How secure do you feel?

Money Report

Know what the future holds for your Social Security benefits

This is the first of two parts. Coming in August: Specific strategies to maximize your Social Security. This month: Frequently asked questions.

How safe is Social Security?

The trustees for Social Security and Medicare issued their annual report in May 2009. The report forecasts that Social Security will begin paying out more than it receives starting in 2016. At that point, the government would tap into the $2.4 trillion Social Security trust fund to cover promised benefits for at least a few more decades, according to the Congressional Budget Office.

However, new revenues from future workers would likely cover more than 80 percent of scheduled Social Security benefits well into the 2080s. This doesn’t include future adjustments to benefits, tax rates and retirement eligibility, all of which could be used to preserve benefits and improve the program.

How are benefits calculated?

When you work and pay Social Security taxes, you earn credits that can qualify you and your family for disability and survivor’s insurance coverage, as well as retirement and Medicare coverage. Each quarter worked earns one credit toward Social Security. Most people need 40 credits (10 years of work) to qualify for benefits, which are based on your 35 highest quarters of earning. Your employer reports your earnings to the Social Security Administration and work credits are added to your account. Higher lifetime earnings result in higher benefits. Years with no earnings or low earnings will adversely affect your benefit amount.

What if I’ve never worked?

If you’ve never been employed you could still be eligible for Social Security benefits based on your spouse’s or ex-spouse’s work record, provided you were married more than 10 years.

When can I take benefits?

Unless you are widowed or disabled, the earliest age you can collect a reduced benefit is 62. Standard benefits are based on full retirement age, which can range from 65 to 67. The longer you wait, the larger your monthly benefit.

Is there an advantage to waiting?

Waiting means larger monthly payments. However, starting later means fewer checks over your remaining lifetime. An often-overlooked advantage to delaying payments is the annual cost-of-living adjustment that is applied to benefits. The larger benefit attained by delaying the start date will increase the impact of the annual cost of living adjustment, yielding an increased benefit over the years.

For more information, call 1-800-772-1213 or visit

Steven Weber, Gigi Harris, and Elizabeth Loda, CFP, are advisors and staff of The Bedminster Group..