The Social Security system is something that everyone is very much aware of as it plays a large part of their retirement plans, and in some cases, in their financial stability should they become disabled. However, not everyone knows exactly how the Social Security system works; issues like where the money comes from and when you qualify for them are something of an enigma for many people. It’s important to understand how Social Security works so you know what to expect when it comes time to file for benefits so that you receive everything available to you.
Social Security benefits come from the taxes that are withheld from paychecks specifically for that purpose. The percentage that you pay into the fund is matched by your employer; the current percentage is around 7.65 % of your income, maxing out at $70,000. These funds are deposited into an account and held until the time a person either reaches the age of retirement or becomes disabled.
To qualify for Social Security you must be at least 62 and have at least 40 work credits. A work credit is based on a set amount of income earned during a specified period of time referred to as a quarter; these quarters are spaced out over a 35 to 40 year period of time. In some cases an individual may become disabled and unable to work, in which case they become qualified to receive Social Security Disability benefits for the duration of their disability.