Retirement Insurance Benefits (RIB)

Retirement Insurance Benefits (RIB) are paid to qualified Americans through the Social Security Administration (SSA). The amount of each benefit depends on how much the individual has contributed to the Social Security system during his or her employment prior to retirement. It is a common misconception that all Americans are automatically eligible for RIB. The payments provide only for individuals who have made payroll tax contributions in their lifetime, and the benefits kick in only once the individual has reached age 62.

Social Security Tax

When you are employed by a company covered by the Social Security Insurance system, you will have automatic payments withdrawn from your paycheck during each pay period. Even if you are self-employed, however, you must pay the Social Security tax on any income you earn. The amount of your payment is a flat tax equal to 12.4 percent of your annual income. However, if you are employed by a participating company, your employer will pay half of this amount, and you will owe only 6.2 percent (figures accurate as of 2010). Once you retire, you receive benefits proportional to the income you put into the system. Social Security is called a progressive tax on the back end because low income earners receive a higher proportion of the amount they contributed.

Fully Insured Status

In order to receive your benefits, you must be considered "fully insured." The SSA defines fully insured in these terms: participating in at least one "quarter of coverage" for each year after 1950 OR once the individual is between age 21 and 62 AND has participated in at least 6 to 40 total quarters of coverage. This is important to remember if you are unemployed or self-employed for a period. Continuing to contribute to the Social Security system is essential.

Claiming Benefits

Unlike other aspects of retirement benefits, RIBs do not begin automatically. Instead, a qualified individual must apply for the benefits through one of the main application systems. You can apply online, at a Social Security office, by mail or by calling the Immediate Claims Taking Unit. You may apply any time after you reach the age of 62. While 62 is considered "old age," it is not the "full retirement age" used by the SSA. Therefore, payments will be lower proportionally. The highest payments are available after the full retirement age of 70. Payments can begin on the first of the month following the month you reach a qualified age.

Tips and Exemptions

  • If you have qualified for Disability Insurance Benefits through the SSA, you will be automatically enrolled to receive your RIB upon reaching "old age."
  • If you wait until age 70 in order to claim benefits, you receive a delayed retirement credit to your future RIB in an amount equal to 1/12 of a percent or 2/3 of a percent per month, depending on your date of birth.
  • If you earn more than the "exempt" amount annually, your RIB will be reduced by $1 for every $2 or $3 by which you exceed the exemption, depending on your exact earnings tier.