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Retirement Insurance 1935 Retirement Insurance History - Social Security’s Programs 1956 Disability Insurance 1956 Disability Insurance 1939 Survivors Insurance 1939 Survivors Insurance

3 3 Other Programs 1965 Medicare 1965 Medicare 1972 Supplemental Security Income 1972 Supplemental Security Income 2003 Medicare Part D 2003 Medicare Part D

4 4 A Foundation for Planning Your Future 4 4

million people Who Gets Benefits from Social Security? 31.5 million Retired Workers 2.9 million Dependents 7.1 million Disabled Workers, 1.8 million Dependents 4.6 million Widows/ Widowers 1.9 million Children of Deceased Workers 2/2008

6 6 Payments to Beneficiaries Workers & Employers Who Pays for Social Security?

7 7 Children Per Woman U.S. Birth Rate

8 8 The Number of Workers per Beneficiary is Decreasing

9 9 America Is Getting Older U.S. Population Age 65 & Older America Is Getting Older U.S. Population Age 65 & Older 11 Million 1946 (7% of total population) 38 Million 2008 (12% of total population) 70 Million 2030 (19% of total population)

10 Life Expectancy for Those Age 65 Today MenWomen U.S. Population8185 White8084 African Americans7983 Hispanic8588 Asian8488 American Indians8488 MenWomen U.S. Population8185 White8084 African Americans7983 Hispanic8588 Asian8488 American Indians8488

11 Social Security Cost-of-Living Adjustments Effective DateAmount June 19758% June % June % June % June % June % June % June % Dec % Dec % Dec % Dec % Dec % Dec 19884% Dec % Dec % Dec % Effective DateAmount June 19758% June % June % June % June % June % June % June % Dec % Dec % Dec % Dec % Dec % Dec 19884% Dec % Dec % Dec % Effective DateAmount Dec 19923% Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Effective DateAmount Dec 19923% Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec %

12 Example: Worker with average pre-retirement income of $ 30,000 (Retiring at age 66 in 2008) 1st Year of Retirement Pension $ 13,000/ 50% Social Security $ 13,000/50% Inflation3% per year Example: Worker with average pre-retirement income of $ 30,000 (Retiring at age 66 in 2008) 1st Year of Retirement Pension $ 13,000/ 50% Social Security $ 13,000/50% Inflation3% per year Value of Inflation Protection

13 Value of Inflation Protection example continued: Worker with average pre-retirement income of $ 30,000 example continued: Worker with average pre-retirement income of $ 30,000 5 th Year of Retirement Pension $ 13,000/47% Social Security $ 14,632/53% 10 th Year of Retirement Pension $ 13,000/43% Social Security $ 16,962/57% 20 th Year of Retirement Pension $ 13,000/36% Social Security $ 22,796/64% 5 th Year of Retirement Pension $ 13,000/47% Social Security $ 14,632/53% 10 th Year of Retirement Pension $ 13,000/43% Social Security $ 16,962/57% 20 th Year of Retirement Pension $ 13,000/36% Social Security $ 22,796/64%

14 Payments to Today’s Beneficiaries Reserves for Future Beneficiaries Reserves for Future Beneficiaries Administrative Costs How Is Social Security Income Spent? 73.8% 25.4% 0.7%

15 Where Does the Money Come From? Payroll Tax84% Trust Fund Interest14% Taxation of Benefits2% Payroll Tax84% Trust Fund Interest14% Taxation of Benefits2% Social Security Trust Fund 2008

16 In 2017, Social Security Will Begin Paying More in Benefits than is Collected in Taxes In 2017, Social Security Will Begin Paying More in Benefits than is Collected in Taxes 16

17 In 2017, Social Security Will Begin Paying More in Benefits than is Collected in Taxes In 2017, Social Security Will Begin Paying More in Benefits than is Collected in Taxes 17 At exhaustion in 2041, only about 78% of benefits could be paid.

18 You Need to Work to Earn Social Security Credits  Each $ 1,050 in earnings gives you one credit  You can earn a maximum of 4 credits per year Example: To earn 4 credits in 2008, you must earn at least $ 4,200. Earning 40 credits throughout your working life will qualify you for a retirement benefit.  Each $ 1,050 in earnings gives you one credit  You can earn a maximum of 4 credits per year Example: To earn 4 credits in 2008, you must earn at least $ 4,200. Earning 40 credits throughout your working life will qualify you for a retirement benefit.

19 Your Age When You Retire Affects Your Benefits If You’re a Worker and Retire  At age 62, you get a lower monthly payment permanently  At your full retirement age, you get your full benefit  You get an even higher monthly payment if you work past your full retirement age

20 In Addition to the Retiree, Who Else Can Get Benefits? In Addition to the Retiree, Who Else Can Get Benefits? Your Spouse  At age 62  At any age if caring for child under 16 or disabled  Divorced spouses may qualify Your Child  Not married under 18 (under 19 if still in high school)  Not married and disabled before age 22

21 Full Retirement Age Year of BirthFull Retirement Age 1937 or earlier & 2 months & 4 months & 6 months & 8 months & 10 months 1943 – & 2 months & 4 months & 6 months & 8 months & 10 months 1960 or later67 Year of BirthFull Retirement Age 1937 or earlier & 2 months & 4 months & 6 months & 8 months & 10 months 1943 – & 2 months & 4 months & 6 months & 8 months & 10 months 1960 or later67

22 How Social Security Determines Your Benefit Social Security benefits are based on earnings Step 1Your wages are adjusted for changes in wage levels Step 2Find the monthly average of your 35 highest earnings years Step 3Result is “average indexed monthly earnings”

23 If your average monthly earnings are= $ 5,200 Then your monthly benefit would be= $ 1,919 Average Monthly Earnings $ 5,200 90% of First $ 711= $ % of Earnings over $ 711 through $ 4,288 $ 3,577= $ 1,144 ( $ 4,288- $ 711= $ 3,577) 15% of Earnings over $ 4,288 $ 912= $ 136 ( $ 5,200- $ 4,288= $ 912) $ 5,200 $ 1,919 If your average monthly earnings are= $ 5,200 Then your monthly benefit would be= $ 1,919 Average Monthly Earnings $ 5,200 90% of First $ 711= $ % of Earnings over $ 711 through $ 4,288 $ 3,577= $ 1,144 ( $ 4,288- $ 711= $ 3,577) 15% of Earnings over $ 4,288 $ 912= $ 136 ( $ 5,200- $ 4,288= $ 912) $ 5,200 $ 1,919 Retirement Benefit Computation Example

24 You Can Work & Still Receive Benefits You CanIf You Make More, If You AreMake Up ToSome Benefits Will Be Withheld Under Full Retirement Age $ 13,560/yr. ( $ 1,130/mo.) $ 1 for every $ 2 The Year Full Retirement Age is Reached $ 36,120/yr. ($3,010/mo.) $ 1 for every $ 3 Month of Full Retirement Age and AboveNo LimitNo Limit You CanIf You Make More, If You AreMake Up ToSome Benefits Will Be Withheld Under Full Retirement Age $ 13,560/yr. ( $ 1,130/mo.) $ 1 for every $ 2 The Year Full Retirement Age is Reached $ 36,120/yr. ($3,010/mo.) $ 1 for every $ 3 Month of Full Retirement Age and AboveNo LimitNo Limit

25 What Will You Need When Applying for Your Social Security Benefits? What Will You Need When Applying for Your Social Security Benefits? Social Security number for each applicant Proof of age (birth certificate) Latest W-2 or self-employment tax return Earnings estimate Bank information for direct deposit Information about marriages/divorces Information about military or railroad service Social Security number for each applicant Proof of age (birth certificate) Latest W-2 or self-employment tax return Earnings estimate Bank information for direct deposit Information about marriages/divorces Information about military or railroad service

26 Who Can Get Survivors Benefits? Widow or Widower:  Reduced benefits at age 60  If disabled as early as age 50  At any age if caring for child under 16 or disabled  Divorced widows/widowers may qualify Your Child if:  Not married under age 18 (under 19 if still in high school)  Not married and disabled before age 22 Widow or Widower:  Reduced benefits at age 60  If disabled as early as age 50  At any age if caring for child under 16 or disabled  Divorced widows/widowers may qualify Your Child if:  Not married under age 18 (under 19 if still in high school)  Not married and disabled before age 22

27 Parents  Age 62 and was receiving at least one-half support from deceased worker Lump Sum Death Payment ( $ 255)  Most spouses or children Parents  Age 62 and was receiving at least one-half support from deceased worker Lump Sum Death Payment ( $ 255)  Most spouses or children Other Survivors Benefits

28 What Should You Do to Prepare for Your Retirement? Get estimates of benefits using different retirement ages and wage estimates Get estimates of benefits using different retirement ages and wage estimates

29 Social Security’s Online Services  Retirement & Disability Applications  Apply for Extra Help  Retirement/Survivors/Disability Planner  Request a Statement  Change of Address  Medicare Card Replacements  Request a Benefit Verification Letter  Start or Change Direct Deposit  Retirement & Disability Applications  Apply for Extra Help  Retirement/Survivors/Disability Planner  Request a Statement  Change of Address  Medicare Card Replacements  Request a Benefit Verification Letter  Start or Change Direct Deposit

30 Importance of Social Security to Women  57% of all aged beneficiaries  70% of all aged beneficiaries over age 85  57% of all aged beneficiaries  70% of all aged beneficiaries over age 85

31 Women and Social Security  For about 78% of unmarried women aged 65 or older, Social Security represents at least ½ of their total income  For about 30% of unmarried women aged 65 or older, Social Security is their only source of income  For about 78% of unmarried women aged 65 or older, Social Security represents at least ½ of their total income  For about 30% of unmarried women aged 65 or older, Social Security is their only source of income

32 The Social Security Statement  The Statement provides you with estimates of monthly Social Security retirement, disability and survivors benefits  The Statement allows you to check your earnings history for accuracy  The Statement provides you with estimates of monthly Social Security retirement, disability and survivors benefits  The Statement allows you to check your earnings history for accuracy

33 The Social Security Statement