Lesson 13.2 Social Security July 2011Copyright © 2011 … REMTECH, inc … All Rights Reserved1 Introduction It replaces a fraction of your pre-retirement.

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Presentation transcript:

Lesson 13.2 Social Security July 2011Copyright © 2011 … REMTECH, inc … All Rights Reserved1 Introduction It replaces a fraction of your pre-retirement income Most people think of Social Security benefits as the money they get from the government after they retire It was designed to be a safety net for all workers Technically, the money is considered to be retirement income, but Social Security is not a retirement plan This ensures those who didn’t earn a lot while working don’t fall into poverty when they can no longer work

Lesson 13.2 Social Security July 2011Copyright © 2011 … REMTECH, inc … All Rights Reserved2 Objectives Identify what Social Security is and is not You should be able to do the following after completing this lesson! Review the different components of Social Security Explain who each component is designed to protect Describe how FICA taxes are used to fund Social Security Review how Social Security benefits are determined Explain how the income replacement formula works Review how your normal retirement age is determined Identify what happens when you retire before/after your NRA Discuss if you will have to pay income taxes on your Social Security Define the key terms introduced in this lesson

Lesson 13.2 Social Security July 2011Copyright © 2011 … REMTECH, inc … All Rights Reserved – Components of Social Security Who is responsible for overseeing Social Security What the Retirement benefits component does What the Insurance component does What the SSI component does What the Medicare component does What the Medicaid component does In this Section, you will learn

Lesson 13.2 Social Security July 2011Copyright © 2011 … REMTECH, inc … All Rights Reserved – Funding Social Security Who funds Social Security Why payroll taxes are also called FICA taxes What the current Social Security tax rate is What the current Medicare tax rate is Which FICA taxes have a wage base limit In this Section, you will learn Funding Social Security Example You will run the following Interactive Example

Lesson 13.2 Social Security July 2011Copyright © 2011 … REMTECH, inc … All Rights Reserved – Retirement Benefits What AIME stands for and how it is calculated How your Social Security benefit is calculated How your AIME and the income replacement formula are used to determine your benefits How inflation is accounted for in Social Security In this Section, you will learn Social Security Benefits Exercise You will run the following Interactive Exercise

Lesson 13.2 Social Security July 2011Copyright © 2011 … REMTECH, inc … All Rights Reserved – When Are You Eligible? How your normal retirement age (NRA) is determined What your NRA is What your income replacement percentage will be What the earliest age you can receive benefits is How much your benefit will be if you retire before your NRA How much your benefit will be if you retire after your NRA In this Section, you will learn Level of Benefits Example You will run the following Interactive Example

Lesson 13.2 Social Security July 2011Copyright © 2011 … REMTECH, inc … All Rights Reserved – Income Replacement Percentage What Social Security was not designed to be What determines your income replacement percentage What the potential range for income replacement percentage is What the relationship between your AIME and income replacement percentage is What Social Security actually does In this Section, you will learn

Lesson 13.2 Social Security July 2011Copyright © 2011 … REMTECH, inc … All Rights Reserved – Taxing Social Security Benefits How much of your Social Security benefits will be taxed What tax rates will be used to calculate the taxes What factors affect which tax rate will be used How to estimate your taxable income during retirement In this Section, you will learn Social Security Taxes Example You will run the following Interactive Example

Lesson 13.2 Social Security July 2011Copyright © 2011 … REMTECH, inc … All Rights Reserved9 Discussion Questions Is it true the average individual will pay more in Social Security taxes than they receive in Social Security benefits after they retire? What will happen to an individual’s benefits if they retire before their normal retirement age?