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1935 Retirement Insurance

History - Social Security’s Programs. 1935 Retirement Insurance. 1939 Survivors Insurance. 1956 Disability Insurance. Other Programs. 1965 Medicare. 1972 Supplemental Security Income. 2003 Medicare Part D. A Foundation for Planning Your Future. 4.

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1935 Retirement Insurance

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

  2. Other Programs 1965 Medicare 1972 Supplemental Security Income 2003 Medicare Part D

  3. A Foundation for Planning Your Future 4

  4. Who Gets Benefits from Social Security? 50 million people 4.6 million Widows/ Widowers 7.1 million Disabled Workers, 1.8 million Dependents 1.9 million Children of Deceased Workers 31.5 million Retired Workers 2.9 million Dependents 2/2008

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

  6. U.S. Birth Rate 1920-2020 Children Per Woman

  7. The Number of Workers per Beneficiary is Decreasing 5 3 2 1960 2008 2030

  8. America Is Getting Older U.S. Population Age 65 & Older 70 Million 2030 (19% of total population) 38 Million 2008 (12% of total population) 11 Million 1946 (7% 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 June 1975 8% June 1976 6.4% June 1977 5.9% June 1978 6.5% June 1979 9.9% June 1980 14.3% June 1981 11.2% June 1982 7.4% Dec 1983 3.5% Dec 1984 3.5% Dec 1985 3.1% Dec 1986 1.3% Dec 1987 4.2% Dec 1988 4% Dec 1989 4.7% Dec 1990 5.4% Dec 1991 3.7% Effective Date Amount Dec 1992 3% Dec 1993 2.6% Dec 1994 2.8% Dec 1995 2.6% Dec 1996 2.9% Dec 1997 2.1% Dec 1998 1.3% Dec 1999 2.5% Dec 2000 3.5% Dec 2001 2.6% Dec 2002 1.4% Dec 2003 2.1% Dec 2004 2.7% Dec 2005 4.1% Dec 2006 3.3% Dec 2007 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 $13,000/47% Social Security $14,632/53% 10th Year of Retirement Pension $13,000/43% Social Security $16,962/57% 20th Year of Retirement Pension $13,000/36% Social Security $22,796/64% example continued: Worker with averagepre-retirement income of $30,000

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

  14. Where Does the Money Come From? Social Security Trust Fund 2008 Payroll Tax 84% Trust Fund Interest14% Taxation of Benefits 2%

  15. 16 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 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 monthlypayment permanently • At your full retirement age, you getyour full benefit • You get an even higher monthlypayment if you work past your fullretirement 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 65 1938 65 & 2 months 1939 65 & 4 months 1940 65 & 6 months 1941 65 & 8 months 1942 65 & 10 months 1943 – 1954 66 1955 66 & 2 months 1956 66 & 4 months 1957 66 & 6 months 1958 66 & 8 months 1959 66 & 10 months 1960 or later 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 = $5,200 Then your monthly benefit would be = $1,919 Average Monthly Earnings $5,200 90% of First $711 = $639 32% 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

  23. 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 $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 Above No Limit 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 toPrepare 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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