Social Security. Yolanda York Public Affairs Specialist.

Transcription

1 Social Security Yolanda York Public Affairs Specialist

2 The Real Beginning... Bismarck introduced first Social Security old-age benefits in Germany in

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4 Who Gets Benefits from Social Security? 57 million people 5/2011 4

5 Who Pays for Social Security? Today s Workers & Employers Today s Beneficiaries 5

6 The Number of Workers per Beneficiary is Decreasing

7 Myths 7

8 Myth #1: Social Security is only a retirement program. Only 70% of checks go to retirees Young workers 1 out of 3 chance $200,000 disability insurance policy $300,000 life insurance policy 8

9 Myth #2: Social Security wouldn t have financial problems if Congress had kept it as a retirement program the way it was originally intended! Survivor s: 1939 Disability: 1956 / Medicare: 1965 Separate funding mechanisms The BIG Problem is demographics Baby Boom Generation Increased longevity 9

10 Myth #3: I don t have to plan for my retirement, Social Security will take care of me. Social Security is not enough to live on! Replaces 40% of income for average worker. Remember the 3 legged stool! 10

11 Life Expectancy for Those Age 65 Today Men Women U.S. Population White African American Hispanic Asian American Indian

12 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 % Dec % Effective Date Amount Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec 2014? 12

13 Full Retirement Age Year of Birth Full Retirement Age 1937 or earlier & 2 months & 4 months & 6 months & 8 months & 10 months & 2 months & 4 months & 6 months & 8 months & 10 months 1960 or later 67 13

14 How Do You Qualify for Retirement Benefits? You need to work to earn Social Security credits Each $ 1,200 in earnings gives you one credit You can earn a maximum of 4 credits per year Example: To earn 4 credits in 2014, you must earn at least $ 4,800. Earning 40 credits (10 years of work) throughout your working life will qualify you for a retirement benefit. 14

15 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 15

16 Your Age At The Time You Elect Retirement Benefits Affects the Amount For example, if you were born from 1943 through 1954: Age 62 Age 66 Age 70 75% of benefit 100% of benefit 132% of benefit 16

17 In Addition to the Retiree, 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 17

18 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 18

19 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 19

20 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 20

21 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 Full benefits to both widow or widower and divorced widow or widower 21

22 Other Survivors Benefits Parents Age 62 and was receiving at least one-half support from deceased worker Lump Sum Death Payment ($255) Most spouses Some children 22

23 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 23 25

24 Replacement Rates Low Income Worker: 55% Average Income Worker: 40% Upper Income Worker: 25% 24

25 Some Individuals look poor The addition of all those zero years gives an artificially low average wage. SS computer thinks worker is poor and gives the 90% rate of return. 25

26 Does This Include You? The Windfall Elimination Provision (WEP) 2014 Max reduction $408 26

27 Two Important Points If have 40 or more credits, you ll definitely get a SS check. If have paid SS taxes for fewer than 30 years, benefit will be reduced (and SS statement is incorrect). 27

28 Two Additional Important Points If you leave your spouse a survivor s benefit from your public pension, that benefit doesn t reduce your spouse s own Social Security. In fact, the WEP dies with you so that your survivor s potential benefits are higher than you had been receiving. 28

29 Medicare & Ministers Even if not paying Social Security tax, some pay Medicare tax. Those who don t pay Medicare tax may get Medicare on a spouse s SS record. Can get Medicare on spouse s record even if your cash benefit is offset (GPO). 29

30 If you are city, state or government employee and have not paid your Medicare Qualified Government Employees (MQGE) you can still purchase Medicare Part A monthly $ credits monthly premium $248 Insured under current or former spouse

31 Part A - Hospital Insurance Medicare Coverage Covers most inpatient hospital expenses 2014 Deductible $ 1,216 Part B - Medical Insurance Covers 80% doctor bills & other outpatient medical expenses after 1 st $ 147 in approved charges 2014 Standard Monthly Premium $ 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 Annual enrollment period expanded beginning 2014 to October 15 through December 7 31

32 Questions? 32