Presentation is loading. Please wait.

Presentation is loading. Please wait.

Social Security Its Vital Role for Workers & Their Families.

Similar presentations


Presentation on theme: "Social Security Its Vital Role for Workers & Their Families."— Presentation transcript:

1 Social Security Its Vital Role for Workers & Their Families

2 Social Security 54.2 million people receive Social Security benefits But more than a retirement program More than one-third all monthly checks for non-retired individuals Social Security = social & family insurance May 2011 Consortium for Citizens with Disabilities 2

3 May 2011 Consortium for Citizens with Disabilities3 Social & Family Insurance Workers share risk of common life events Each worker’s record provides benefits for different family generations, even young workers Guaranteed monthly payment

4 May 2011 Consortium for Citizens with Disabilities 4 Social Security Insurance Retirement - insures against poverty after worker retires Survivors - insures dependents after worker dies or retires Disability - insures against loss of ability to work due to disability

5 May 2011 Consortium for Citizens with Disabilities5 Current Design: The Positives Fixed monthly payment Ability to move among 3 programs: work history, age & eligibility category Pays multiple family members based on one worker’s earnings Adjusted annually for inflation (generally)

6 Social Security & The Deficit National groups examining ways to reduce deficit, including Social Security changes Social Security did NOT cause the deficit Cutting benefits will NOT solve budget crisis Cutting benefits will deepen financial crisis for many people with disabilities May 2011 Consortium for Citizens with Disabilities6

7 Social Security & The Deficit Social Security did NOT cause the deficit: It is self-funded By law, it can only spend money dedicated to the program No borrowing authority May 2011 Consortium for Citizens with Disabilities7

8 May 2011 Consortium for Citizens with Disabilities8 How Does Social Security Benefit People with Disabilities & Their Families?

9 May 2011 Consortium for Citizens with Disabilities9 How to Earn Social Security Insurance Coverage Payroll Tax: Workers & employers pay FICA (Federal Insurance Contributions Act) taxes Workers earn “credits” to become insured Multiple generations receive benefits from wage earner’s record when worker becomes disabled, retires or dies

10 May 2011 Consortium for Citizens with Disabilities10 Retirement Insurance  Retirees with disabilities  Spouses, including those with disabilities  Disabled adult children  Examples of people with increased reliance on Social Security retirement benefits:  Workers with uneven work history who retire early due to poor health  Parents of children with disabilities with reduced earnings and savings due to caregiving

11 May 2011 Consortium for Citizens with Disabilities11 Survivors Insurance  Minor children & spouses of deceased workers and retirees  Disabled widow(er)s  Disabled adult children

12 May 2011 Consortium for Citizens with Disabilities 12 Disability Insurance Disabled workers, their children & spouses Disabled adult children

13 May 2011 Consortium for Citizens with Disabilities13 Essential Protection Millions of families face disability Adults with serious disabilities have very low employment rate

14 May 2011 Consortium for Citizens with Disabilities14 Disability & Poverty Poverty rates among workers with disabilities: twice as high as others who get Social Security Social Security equals half/more of TOTAL family income for about half of disabled worker beneficiaries

15 May 2011 Consortium for Citizens with Disabilities15 Better Than Private Insurance Adjusted for inflation Covers children of disabled workers Available to workers with disabilities & chronic health problems

16 May 2011 Consortium for Citizens with Disabilities16 Disability Insurance: Qualifying Groups More than 8.3 million disabled workers (includes veterans) More than 1.8 million children 160,000 spouses of disabled workers More than 950,000 disabled adult children More than 240,000 disabled widow(er)s

17 Disabled Adult Children Eligible all 3 types of benefits  Severe disability before age 22, significant work limitations & single  Based on earnings record of parent who is disabled, retires or dies  Rarely leave program May 2011 Consortium for Citizens with Disabilities 17

18 Social Security Helps Young Workers and Their Families Disability or death can happen at any time to people of all ages Disability & survivors benefits provide guaranteed income for spouse & children May 2011 Consortium for Citizens with Disabilities18

19 May 2011 Consortium for Citizens with Disabilities19 Younger Workers: Eligibility Need fewer “credits” than older workers to qualify Disability: Must prove significant work limitations Benefit amount depends on worker’s previous earnings

20 Families of Younger Workers Benefits for spouse & children as dependents of disabled worker or survivors of deceased worker Survivors: Benefit amount based on what worker would have received if had reached full retirement age May 2011 Consortium for Citizens with Disabilities 20

21 May 2011 Consortium for Citizens with Disabilities21 Value of Social Security Young workers with spouse and 2 children – approximate value  “Life” insurance = $476,000  Disability = $ 465,000

22 May 2011 Consortium for Citizens with Disabilities22 How are Social Security & SSI Different?

23 May 2011 Consortium for Citizens with Disabilities 23 Social Security Act  Title II: Old Age, Survivors, & Disability Insurance (OASDI) (called Social Security)  Title XVI: Supplemental Security Income (SSI)

24 May 2011 Consortium for Citizens with Disabilities 24 Different Programs: Title II & Title XVI Title II: OASDI Social Security payroll taxes Workers Other beneficiaries: spouses & children Medicare Title XVI: SSI General revenues from federal budget Aged & blind and disabled adults & children Needs-based Medicaid

25 May 2011 Consortium for Citizens with Disabilities 25 You Can Receive Both Social Security and SSI May get Social Security disability & SSI at same time – must have VERY limited income & resources (for SSI) May get one benefit now & another later Beneficiaries may work, but rules about allowable earnings (“work incentives”) differ for each program

26 May 2011 Consortium for Citizens with Disabilities 26 How is Social Security Funded?

27 May 2011 Consortium for Citizens with Disabilities 27 Is There Enough Money?  Question everyone asks!  Solvency = ability to pay legal obligations  Facts support no immediate crisis

28 May 2011 Consortium for Citizens with Disabilities 28 Source of Benefits FICA (Federal Insurance Contributions Act) = Payroll Taxes Creates Social Security Trust Fund

29 May 2011 Consortium for Citizens with Disabilities29 What Are the Trust Funds?  Technically 2 trust funds:  Old Age and Survivors Insurance  Disability Insurance  People with disabilities get benefits from both  Policymakers treat as one fund

30 May 2011 Consortium for Citizens with Disabilities 30 Paying Current Benefits “ Pay as you go” system Most money coming in pays current beneficiaries Very low administrative costs

31 May 2011 Consortium for Citizens with Disabilities 31 Paying Future Benefits Collect more now than need: build surplus (reserve) for future benefits Use surplus to buy U.S. Treasury bonds Put bond interest in Trust Fund Redeem bonds later when not enough incoming payroll taxes to pay full benefits

32 May 2011 Consortium for Citizens with Disabilities32 Investing Surplus U.S. Treasury bonds = safest investment in world Not invested in stock market U.S. government bears risk, not individuals Program will NOT go bankrupt!

33 Current & Future Surplus Surplus = invested assets or Trust Fund reserves $2.6 trillion by end 2010 Will continue to grow Projected to reach $3.7 trillion by 2022 May 2011 Consortium for Citizens with Disabilities 33

34 Projected Shortfall Over 75 Years Less than 1 percent of Gross Domestic Product (GDP) Another measure = 2.22 percent of taxable payroll Previous Trustees’ forecasts = similar projection May 2011 Consortium for Citizens with Disabilities34

35 May 2011 Consortium for Citizens with Disabilities 35 No Immediate Problem Long term planning = 75 years Social Security Trustees project future benefits based on payroll tax income & reserves Need to start addressing problem, but no need to change basic program design

36 May 2011 Consortium for Citizens with Disabilities36 Future Projections Pay 100% of scheduled benefits 2011 Trustees Report: until 2036 Pay reduced benefits (if no action taken) 2011 Trustees Report: 77% of scheduled benefits starting 2037

37 Future Projections – DI Trust Fund 2011 Trustees Report: DI Trust Fund exhausted in 2018 Solution: Reallocation of payroll tax rate between OASI and DI Trust Funds Reallocation has occurred before May 2011 Consortium for Citizens with Disabilities37

38 May 2011Consortium for Citizens with Disabilities38 Future Challenges  What will it take to fix system’s long term funding shortfall?  Wide range of options to phase in gradually  Has Congress ever stepped in to strengthen Social Security’s financial future?  YES. In 1983 to plan for retirement of “baby boomers” which helped create current surplus

39 May 2011 Consortium for Citizens with Disabilities39 Possible Options: Solvency 2 approaches, but could combine options from each: Increase revenue Cut benefits

40 Possible Options: Solvency Multiple choices within each approach Different timelines Different target populations Will cover in more detail in June 1 Webinar May 2011 Consortium for Citizens with Disabilities 40

41 Increase Revenue: Some Options Increase payroll tax for employers & employees Raise limit on maximum taxable income (2011: $106,800) Tax earnings above taxable maximum Extend covered employees (e.g. state & local now excluded) Earmark specific taxes for new funding stream Diversify investments beyond U.S. Treasury bonds May 2011 Consortium for Citizens with Disabilities 41

42 Cut Benefits: Some Options Modify cost of living adjustment: reduce annually OR adopt new measure Raise normal and/or early retirement age Lengthen time period used to set level of insurance benefits Reduce payments for new beneficiaries May 2011 Consortium for Citizens with Disabilities42

43 May 2011 Consortium for Citizens with Disabilities43 What Lies Ahead?  Each potential change affects Social Security’s future  No immediate crisis  Possible to meet long term needs with modest adjustments over next years

44 May 2011 Consortium for Citizens with Disabilities44 A Checklist for People with Disabilities & Their Families

45 May 2011 Consortium for Citizens with Disabilities45 Our Principles Do not change basic design based on payroll taxes Preserve as social insurance for disability, survivors & retirement Guarantee monthly benefits adjusted for inflation Preserve current & future benefits Restore program’s long term funding

46 More General Principles Social Security is NOT in crisis Social Security changes should not be included in deficit reduction legislation The Social Security programs should not be included in proposals that cap overall federal spending Modest premium contribution adjustments, rather than benefit cuts, should be used to address long- term solvency of the Social Security programs May 2011 Consortium for Citizens with Disabilities 46

47 May 2011 Consortium for Citizens with Disabilities47 Our Questions Do proposals: Change benefit formula? Change cost-of-living adjustments? Switch from “wage” to “price” index? Provide benefits for family members? Raise retirement age?

48 May 2011 Consortium for Citizens with Disabilities48 Our Message Some change is necessary, but nothing drastic now or later Protect basic design Require beneficiary impact statement for each proposal

49 May 2011 Consortium for Citizens with Disabilities 49 Beneficiary Impact Statement Analyze impact for each type of beneficiary Disabled workers/their dependents Retirees/their dependents Disabled adult children – dependents of parents who retire, die or become disabled Disabled widow(er)s

50 For More Information To find fact sheets regarding Social Security and disability, links to helpful resources, or to access a recording of this webinar, please visit May 2011 Consortium for Citizens with Disabilities 50

51 Join us for our next webinar Current Social Security Reform Proposals: How Would They Affect People with Disabilities Wednesday June 1, :00 – 3:00 p.m. EDT with May 2011 Consortium for Citizens with Disabilities 51

52 Webinar Sponsors This webinar has been sponsored by the Consortium for Citizens with Disabilities. Funding was provided through a grant administered by the National Academy of Social Insurance and provided by the Ford Foundation. May 2011 Consortium for Citizens with Disabilities52


Download ppt "Social Security Its Vital Role for Workers & Their Families."

Similar presentations


Ads by Google