1 1

2 2 A Foundation for Planning Your Future 2 2

million people Who Gets Benefits from Social Security? 32 million Retired Workers 2.9 million Dependents 7.4 million Disabled Workers, 1.8 million Dependents 4.6 million Widows/ Widowers 1.9 million Children of Deceased Workers 2/2009

4 4 Payments to Beneficiaries Workers & Employers Who Pays for Social Security?

5 5 Children Per Woman U.S. Birth Rate

6 6 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 % Dec % Effective DateAmount Dec 19923% Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec %

7 7 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

8 8 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 8 8 At exhaustion in 2041, only about 78% of benefits could be paid.

9 9 You Need to Work to Earn Social Security Credits  Each $ 1,090 in earnings gives you one credit  You can earn a maximum of 4 credits per year Example: To earn 4 credits in 2009, you must earn at least $ 4,360. Earning 40 credits throughout your working life will qualify you for a retirement benefit.  Each $ 1,090 in earnings gives you one credit  You can earn a maximum of 4 credits per year Example: To earn 4 credits in 2009, you must earn at least $ 4,360. Earning 40 credits throughout your working life will qualify you for a retirement benefit.

10 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

11 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

12 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

13 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”

14 If your average monthly earnings are= $ 5,200 Then your monthly benefit would be= $ 1,974 Average Monthly Earnings $ 5,200 90% of First $ 744= $ % of Earnings over $ 711 through $ 4,288 $ 3,739= $ 1,196 ( $ 4,288- $ 711= $ 3,577) 15% of Earnings over $ 4,288 $ 717= $ 108 ( $ 5,200- $ 4,288= $ 912) $ 5,200 $ 1,974 If your average monthly earnings are= $ 5,200 Then your monthly benefit would be= $ 1,974 Average Monthly Earnings $ 5,200 90% of First $ 744= $ % of Earnings over $ 711 through $ 4,288 $ 3,739= $ 1,196 ( $ 4,288- $ 711= $ 3,577) 15% of Earnings over $ 4,288 $ 717= $ 108 ( $ 5,200- $ 4,288= $ 912) $ 5,200 $ 1,974 Retirement Benefit Computation Example

15 Use the New Retirement Estimator You can get estimates of your future Social Security retirement benefits using our new online Retirement Estimator.  No manual keying of earnings is needed  ‘What if’ scenarios are easy You can get estimates of your future Social Security retirement benefits using our new online Retirement Estimator.  No manual keying of earnings is needed  ‘What if’ scenarios are easy It’s convenient, secure and quick. It’s convenient, secure and quick.

16 What You Can Expect at Full Retirement Age % of Earnings Low Earner Average Earner High Earner 56% 41% 34%

17 You Can Work & Still Receive Benefits You CanIf You Make More, If You AreMake Up ToSome Benefits Will Be Withheld Under Full Retirement Age $ 14,160/yr. ( $ 1,180/mo.) $ 1 for every $ 2 The Year Full Retirement Age is Reached $ 37,680/yr. ($3,140/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 $ 14,160/yr. ( $ 1,180/mo.) $ 1 for every $ 2 The Year Full Retirement Age is Reached $ 37,680/yr. ($3,140/mo.) $ 1 for every $ 3 Month of Full Retirement Age and AboveNo LimitNo Limit

18 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

19 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

20 Social Security’s Disability Definition: A medical condition preventing substantial work for at least 12 months, or expected to result in death. The determination also considers age, education & work experience. A medical condition preventing substantial work for at least 12 months, or expected to result in death. The determination also considers age, education & work experience.

21 Who Can Get Disability Benefits? Worker  Must have paid into Social Security five out of last 10 years Spouse  At age 62  At any age if caring for child under 16 or disabled  Divorced spouses may qualify Worker  Must have paid into Social Security five out of last 10 years Spouse  At age 62  At any age if caring for child under 16 or disabled  Divorced spouses may qualify

22 65 & older -or- Receiving Social Security disability benefits at least 24 months -or- Permanent kidney failure -or- Amyotrophic Lateral Sclerosis (ALS) 65 & older -or- Receiving Social Security disability benefits at least 24 months -or- Permanent kidney failure -or- Amyotrophic Lateral Sclerosis (ALS) Who Can Get Medicare?

23 When Can I Sign Up for Medicare? Medicare Enrollment Periods:  Initial - at age 65  Special - if still working  General - January-March

24 Medicare Coverage Part AHospital Insurance  Covers most inpatient hospital expenses Deductible $ 1,068 Part BSupplementary Medical Insurance  Covers 80% doctor bills & other outpatient medical expenses after 1 st $ 135 in approved charges Monthly Premium $ Part DMedicare Prescription Drug Plan  Covers a major portion of prescription drug costs for Medicare beneficiaries average Monthly Premium $ 28 Part AHospital Insurance  Covers most inpatient hospital expenses Deductible $ 1,068 Part BSupplementary Medical Insurance  Covers 80% doctor bills & other outpatient medical expenses after 1 st $ 135 in approved charges Monthly Premium $ Part DMedicare Prescription Drug Plan  Covers a major portion of prescription drug costs for Medicare beneficiaries average Monthly Premium $ 28

25 How Will the Prescription Drug Plan Affect You? How Will the Prescription Drug Plan Affect You?  You will pay the first $ 295 (called an “annual deductible”).  Medicare will pay 75% of costs above $ 295 up to $ 2,700 in drug spending. You will pay only 25% of these costs.  You will pay 100% of the drug costs above $ 2,700 until you reach $ 4,350 in out-of-pocket spending. Your out-of- pocket spending includes the annual deductible and prescription co-payments. It does not include the monthly premiums you pay for your drug plan.  Medicare will pay about 95% of the costs after you have spent $ 4,350.

26 Extra Help Could Further Reduce Medicare Prescription Drug Costs Extra Help Could Further Reduce Medicare Prescription Drug Costs Extra help is available for low income beneficiaries to pay for part of the Medicare Part D monthly premiums, annual deductibles and prescription co-payments. The extra help could be worth more than $ 3,900 per year. Go online to to apply for extra help. Extra help is available for low income beneficiaries to pay for part of the Medicare Part D monthly premiums, annual deductibles and prescription co-payments. The extra help could be worth more than $ 3,900 per year. Go online to to apply for extra help.

27 For More Medicare Information MEDICARE ( ) TTY MEDICARE ( ) TTY

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