Statement, or if you have a question about your earnings record, call Social Security at 800-772-1213.

    U.S. Citizens’ Rights to Receive Benefits While Living Abroad

    If you are a U.S. citizen living in another country, you are entitled to the same Social Security benefits—to the extent you have earned them through work in the United States—as if you lived in the United States. However, your retirement benefits may be reduced if you also receive a pension in the other country. (See “Reductions for Government or Foreign Pensions” in Chapter 2.)

    If you’re married to someone who is not a U.S. citizen, and you both live outside the United States, your spouse is not entitled to Social Security dependents or survivors benefits based on your work record. (Your spouse might still be entitled to Social Security retirement benefits based on their own work performed while living in the United States; see the following section, “Receiving Benefits as a Noncitizen.”)

    If you live in one of a few particular countries, there are restrictions on the sending of your Social Security benefits. If you live in Cuba or North Korea, a law passed during the days of Cold War anti-Communist policy forbids the Social Security system from sending your benefits there. Instead, you would have to have the benefits sent to a bank in the United States or in some third country, and then transfer the money on your own. If you live in Vietnam or Cambodia, or in one of the Central Asian former Soviet republics, you may be able to receive Social Security payments there, but only if you make special arrangements with Social Security and the U.S. embassy in that country.

    Receiving Benefits as a Noncitizen

    It is increasingly common for people who are not U.S. citizens to live and work here for long periods of time. This section explains your rights to collect Social Security benefits if you are not a U.S. citizen, whether you’re living in the United States now or have since left to live in another country.

    Noncitizens Living in the United States

    Noncitizens living in the United States are entitled to all the Social Security benefits that they or their spouse or parents have earned— under the same rules as U.S. citizens—if they are lawfully in the United States. For example, you might benefit from this if you:

    • were not a U.S. citizen during some or all of the time you or your family member worked in the United States, but have since become a U.S. citizen, or
    • are not a U.S. citizen, but are a lawful permanent U.S. resident or have another immigration status permitting you to be lawfully present in the United States.

    Non-U.S. Citizens Living Abroad

    Many non-U.S. citizens live and work for a time in the United States, paying Social Security taxes and earning enough work credits to qualify for benefits for themselves and their families. However, many of these people ultimately leave the United States. Their ability to collect earned Social Security benefits after departing depends in large part on whether the United States has entered into agreements with their home countries. If you’ve formerly worked in the United States, you need to look at three things to figure out your eligibility for benefits, including:

    • your country of citizenship
    • the country where you’re living when you request Social Security benefits, and
    • the type of benefit you’re requesting.

    To find out what your rights are to collect Social Security benefits based on your country of citizenship, your country of residence, and the type of Social Security benefit you’re entitled to receive, see the Social Security Administration’s publication Your Payments While You Are Outside the United States, available at

    We hope you enjoyed this sample chapter. The complete book is available for sale here at


7 Reviews
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Excellent coverage

By Anonymous

Excellent detailed coverage of social security rules; well organized to find answers to questions you may have.

Posted on 2/23/2023

Good for All

By Zaw L.

Got legal and procedure knowledge from this book.

Posted on 2/23/2023

Wonderfully informative

By Deborah P.

This is a book that I initially brought home from the library. It contains so much usefull information that I purchased a copy for myself. It is a valuable reference tool every senior needs.

Posted on 2/23/2023


By Kenneth F.

Great overview! We would welcome more content about where benefits overlap, cross-discussion between different benefits schemes and "tradeoff" situations, like whether to file for WC disability versus retirement.

Posted on 2/23/2023

Explore the System

By Sue H.

Lots of information to ingest for me but am reading it with new found thing daily. Am glad I purchased this book to find out such things I needed to know. I suggest to many others to purchase this to find out what out about the system.

Posted on 2/23/2023

The Best little book in Retirement !

By Laura V.

this has helped so much ! i'm no longer hunting and pecking to find information for my soon to be retirees on line. I wish i knew more about this subject within HR but its for AFTER CARE from your work life. Thank you for providing much needed information that we will all need one day. Suggestion...maybe a mention of the additional types available like here in Texas there is a PART J ect...

Posted on 2/23/2023

Too political.

By Joe E.

The author would do better to leave politics out and put more facts in. Had I known this title pushed an agenda, I would have looked elsewhere.

Posted on 2/23/2023

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