Social%20Security

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Social Security
MGMT 4030 - Managing Employee Reward Systems
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Social Security Overview

• Legally Required Benefit
• Provides a Basic Level of Security for Employees
• Other Employer Provided Benefits Give Additional
  Coverage
• Basic Economic Security for Retirement,
  Disability, Survivors and Health Care for the Aged

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Funding Social Security

• Equal Contributions made by Employer and Employee
• OASDI tax 6.2 up to 68,400 Annual Earnings
  (1998)
• Medicare Tax 1.45 No cap on Earnings

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Social Security Retirement Benefits

• Full Benefits at age 65 raised to age 67 by 2027
• Reduced Benefits (80) at age 62
• Benefits equal aprox. 30 earnings prior to
  Retirement
• Average Benefit Amount 858/month.
• With Spouse, benefits increased by 50
• Eligibility 40 1/4 year periods with Min.
  Earnings 590/Qtr.

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Social Security Medicare

• Health Insurance for Age 65 and Older
• Part A Hospital Expenses 600-700
  deductible/yr.
• Part B Medical Expenses aprox. 40/month fee
• Some Limits on Lengthy Hospital Visits, Nursing
  Homes

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Social Security Disability Income

• No Age Limit
• Total Disability for 5 Months or More
• Aprox. 30 of Replacement Income Provided
• Integrate with Sick Leave, WC benefits, LTD
  Insurance

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Social Security Survivor Benefits

• Income for Survivors of Deceased Worker
• Widow(er) age 60 Child lt 18 yrs.
• Benefits Related to Deceased Workers Retirement
  Benefits

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Problems with Social Security

• Funding May Be Exhausted by 2020 Due to
  Demographics
• Government Uses Soc.Sec. Taxes to Pay Current
  Debts
• Long Life Spans Means more Beneficiaries to
  Support

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Fixing Social Security - Alternatives

• 1.All Social Security Funds can be Managed by
  Individuals Choice of Mutual funds, Bonds, or
  Treasury notes.
• 2. 1/3 of Social Security money can be Invested
  as in 1, and 2/3 of money managed by Government
  as is the case now.
• 3. The government puts all the Social Security
  money in a portfolio of stocks of blue chip US
  companies.