Is pension and social security the same

Work you do for a state or local government agency, including a school system, college or university, is covered by Social Security in certain cases.

If you are covered by both your state or local pension plan and Social Security, you pay Social Security and Medicare taxes just as you would for any other Social Security covered job. You will see your earnings on your Social Security Statement record.

If you are covered only by your state or local pension plan:

  • You don't pay Social Security taxes and your earnings won't be on your Social Security record. (Your record will show your Medicare wages if you pay into that program.)
  • Your pension from noncovered state or local government employment may affect the amount of your:
    • Social Security benefit.
    • Social Security benefit as a spouse.

Is pension and social security the same

We want you to know what Social Security can mean for you and your family’s financial future. In this section, you can learn how Social Security works, who’s eligible for retirement benefits, and what to consider before applying. Read on to understand how Social Security fits into your retirement plan.

Jump to a topic on this page:

How Retirement Benefits Work / Planning For Retirement / Deciding When To Start Retirement Benefits / What Else Affects Your Retirement Benefits




How Retirement Benefits Work

Social Security replaces a percentage of your pre-retirement income based on their lifetime earnings. The portion of your pre-retirement wages that Social Security replaces is based on your highest 35 years of earnings and varies depending on how much you earn and when you choose to start benefits.

When you work, you pay taxes into Social Security. We use the tax money to pay benefits to:

  • People who have already retired.
  • People who are disabled.
  • Survivors of workers who have died.
  • Dependents of beneficiaries.

The money you pay in taxes isn’t held in a personal account for you to use when you get benefits. We use your taxes to pay people who are getting benefits right now. Any unused money goes to the Social Security trust fund that pays monthly benefits to you and your family when you start receiving retirement benefits.




Planning For Retirement

Planning is the key to creating your best retirement. You’ll need to plan and save for years to achieve your retirement goals. While many factors affect retirement planning, we want you to understand what Social Security can mean to you and your family’s financial future.

Social Security Should Be Just One Part of Your Retirement Plan

On average, retirement beneficiaries receive a portion of their pre-retirement income from Social Security. As you make your retirement plan, knowing the approximate amount you will receive in Social Security benefits can help you determine how much other retirement income you’ll need to reach your goals.

Are You Eligible?

When you work and pay Social Security taxes, you earn “credits” toward Social Security benefits. The number of credits you need to get retirement benefits depends on when you were born. If you were born in 1929 or later, you need 40 credits (usually, this is 10 years of work).

If you stop working before you have enough credits to qualify for benefits, the credits will remain on your Social Security record. If you return to work later, more credits may be added. We can’t pay any retirement benefits until you have 40 credits. Visit our retirement benefits webpage for more information on how Social Security Credits work.

Verify Your Earnings History

The amount of the Social Security benefits you or your family receives depends on the amount of earnings shown on your record. Regularly checking your Social Security earnings history can help ensure there are no surprises when it’s time for you to start receiving benefits. You can find your earnings history with a personal my Social Security account. Create your account now to check your earnings history online.

Estimate Your Benefits

Knowing what you will get every month in retirement benefits helps you plan for your retirement. If you have a personal my Social Security account, you can get an estimate of your personalized retirement benefits and see the effects of different retirement age scenarios. If you don’t have a personal my Social Security account, create one at www.ssa.gov/myaccount.

Additional Information

  • Anytime is the Right Time to Save for Your Future
  • Spruce Up Your Financial Plan With Social Security
  • Income From Pensions, Annuities, Interest, And Dividends
  • Monitoring Your Earnings Can Really Pay Off
  • Benefit Eligibility Screening Tool (BEST)




Deciding When To Start Retirement Benefits

Choosing when to start receiving retirement benefits is a personal decision. If you choose to retire and begin receiving benefits when you reach your full retirement age, you’ll receive your full benefit amount. We will reduce your benefit amount if you decide to start benefits before reaching full retirement age.

To make an informed choice, consider the following factors as you think about when to start your Social Security benefits.

What Age Should You Start To Receive Benefits?

The age you begin receiving your retirement benefit affects how much your monthly benefits will be. There are three important things to know about age when thinking about when to start your benefits.

Full Retirement Age

Full retirement age is the age when you can start receiving your full retirement benefit amount. The full retirement age is 66 if you were born from 1943 to 1954. The full retirement age increases gradually if you were born from 1955 to 1960, until it reaches 67. For anyone born 1960 or later, full retirement benefits are payable at age 67. You can find your full retirement age by birth year in the full retirement age chart.

Early Retirement Age

You can get Social Security retirement benefits as early as age 62. However, we’ll reduce your benefit if you start receiving benefits before your full retirement age. Visit our website to learn how claiming retirement benefits early will affect your benefit amount.

Delayed Retirement Age

When you delay benefits beyond your full retirement age, the amount of your retirement benefit will continue to increase up until age 70. There is no incentive to delay claiming after age 70.




What Else Affects Your Retirement Benefits


What is the difference between Social Security and pension plan?

Social Security is funded, primarily, through a payroll tax that most Americans pay. Pension plans are funded privately by a combination of company and employee funds. Social Security has a disability income program, but pension funds do not.

How do I know if I have pension?

Contact your former employer If you want to trace a workplace pension – a scheme arranged by a previous employer – your first point of contact should be the employer. However, if your employer provided access to a personal or stakeholder scheme, contact the pension provider if you know their details.

When can you collect a pension?

You can start taking money from most pensions from the age of 60 or 65. This is when a lot of people typically think about reducing their work hours and moving into retirement. You can often even start taking money from a workplace or personal pension from age 55 if you want to.

What is a pension income?

Your traditional pension plan is designed to provide you with a steady stream of income once you retire. That's why your pension benefits are normally paid in the form of lifetime monthly payments. Increasingly, employers are making available to their employees a one-time payment for all or a portion of their pension.