Retirement Insurance

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(No Transcript)
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History - Social Securitys Programs
1935 Retirement Insurance
1956 Disability Insurance
1939 Survivors Insurance
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Other Programs
1965 Medicare
1972 Supplemental Security Income
2003 Medicare Part D
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A Foundation for Planning Your Future
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Save for a Secure Future
Social Security is the foundation for a
comfortable retirement, but you also will need
other savings and investments. If you want to
learn more about how and why to save, visit
www.mymoney.gov.
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Who Gets Benefits from Social Security?
51 million people
4.6 million Widows/ Widowers
7.4 million Disabled Workers, 1.8 million
Dependents
1.9 million Children of Deceased Workers
32 million Retired Workers 2.9 million Dependents
2/2009
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Who Pays for Social Security?
Payments to Beneficiaries
Workers Employers
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U.S. Birth Rate 1920-2020
Children Per Woman
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The Number of Workers per Beneficiary is
Decreasing
5 3 2 1960 2009 2034
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America Is Getting Older U.S. Population Age 65
Older
74 Million 2034 (19 of
total population)
38 Million 2009 (12 of total population)
11 Million 1946 (7 of total population)
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Life Expectancy for Those Age 65 Today
Men Women U.S. Population 81 85 White 80 84 Afric
an Americans 79 83 Hispanic 85 88 Asian 84 88 Amer
ican Indians 84 88
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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 Dec
2008 5.8
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Value of Inflation Protection
Example Worker with average pre-retirement
income of 30,000 (Retiring at age 66 in
2009) 1st Year of Retirement Pension 13,000/
50 Social Security 13,000/50 Inflation 3
per year
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Value of Inflation Protection
5th Year of Retirement Pension 13,000/47 Socia
l 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-retirem
ent income of 30,000
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How Is Social Security Income Spent?
Payments to Todays Beneficiaries
25.4
Reserves for Future Beneficiaries
73.8
Administrative Costs
0.7
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Where Does the Money Come From?
Social Security Trust Fund 2008
Payroll Tax 84 Trust Fund Interest 14 Taxation
of Benefits 2
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In 2017, Social Security Will Begin Paying More
in Benefits than is Collected in Taxes
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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.
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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.

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Your Age When You Retire Affects Your Benefits

• If Youre 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

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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

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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
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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
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Retirement Benefit Computation Example
If your average monthly earnings
are 5,200 Then your monthly benefit would
be 1,974 Average Monthly Earnings 5,200 90
of First 744 670 32 of Earnings over 711
through 4,288 3,739 1,196 (4,288-7113,5
77) 15 of Earnings over 4,288
717 108 (5,200-4,288912) 5,200 1,97
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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

Its convenient, secure and quick. www.socialsecur
ity.gov/estimator
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What You Can Expect at Full Retirement Age
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of Earnings
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Low Earner
Average Earner
High Earner
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Windfall Elimination Provision
If any part of your government pension is based
on work not covered by Social Security, you may
be affected by the Windfall Elimination Provision.
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Windfall Elimination Provision (WEP) - 2009
Normal Computation WEP Computation 90 of the
First 744 40 of the First 744 32 of the Next
3,739 32 of the Next 3,739 15 of the
Remainder 15 of the Remainder
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Exception to the Windfall Elimination Provision
of First Factor Years of Coverage in Benefit
Formula 30 or more 90 29 85 28 80 27 75 26 70
25 65 24 60 23 55 22 50 21 45 20 or
less 40
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Government Pension Offset (GPO)
If you receive a government pension based on work
not covered by Social Security, your Social
Security spouses or widow(er)s benefits may be
reduced.
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Government Pension Offset (GPO)
Spouses Benefits Only 2/3 of amount of
government pension will be used to reduce the
Social Security spouses benefits
Example 900 of government pension 2/3
600 Social Security spouses benefits 500 No
cash benefit payable by Social Security
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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 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
Above No Limit No Limit
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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

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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

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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

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Social Securitys 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.
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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

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Who Can Get Disability Benefits?

• Child
• Not married under age 18
• (under 19 if still in high school)
• Not married and disabled
• before age 22

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Who Can Get Medicare?
65 older -or- Receiving Social Security
disability benefits at least 24
months -or- Permanent kidney failure -or- Amyotrop
hic Lateral Sclerosis (ALS)
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When Can I Sign Up for Medicare?

• Medicare Enrollment Periods
• Initial - at age 65
• Special - if still working
• General - January-March

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Medicare Coverage

• Part A Hospital Insurance
• Covers most inpatient hospital expenses.
• 2009 Deductible 1,068
• Part B Supplementary Medical Insurance
• Covers 80 doctor bills other outpatient
  medical expenses after 1st 135 in approved
  charges.
• 2009 Monthly Premium 96.40
• Part D Medicare Prescription Drug Plan
• Covers a major portion of prescription drug costs
• for Medicare beneficiaries.
• 2009 average Monthly Premium 28

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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.

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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
www.socialsecurity.gov to apply for extra help.
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For More Medicare Information
1-800-MEDICARE (1-800-633-4227) TTY
1-877-486-2048 www.medicare.gov
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Supplemental Security Income

• Who Can Get SSI?
• Age 65 or older
• Blind - any age
• Disabled - any age
• Limited income
• Limited resources

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What Should You Do toPrepare for Your Retirement?
Get estimates of benefits using different
retirement ages and wage estimates www.socialsecu
rity.gov
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Social Securitys 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

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Importance of Social Security to African Americans
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Importance of Social Security to African Americans

• Benefits continue for life
• Benefits tied to inflation

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Life Expectancy for Those Age 65 Today
Men Women U.S. Population 81 85 White 80 84 Afric
an Americans 79 83 Hispanic 85 88 Asian 84 88 Amer
ican Indians 84 88
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Importance of Social Security to American Indians
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Importance of Social Security to American Indians

• Benefits continue for life
• Benefits tied to inflation

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Life Expectancy for Those Age 65 Today
Men Women U.S. Population 81 85 White 80 84 Afric
an American 79 83 Hispanic 85 88 Asian 84 88 Ameri
can Indians 84 88
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Importance of Social Security to Asians Pacific
Islanders
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Importance of Social Securityto Asians Pacific
Islanders

• Longer life expectancy
• Benefits tied to inflation
• Benefits continue for life

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Life Expectancy for Those Age 65 Today
Men Women U.S. Population 81 85 White 80 84 Afric
an American 79 83 Hispanic 85 88 Asian 84 88 Ameri
can Indians 84 88
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Importance of Social Security to Hispanics
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Importance of Social Security to Hispanics

• Benefits tied to inflation
• Benefits continue for life

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Life Expectancy for Those Age 65 Today
Men Women U.S. Population 81 85 White 80 84 Afric
an American 79 83 Hispanic 85 88 Asian 84 88 Ameri
can Indians 84 88
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Projected Growth of Hispanic Community

• 2000 13 of total population
• 2050 24 of total population

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Importance of Social Security to Women
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Importance of Social Security to Women

• 57 of all aged beneficiaries
• 69 of all aged beneficiaries over age 85

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Importance of Social Security to Women

• Fewer covered by pensions
• Benefits tied to inflation
• Continue for life

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Women and Social Security

• For about 78 of unmarried women aged 65 or
  older,
• Social Security represents about ½ of their
  total income
• For about 30 of unmarried women aged 65 or
  older,
• Social Security is their only source of income

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Women Social Security
Average Monthly Benefits (12/07) Women Men Retire
ment 935 1,216 Disability 866 1,126
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Life Expectancy for Those Age 65 Today
Men Women U.S. Population 81 85 White 80 84 Afric
an American 79 83 Hispanic 85 88 Asian 84 88 Ameri
can Indians 84 88
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Importance of Social Security to Young Americans
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Importance of Social Security to Young Americans

• Almost 3 in 10 of todays 20-year-olds will
• become disabled before reaching age 67
• About 1 in 7 of todays 20-year-olds will
• die prior to age 67

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How Social Security Protects You with Disability
Survivors Insurance
Under age 31 - Must have paid Social Security
taxes for half the elapsed time since turning age
21 Age S.S. TaxesEXAMPLE 24 1-1/2
Yrs. 29 4 Yrs.
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The Social Security Statement
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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

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The Social Security Statement
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Agency Strategic Plan for 2008-2013

• Four basic goals
• Eliminate hearings backlogs and prevent its
  recurrence
• Improve speed/quality of disability decision
  process
• Improve retiree and other core services
• Preserve public trust in system
• Key foundational elements
• Our employees
• Information technology
• Special initiative
• Encourage saving

www.socialsecurity.gov/strategicplan.html