Retirement Benefit on Own Record

Retirement Benefit on Own Record

Social Security Retirement benefits are the benefit that most of us think of when we think of “Social Security” and it is by far the biggest income program run by the Social Security Administration. Retirement benefits are paid to older adults and for many, these benefits are the primary source of income as they age.

Individuals can begin receiving benefits at 62.  However, if you elect to take retirement benefits before your “full retirement age”, you will receive a reduced benefit.  Those born in 1942 or earlier have reached full retirement age.  Those born between 1943 and 1954 reach full retirement at 66.  Those born after 1959 reach full retirement age at 67. Anyone born 1955 through 1959 reaches full retirement age at 66 and a number of months.

Funding Source

Retirement benefits are paid by the Old-Age and Survivors Insurance Trust Fund.  Funds are collected through employer and employee contributions, commonly known as “FICA taxes”, “payroll  taxes” or “Social Security taxes”.  Funds are allocated to this Fund and the Disability Insurance Fund and that allocation is set by law.  Over the years, Congress has changed this allocation to account to assure continued solvency of either fund.

In 2012, individuals pay 4.2% of their earnings up to $110,100 and employers pay 6.2% of the individual income up to the same amount.  The 2% differential, known as the “payroll tax holiday”, is set to expire after 2011 and individuals will pay 6.2% again.  In 2012, self-employed individuals pay 10.4% of their earnings, down 2% as well.  The “payroll tax holiday” is currently being funded by general revenues.


  • Age 62 or older
  • If born in 1929 or later, 40 credits of work. In 2012, a credit is earned for every $1130, up to 4 credits per year.
  • Individuals who are old enough to qualify but do not want to collect benefits yet may choose to “file and suspend” their benefits so that a spouse may draw benefits off of the account.

How Benefit Amount is Calculated

The benefit amount for a retired worker is determined by two factors.  First, the amount earned during the working career factors into the benefit amount.  Therefore, higher earnings over a working career will result in a higher retirement check.  Second, the benefit amount is impacted by when the individual chooses to start receiving benefits.  If one retires before their designated “full retirement age”, benefits will be reduced.  If one continues to keep working beyond full retirement age, those earnings will contribute to a higher amount of benefits when the system is accessed later.  In addition, when an individual continues to work, benefits will automatically increase by a given percentage over the “extra” work time, up to the time when benefits are accessed or age 70.  The increase for delayed retirement past full retirement age is 2/3 of 1% per month (or 8% per year) up to age 70.