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Social security benefits you don't know about

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Social Security is more than a retirement program. It's a broad social safety net across many sectors of our society and it's often misunderstood.

Typically when people talk about Social Security they are referring to the Social Security Retirement benefits, only one of the programs administered by the Social Security Administration.

Advisors and clients may not, however, be as familiar with the other Social Security Programs: Survivors, Disability benefits and SSI -- Supplemental Security Income. Here's a brief primer:

Social Security's Survivors program is closely related to its retirement program. They share funding, the same qualifications and the same Trust Account -- but that's where the similarities end.

The survivors program has different age cutoffs and helps a wider range of potential beneficiaries. It is most commonly accessed by surviving spouses and ex-spouses in their retirement years at ages as early as 60 (earlier than the retirement benefits minimum of 62) and even as early as 50 if they are disabled.

Beneficiaries may also include children under 19 or even dependent parents 62 or older. In 2013, roughly 6 million people relied upon the survivor program.

Social Security Disability benefits are also paid out of the payroll taxes but the excess is placed in a separate disability trust fund. This is the trust fund which is projected to run dry within a few years partially because SSDI has seen a dramatic increase in beneficiaries since the Great Recession began in 2008.

While there is no minimum age to receive disability benefits, one must have worked a minimum number of years of work in order to be eligible for the benefits. The minimum number of years worked increases with age from at least 2 years of work at age 30 to at least 9.5 years of work at age 60.

SSDI pays ongoing benefits to people of any age who are considered unable to work due to physical or mental limitations. In 2013, 11 million people collected in this program.

When an SSDI beneficiary turns 62 they automatically qualify, and will receive, the higher of their SSDI benefits or their retirement benefits.

In 2013, 11 million people collected in this program.

Supplemental Security Income (SSI) is not formally a Social Security program but it is administered by the Social Security Administration and sometimes referred to as a Social Security benefit. SSI is not, however, funded by payroll tax but is paid by U.S. Treasury general funds.

SSI is essentially a welfare income program started during the Nixon administration to standardize and coordinate programs that previously had been run by states. Payments are made to individuals who are either over 65, disabled, have no other sources of income and very minimal net worth -- very similar to Medicaid requirements. SSI is often automatically applied for in tandem with Medicaid.

There are no contribution requirements such as those which apply to the other three programs. Over 8 million people received SSI in 2013.

Most Americans take these programs and benefits for granted. Financial advisors shouldn't.

Paul Norr is a CFP in Westlake Village, Calif., who specializes in retirement planning for Bucks County Financial Planning Group.

This story is part of a 30-day series on Social Security and retirement income strategies.

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