1
History - Social Security’s Programs
1935
1939
1956
Retirement
Insurance
Survivors
Insurance
Disability
Insurance
2
Other Programs
1965
1972
2003
Medicare
Supplemental
Security
Income
Medicare
Part D
3
A Foundation for Planning Your Future
44
Who Gets Benefits from Social Security?
50 million people
7.1 million Disabled Workers,
1.8 million Dependents
31.5 million Retired Workers
2.9 million Dependents
4.6 million
Widows/ Widowers
1.9 million
Children of
Deceased Workers
2/2008
5
Who Pays for Social Security?
Workers
&
Employers
Payments
to
Beneficiaries
6
Children Per Woman
U.S. Birth Rate 1920-2020
7
The Number of Workers
per Beneficiary is Decreasing
1960
2008
2030
8
America Is Getting Older
U.S. Population Age 65 & Older
70 Million
38 Million
11 Million
1946
(7% of total
population)
2008 2030
(12% of total
population)
(19% of total
population)
9
Life Expectancy for Those Age 65 Today
Men
Women
U.S. Population
81
85
White
80
84
African Americans
79
83
Hispanic
85
88
Asian
84
88
American Indians
84
88
10
Social Security Cost-of-Living Adjustments
Effective Date
Amount
Effective Date
Amount
June 1975
June 1976
June 1977
June 1978
June 1979
June 1980
June 1981
June 1982
Dec 1983
Dec 1984
Dec 1985
Dec 1986
Dec 1987
Dec 1988
Dec 1989
Dec 1990
Dec 1991
8%
6.4%
5.9%
6.5%
9.9%
14.3%
11.2%
7.4%
3.5%
3.5%
3.1%
1.3%
4.2%
4%
4.7%
5.4%
3.7%
Dec 1992
Dec 1993
Dec 1994
Dec 1995
Dec 1996
Dec 1997
Dec 1998
Dec 1999
Dec 2000
Dec 2001
Dec 2002
Dec 2003
Dec 2004
Dec 2005
Dec 2006
Dec 2007
3%
2.6%
2.8%
2.6%
2.9%
2.1%
1.3%
2.5%
3.5%
2.6%
1.4%
2.1%
2.7%
4.1%
3.3%
2.3%
11
Value of Inflation Protection
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%
Inflation
3% per year
12
Value of Inflation Protection
5th Year of Retirement
Pension
Social Security
$13,000/47%
$14,632/53%
10th Year of Retirement
Pension
Social Security
20th
$13,000/43%
$16,962/57%
Year of Retirement
Pension
Social Security
$13,000/36%
$22,796/64%
example continued:
Worker with average
pre-retirement
income of $30,000
13
How Is Social Security Income Spent?
25.4%
Payments to Today’s
Beneficiaries
Reserves for Future
Beneficiaries
73.8%
0.7%
Administrative
Costs
14
Where Does the Money Come From?
Social Security Trust Fund 2008
Payroll Tax
84%
Trust Fund Interest
14%
Taxation of Benefits
2%
15
In 2017, Social Security Will Begin Paying
More in Benefits than is Collected in Taxes
16
16
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.
17
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.
18
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
19
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
20
Full Retirement Age
Year of Birth
Full Retirement Age
1937 or earlier
1938
1939
1940
1941
1942
1943 – 1954
1955
1956
1957
1958
1959
1960 or later
65
65 & 2 months
65 & 4 months
65 & 6 months
65 & 8 months
65 & 10 months
66
66 & 2 months
66 & 4 months
66 & 6 months
66 & 8 months
66 & 10 months
67
21
How Social Security Determines Your Benefit
Social Security benefits are based on earnings
Step 1
Your wages are adjusted for changes in wage levels
Step 2
Find the monthly average of your 35 highest
earnings years
Step 3
Result is “average indexed monthly earnings”
22
Retirement Benefit Computation Example
If your average monthly earnings are =
Then your monthly benefit would be =
Average Monthly Earnings
90% of First
32% of Earnings over $711 through $4,288
$5,200
$1,919
$5,200
$711
=
$639
$3,577
=
$1,144
$912
=
$136
($4,288-$711=$3,577)
15% of Earnings over $4,288
($5,200-$4,288=$912)
$5,200
$1,919
23
You Can Work & Still Receive Benefits
If You Are
You Can
Make Up To
Under Full
Retirement Age
$13,560/yr. ($1,130/mo.)
$1
for every $2
$36,120/yr.
$1
for every $3
The Year Full Retirement
Age is Reached
Month of Full Retirement
Age and Above
($3,010/mo.)
No Limit
If You Make More,
Some Benefits Will
Be Withheld
No Limit
24
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
25
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
26
Other Survivors Benefits
Parents
 Age 62 and was receiving at
least one-half support from
deceased worker
Lump Sum Death Payment ($255)
 Most spouses or children
27
What Should You Do to
Prepare for Your Retirement?
Get estimates of benefits using different
retirement ages and wage estimates
www.socialsecurity.gov
28
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
29
Importance of Social Security to Women
 57% of all aged beneficiaries
 70% of all aged beneficiaries over age 85
30
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
31
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
32
The Social Security Statement
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