Social Security Benefits

1
Social Security Benefits

• W. Dick Bosstick

2
Agenda

• What is Social Security
• What are Your Social Security Benefits
• How to Apply for Social Security

3
Overview

• The Social Security Act was signed into law on
  August 14, 1935.
• In addition, to several general welfare
  provisions, the new Act created a social
  insurance program designed to pay retired
  workers, age 65 or older a continuing income
  after retirement.
• 1 in 6 Americans receive Social Security benefits
  and 98 percent of all workers are in jobs covered
  by Social Security.

SSN
Who
Age
FICA
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Social Security Benefits

• Social Security was never intended to be your
  sole source of income at retirement. It was meant
  to supplement retirement plans, savings,
  investments.
• Your Social Security Benefit is a percentage of
  your earnings averaged over your working career.
• Low income workers will receive a higher rate of
  return than those in upper income brackets.
• A worker with average earnings can expect a
  retirement benefit that represents about 40
  percent of his or her average lifetime earnings.

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Vocabulary

• FICA Taxes that are taken from your paycheck
  that are used to support Social Security Benefits
  and Medicare. Employer pays 7.65 and Employee
  pays 7.65.
• Social Security Credits - As you work and pay
  FICA taxes, you earn credits that count toward
  eligibility for future Social Security benefits.
  You earn four credits per year. Most people need
  40 credits (ten years of work) to qualify for
  benefits. In 2002, you must earn 870 a quarter
  to get a credit.

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More Terms You Should Know

• PIA Primary Insurance Amount is benefit payable
  to you at your full retirement age.
• AIME Average Indexed Monthly Earnings is used
  to calculate your benefits and is an average of
  your lifetime earnings history.
• Earnings Limit is the annual limit you can earn
  from employment and not have your Social Security
  Benefits reduced.

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Types of Social Security Benefits

• Retirement
• Disability
• Family Benefits
• Survivor Benefits
• Medicare

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Retirement Benefits

• Are payable at full retirement age for anyone
  with enough credits.
• Full retirement age is 65 for persons born before
  1938.
• Age gradually increases to age 67 for persons
  born in 1960 or later.
• People who delay retirement beyond their full
  retirement age get special credit of 6.5 a year
  for each year they delay receiving benefits.

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Family Benefits

• If you are eligible for benefits, other members
  of your family may qualify for benefits as well
• A spouse that is 62 or under 62 but is caring for
  a child under age 16
• Unmarried children under age 18 , under 19 but
  still in school, or 18 or older but disabled.

10
Survivor Benefits

• Upon your death, members of your family may
  qualify for benefits if you earned enough
  credits. The family members include widow age 60
  or older, 50 or older if disabled, or any age if
  caring for a child under age 16 unmarried
  children under age 18, under 19 if still in
  school, or older than 18 and disabled and your
  parents if you were their primary means of
  support.
• A special one time payment of 255 may be made to
  your spouse or minor children when you die.

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Calculation of Benefits

• Social Security has been sending out annual
  statements.
• Statements can be requested at any time either
  online or in writing.
• Visit Social Securitys website at
  www.ssa.gov/retirement. It has a retirement
  planner and a benefit calculator

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If You Really, Really Want to Know

• Handout is included that contains worksheet,
  formula, and instructions.
• Have also included an Easy Reference Table that
  estimates benefits.

13
Annual Earnings Limit

• No earnings limit for individuals at full
  retirement age. You can work full time and
  receive your social security benefits.
• If under age 65 for all of 2002, the limit is
  11,280. Offset is 1 for every 2 over.
• If you turn 65 in 2002, you can earn 30,000 for
  the period of time prior to you attaining age 65.
  Offset is 1 for every 3 over.

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Example

• Apply for benefits in January 2002.
• Turn 65 in July 2002.
• Earned 33,000 for first six months of year.
• 3,000 over earnings limit. 3,000/3 1,000
  penalty.
• If persons benefit was over 1,000 month would
  receive partial check for January and full
  benefits for rest of year.

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Last Minute Additions

• Social Security Benefits are tax free for a
  majority of beneficiaries. However, those with
  high total incomes must include up to 85 of
  their benefits as income for federal tax
  purposes. Special thresholds determine these
  amounts.
• COLAs are established each December and are
  payable in January.
• Social Security checks are issued the fourth
  Wednesday of each month.

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When to Retire

• You should apply three months prior to date you
  want benefits to begin.
• You can apply online or in person at local office
• Social Securitys phone number is 1-800-325-0778

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Heres an Important Point!

• There are disadvantages and advantages to taking
  your benefit before full retirement age. The
  advantage is that you collect benefits for a
  longer period of time.
• The disadvantage is that your benefit is
  permanently reduced.
• Each situation is different. You should talk to
  SSA before you decide.

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What Do You Need to Apply

• Social Security Card
• Birth Certificate
• W-2 for last year
• Military Discharge papers
• Spouses social security card and birth
  certificate if she is applying with you.
• Childs social security card and birth
  certificate if they are applying with you.
• Proof of U.S. citizenship if born outside the
  States
• Name of Bank and Account number for direct
  deposit.

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Where to Get More Information

• Handouts
• www.ssa.gov
• www.personnel.umd.edu - Click on Benefits
• 1-800-325-0778

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Questions