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Social Security

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Presentation on theme: "Social Security"— Presentation transcript:

1 Social Security

2 History of Social Security Programs
1935 – Retirement Insurance 1939 – Survivors Insurance 1956 – Disability Insurance 1965 – Medicare Program 1972 – Supplemental Security Income 2003 – Medicare Part D Prescription Drug Coverage Social Security legislation was passed in At that time, the program was solely a retirement program. The basic tenets of this social insurance program have been to provide: Individual Equity – You earn the benefits you receive. The more you earn, the higher your benefit will be. Social Adequacy – Social Security provides a financial foundation which protects all workers. In 1939, a year before Social Security began paying monthly retirement benefits, the social safety net expanded with the Survivors Insurance program. Again during difficult economic times, the vulnerability of widows and children became even more apparent. In 1956, the Social Security Disability Insurance Program became law. Then, as now, for most workers in America, Social Security is the only comprehensive disability insurance policy they have.

3 A Foundation for Planning Your Future
OTHER INCOME SAVINGS & INVESTMENTS PENSION SOCIAL SECURITY Social Security provides a foundation on which to build retirement security.

4 Who Gets Benefits from Social Security?
56 million people This graph is an overview of the number of beneficiaries we pay. Currently, about one in every six people in America is receiving a Social Security benefit. The majority of our beneficiaries are retired. But Social Security is more than is a family protection plan (almost 1/3 of the beneficiaries are disabled, dependants of disabled, or survivors).

5 Who Pays for Social Security?
Today’s Workers & Employers Today’s Beneficiaries The basic concept of Social Security is an intergenerational transfer system: the workers of today pay the benefits of current retirees and other beneficiaries. Currently, an estimated 156 million workers are paying Social Security taxes.

6 The Number of Workers per Beneficiary is Decreasing
5 – 1960 3 – 2012 2 – 2035 Because of the changing demographics, over the years we have seen the ratio of workers to beneficiaries change: in to 1; today 3 to 1. When the baby boom generation is in full retirement, the ratio may be about 2 workers for each beneficiary.

7 America is Getting Older (7% of total population)
The combined pressures of a massive baby boom generation and increasing life expectancy will result in an American population with almost 20% of our projected population over the age of 65 by the year 2035. Million

8 Social Security Cost-of-Living Adjustments
Effective Date Amount June % June % June % June % June % June % June % June % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Effective Date Amount Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Another economic factor that can affect Social Security is the rate of inflation. Social Security will probably be the only source of your retirement income that is tied directly to the Consumer Price Index. This is important information for your pre-retirement planning.

9 Social Security Trust Funds Will Be Able to Pay Only About 75 Cents for Each Dollar of Scheduled Benefits in 2033 In 2033, only about 75% of benefits could be paid if no changes are made. Calendar Year

10 How Do You Qualify for Retirement Benefits?
You need to work to earn Social Security “credits” Each $1,160 in earnings gives you one credit You can earn a maximum of 4 credits per year Example: To earn 4 credits in 2013, you must earn at least $4,640. Earning 40 credits (10 years of work) throughout your working life will qualify you for a retirement benefit.

11 Your Age at the Time You Elect Retirement Benefits Affects the Amount
If You’re a Worker and Retire At age 62, you get a lower monthly payment 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

12 Your Age at the Time You Elect Retirement Benefits Affects the Amount
For example, if you were born from 1943 through 1954: Age 62 75% of benefit Age % of benefit Age % of benefit The reduction for early retirement is: 20% if you were born before 1938 25% if you were born between 1943 and 1954 30% if you were born 1960 or later

13 Full Retirement Age Year of Birth Full Retirement Age
1937 or earlier 65 & 2 months & 4 months & 6 months & 8 months & 10 months 1943 – & 2 months & 4 months & 6 months & 8 months & 10 months 1960 or later 67 The increase in full retirement age was the result of the 1983 Amendments. Full retirement age increases apply to all Retirement Benefits and to Survivors Benefits. Although, we at Social Security have always used the term “full” retirement age, you may find that some people now refer to “full retirement age” as “Normal Retirement Age”. Regardless of your full retirement age, reduced benefits can still be paid as early as age 62. In addition, the Medicare eligibility age of 65 has not changed. You should apply for Medicare 3 months before your 65th birthday, even when you plan to apply for your retirement or spouse’s benefits later.

14 In Addition to the Beneficiary, Who Else Can Get Benefits?
Your Child Not married under 18 (under 19 if still in high school) Not married and disabled before age 22 Your Spouse Age 62 or older At any age, if caring for a child under age 16 or disabled The worker and his or her spouse must be married for one year (continuously) immediately before the day on which the application is filed. (Note: The one-year requirement can be waived if the spouse is the natural mother or father of the worker’s biological child or if the spouse was entitled or potentially entitled to certain auxiliary or survivor’s benefits in the month before the month of marriage to the worker.) If a spouse is caring for a child under age 16 of the worker, the spouse could qualify regardless of age. When the youngest child turns 16, the spouse’s benefit will stop, even though the child’s benefit will continue. However, if the child is disabled, the spouse’s benefits will continue as long as the child is under his or her care.

15 In Addition to the Retiree, Who Else Can Get Benefits?
Your Ex-Spouse Marriage lasted at least 10 years Ex-spouse 62 or older Divorced at least two years and you and your ex-spouse are at least 62, he or she can get benefits even if you are not retired Ex-spouse’s benefit amount has no effect on the amount you or your current spouse can get Your divorced spouse can get benefits on your Social Security record if the marriage lasted at least 10 years. Your divorced spouse must be 62 or older and unmarried. Also, if you and your ex-spouse have been divorced for at least two years and you and your ex-spouse are at least 62, he or she can get benefits even if you are not retired. Your current spouse cannot receive spouse’s benefits until you file for retirement benefits. The amount of benefits your divorced spouse gets has no effect on the amount of benefits you or your current spouse can get.

16 Spouse’s Benefit Computation
Benefit is 50% of worker’s unreduced benefit Reduction for early retirement If spouse’s own benefit is less than 50% of the worker’s, the benefits are combined Does not reduce payment to worker A spouse who has not worked or who has low earnings can be entitled to as much as one-half of the retired worker’s full benefit. If you are eligible for both your own retirement benefits and for benefits as a spouse, we always pay your own benefits first. If your benefits as a spouse are higher than your retirement benefits, you will get a combination of benefits equaling the higher spouse benefit. If spouses want to get Social Security retirement benefits before they reach full retirement age, the amount of the benefit is reduced. The amount of reduction depends on when the person reaches full retirement age. For example: If full retirement age is 65, a spouse can get 37.5 percent of the worker’s unreduced benefit at age 62; If full retirement age is 66, a spouse can get 35 percent of the worker’s unreduced benefit at age 62; If full retirement age is 67, a spouse can get 32.5 percent of the worker’s unreduced benefit at age 62. The amount of the benefit increases at later ages up to the maximum of 50 percent at full retirement age. If full retirement age is other than those shown in our example, the amount of the benefit will fall between 32.5 percent and 37.5 percent at age 62. However, if a spouse is caring for a child under age 16 or disabled, who gets Social Security benefits on the worker’s record, the spouse gets full benefits, regardless of age.

17 How Social Security Determines Your Benefit
Social Security benefits are based on earnings Step 1 -Your wages are adjusted for changes in wage levels over time Step 2 -Find the monthly average of your 35 highest earnings years Step 3 -Result is “average indexed monthly earnings” This slide provides an overview of the first step that we use in computing a benefit. We are looking for the highest 35 years during a worker's lifetime of earnings, regardless of when earned. This formula also makes clear how a worker who qualifies for a retirement benefit with just 10 years of work would have a low benefit payment. Since we are looking for his or her highest 35 years, in this example, we would be adding in 25 zero years. Needless to say, this worker would be receiving a lower benefit. There is, however, no such thing as a minimum benefit. 26

18 Retirement Benefit Computation Example
If your average monthly earnings are = $5,200 Then your monthly benefit would be = $2,010 Average Monthly Earnings $5,200 90% of First $767 = $690 32% of Earnings over $767 through $4,624 $3,857 = $1,234 ($4,624-$767=$3,857) 15% of Earnings over $4,624 $576 = $86 $5,200 $2,010

19 my Social Security Your Online Account ... Your Control ... my my Social Security is a convenient way to access valuable personalized Social Security information, whether you’ve been working and paying Social Security taxes or now are receiving Social Security benefits. And you can check your online account just about whenever you want at my Social Security is an easy-to-access, easy-to-use portal to view and update some of your own Social Security information.

20 Who Can Create a my Social Security Account?
You must be at least 18 years old and have: A valid address; A Social Security number; and A U.S. mailing address. Almost anyone can get an online account. You must be at least 18 years of age, have a valid address, a Social Security number, and a U.S. mailing address (includes military addresses, APO/FPO/DPO AE, AP or AA). Users can only create an account for themselves. They cannot set up an account for another person, even if they have his or her written consent. This also applies to an appointed representative or someone who has business with that person. Users may be unable to create an online account if they: •     Blocked electronic access to their personal information with us; •     Recently moved or changed your name; or •     Placed a freeze on their credit report.

21 my Social Security Services
If you don’t get benefits, you can— View, save, and print your online Social Security Statement.  If you do get benefits you can— Get your benefit verification letter; Check your benefit and payment information and your earnings record; Change your address and phone number; and Start or change your direct deposit. (Read from slide.) Note: Services are available (and presented) to registered users based on the type of benefits they receive. If the user does not receive benefits: Access online Social Security Statement If the user only receives Social Security benefits: Get benefit verification letter Change address and telephone number Start or change direct deposit If the user only receives SSI benefits: If the user receives both Social Security and SSI benefits: If the user only receives Medicare:

22 Your Online Social Security Statement Provides
Estimates of the retirement and disability benefits you may receive; Estimates of benefits your family may get when you receive Social Security or die; Allows you to create what-if scenarios. Paper statements provide inflated estimates. A list of your lifetime earnings according to Social Security’s records; The estimated Social Security and Medicare taxes you’ve paid; Information about qualifying and signing up for Medicare; and A printable version of your Social Security Statement. Your online Statement provides a wealth of information to help you and your family. (Walk through the bullets in the slide.)

23 The Online Benefit Verification Letter
With my Social Security you can get your online benefit verification letter and use it as official proof of: Your income when you apply for a loan or mortgage, assisted housing or other state or local benefits; Your current Medicare health insurance coverage; Your retirement or disability status; and Your age. (Read from slide.)

24 Windfall Elimination Provision
If any part of your pension is based on work not covered by Social Security, you may be affected by the Windfall Elimination Provision. 35

25 Exception to the Windfall Elimination Provision
Years of Social % of First Factor Security Coverage in Benefit Formula 30 or more 90 20 or fewer 40 This chart is a simple reflection of the major exception to WEP and its variables. A government worker with 21 to 30 years of significant (substantial) years of Social Security wages will have a different percentage factor used in the first level of their benefit computation. To see how your benefit may be reduced by WEP use our WEP calculator at Our Online WEP calculator allows you to estimate your Social Security benefit.

26 Government Pension Offset (GPO)
If you receive a government pension based on work not covered by Social Security, your Social Security spouse’s or widow(er)’s benefits may be reduced.

27 Government Pension Offset (GPO)
Applies to Spouse’s Benefits Only 2/3 of amount of government pension will be used to reduce the Social Security spouse’s benefits Example: $1,200 of government pension 2/3 = $800 Social Security spouse’s benefits = $750 No benefit payable by Social Security The Government Pension Offset (GPO) affects people who earned a pension while working in non-covered government employment. Unless a federal worker switched to the Federal Employees Retirement System (FERS) and worked under FERS for at least 5 years, GPO will affect the amount of the wife’s/husband’s or widow’s(er’s) benefits payable to them. Generally, the concept of spouse’s benefits have the inherent concept of dependency. The notion that a spouse is working in non-covered employment and thereby earning a pension from that employment argues against the notion of dependency. As a result, GPO was passed as part of the 1983 Amendments. The fact sheet, "Government Pension Offset," provides a detailed overview of GPO and all of the exceptions. Understanding WEP and GPO by themselves is not a problem. Many people become confused when they mix the principles of each together. It is possible for a worker to be affected by WEP on their own work record due to their government pension and to have any potential spousal benefit payable to them affected by GPO. To estimate your future benefits under GPO, use our Online GPO calculator at Our Online GPO calculator allows you to estimate your Social Security benefit. (Medicare Eligibility is not affected by GPO)

28 You Can Work & Still Receive Benefits
You Can If You Make More, If You Are Make Up To Some Benefits Will Be Withheld Under Full Retirement Age $15,120/yr. ($1,260/mo.) $1 for every $2 The Year Full Retirement Age is Reached $40,080/yr. ($3,340/mo.) $1 for every $3 Month of Full Retirement Age and Above No Limit No Limit Note: If some of your retirement benefits are withheld because of your earnings, your benefits will be increased starting at your full retirement age to take into account those months in which benefits were withheld.

29 How Do I Apply for Benefits?
Apply online, for Disability and Medicare, at It is the most convenient way to apply; Call Social Security to schedule an appointment (TTY ); or Apply at your local Social Security office.

30 What Will You Need When Applying for Your Social Security Benefits?
Social Security number for each applicant Proof of age (only if date of birth allegation doesn't match Social Security records) 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 We need to see the appropriate proofs when you file your claim.

31 Who Can Get Survivors Benefits?
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: Full benefits at full retirement age Reduced benefits at age 60 If disabled as early as age 50 At any age if caring for child under 16 or disabled Remarriage after age 60 (50 if disabled) Divorced widows/widowers may qualify The length of marriage requirement for a widow or widower is 9 months, and for a surviving divorced wife it is 10 years immediately before the date of divorce. Please note, there are exceptions to the duration of marriage requirements. Generally, you cannot get widow’s or widower’s benefits if you remarry before age 60. But remarriage after age 60 (or age 50 if you are disabled) will not prevent you from getting benefit payments based on your former spouse’s work. And at age 62 or older, you may get benefits based on your new spouse’s work, if those benefits would be higher.

32 Widow or Widower Benefit Computation
At full retirement age, 100% of deceased worker’s unreduced benefit At age 60, 71.5% of deceased worker’s unreduced benefit Reduced benefits on one record at age 60, reduced or unreduced benefit on other record at age 62 or older Full benefits to both widow or widower and divorced widow or widower Regardless of the change in full retirement age, a widow or widower can still receive 71-1/2% of the worker’s benefit at age 60. A widow or widower can receive a survivors benefit at age 60 and then switch to a benefit on his or her own work record at age 62. Or, a widow or widower could receive a reduced survivors benefit at age 60 and then file for an unreduced benefit on his or her own work record at full retirement age. Benefits paid to a surviving divorced spouse who is 60 or older (age 50 if disabled) will not affect the benefit rates for other survivors receiving benefits.

33 Social Security’s Disability Definition:
A medical condition or combination of impairments preventing substantial work for at least 12 months, or expected to result in death. The determination also considers age, education & work experience. The actual disability definition makes the clear distinction between Social Security’s disability requirements compared to other disability programs, such as Veterans and Workman’s Compensation. Social Security’s disability definition is based on your medical condition and the fact that you are not expected to be able to do any work for at least 12 months or your condition is terminal. This work determination is based on your age, education and work experience. After becoming eligible for a disability benefit, the law requires us to review the continuing disability (CDRs) generally every 3 to 7 years, depending on the severity of the disability.

34 Your Benefits Can Be Taxable
About 1/3 of people who get Social Security pay income taxes on their benefits. At the end of each year, you’ll receive a Social Security Benefit Statement (Form SSA-1099). Use this statement to complete your Federal income tax return to find out if you have to pay taxes on your benefit.

35 Who Can Get Medicare ? 65 & older -or-
24 months after entitlement to Social Security disability benefits Amyotrophic Lateral Sclerosis Permanent kidney failure and receive maintenance dialysis or a kidney transplant Exposure to Environmental Health Hazards Remember that although the full retirement age has increased above age 65, Medicare eligibility is still age 65. You should apply for Medicare 3 months before your 65th birthday, even when you plan to apply for your retirement or spouse’s benefits later. You also are eligible for Medicare benefits, 24 months from the month you were entitled to receive Social Security disability benefits, not from the first month you receive a payment. If you have Amyotrophic Lateral Sclerosis (Lou Gehrig’s disease), or permanent kidney failure and you receive maintenance dialysis or a kidney transplant, you become entitled for Medicare beginning with the month you first become entitled to disability benefits.

36 When Can I Sign Up for Medicare Part B?
Medicare Enrollment Periods: Initial – at age 65 Special – if still working General – January-March If you have enrolled for cash benefits BEFORE age 65, you will be AUTOMATICALLY enrolled for BOTH Parts A & B. The Initial Enrollment Period starts 3 months before the month you turn age 65 and extends 3 months past the month you turn 65. If you are not receiving benefits, you should inquire about filing for Medicare 3 months prior to turning age 65 so that your coverage can start the month you turn 65. If you already are receiving Social Security benefits, you'll automatically be enrolled in Medicare Part A (hospital insurance) and B (medical insurance). (Note: Residents of Puerto Rico or foreign countries will not receive Part B automatically. They must elect this benefit.) However, because you must pay a premium for Part B coverage, you have the option of turning it down. Most people choose Part B even though it’s optional. You will be contacted by mail a few months before you become eligible and given all the information you need. The Special Enrollment Period is for people (and their spouses) who continue to work past age 65. Since Medicare pays second after their employer group health plan pays first, they are not required to file for Part B. Since Medicare pays second there may be no need for Part B coverage. It is extremely important for workers to check with their employer group health plan for specific guidance. For this reason, they are offered a special period in which to file for Medicare. As a general rule, we recommend that people file for Part A 3 months prior to turning age 65, and then on the day they stop working call Social Security to file for Part B. The General Enrollment Period is for those people who missed their Initial or Special Enrollment Periods. The window to file is January to March with coverage beginning in July. Anyone filing in the General Enrollment Period will be assessed a 10% penalty for each year after the Initial or Special Enrollment Period. 58

37 Medicare Coverage Part A - Hospital Insurance
Covers most inpatient hospital expenses 2013 Deductible $1,184 Part B - Medical Insurance Covers 80% doctor bills & other outpatient medical expenses after 1st $140 in approved charges 2013 Standard Monthly Premium $104.90 Part D - Medicare Prescription Drug Plan Covers a major portion of prescription drug costs for Medicare beneficiaries Enroll With Medicare prescription drug provider not SSA There is no monthly premium for Part A if you are insured for retirement benefits. After you retire, your health insurance may only pay after Medicare pays. Many supplemental plans require you to file for Medicare Part B. The Medicare premium beneficiaries pay represents 1/4 of the actual cost; the federal government covers the balance of the cost. Medicare Part D Prescription Drug Plan covers a major portion of prescription drug costs for Medicare beneficiaries.

38 Extra Help Could Further Reduce Medicare Prescription Drug Costs
Extra Help is available for beneficiaries with limited resources and income to help pay for the costs—monthly premiums, annual deductibles, and prescription co-payments—related to a Medicare prescription drug plan The Extra Help is estimated to be worth about $4,000 per year.

39 How Do I Apply for Extra Help?
Complete the Application for Extra Help with Medicare Prescription Drug Plan Costs (Form SSA-1020). Here’s how: Apply online at Call Social Security to apply over the phone or request an application at (TTY ) Apply at your local Social Security office Social Security will review your application and send you a letter to let you know if you qualify


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