Many young people express concerns about the Social Security program. Millennials will have to wait until an older age than their parents to claim their full Social Security benefit and face a steeper benefit cut if they claim payments early. However, many young people are already benefitting from the life and disability insurance that Social Security provides. Here’s a look at what millennials can expect from Social Security.
[See: 10 Ways to Increase Your Social Security Payments.]
Disability insurance. Social Security pays benefits to people who can’t work because of a serious medical condition. Young people who have worked and paid into Social Security for as little as 1.5 years in the period of time leading up to the disability could qualify for payments. Disability benefits are paid out beginning six months after the disability begins. However, processing a disability benefits application can take three to five months, so the Social Security Administration recommends that disabled workers apply as soon as the health problem begins. Family members of disabled workers might also qualify for payments, such as children under age 18 or a spouse who is caring for children under age 16.
Survivor’s insurance. If you pass away, a Social Security benefit could be paid to your children and a spouse who is caring for them. Your family members can receive benefits if you worked for as little as 1.5 years in the three years before your death. A surviving spouse or child may also receive a lump-sum death payment of $255.
Support for aging parents. Parents and grandparents who receive Social Security payments are less likely to need significant financial support from younger relatives. It would be difficult for most young people to send their aging parents $1,341 per month, which was the average Social Security monthly payment in January 2016. And even if you do plan to help care for your parents in old age, the Social Security income helps to cover the costs.
[Read: The Most Popular Ages to Sign Up for Social Security.]
Payments in retirement. Millennials can claim the full Social Security benefit they are entitled to at age 67, compared to 66 for most baby boomers and 65 for people born in 1937 and earlier. Millennials who claim payments early at age 62 will receive 30 percent smaller payments, compared to a 25 percent payment reduction for baby boomers who claim at the same age. Conversely, millennials who delay claiming Social Security until age 70 will get 24 percent bigger monthly payments.
However, Social Security has a long-term projected deficit. The Social Security retirement benefit program expects to have enough cash to pay out promised benefits until 2035, according to the annual report of the Board of Trustees of Social Security. After that, the program projects that it will have enough tax revenue coming in to pay out about 77 percent of scheduled benefits. There are a variety of tweaks to the program that would correct the problem. For example, an immediate 1.31 percentage point tax increase for both workers and employers would allow the program to proceed with scheduled payments, according to the report.
[Read: How to Solve 5 Common Social Security Problems.]
Workers can find out how much they have paid into Social Security and get a personalized estimate of how much they can expect to receive in retirement by creating a My Social Security account at www.ssa.gov/myaccount. This tool will also tell you how much you might receive if you become disabled and what family members are eligible for if you pass away. It’s important to check these numbers annually to verify accuracy. The payment estimates will also change as you continue to work and pay into Social Security.
Emily Brandon is the author of “Pensionless: The 10-Step Solution for a Stress-Free Retirement.”
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What Millennials Will Get From Social Security originally appeared on usnews.com
