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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. Save for a Secure Future.

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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. 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.

  5. 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

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

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

  8. The Number of Workers per Beneficiary is Decreasing 5 3 2 1960 2009 2034

  9. 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)

  10. 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

  11. 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%

  12. 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

  13. 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

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

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

  16. 17 In 2017, Social Security Will Begin Paying More in Benefits than is Collected in Taxes

  17. 18 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.

  18. 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.

  19. 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

  20. 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

  21. 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

  22. 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”

  23. 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-$711=$3,577) 15% of Earnings over $4,288$717 = $108 ($5,200-$4,288=$912) $5,200 $1,974

  24. 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 It’s convenient, secure and quick. www.socialsecurity.gov/estimator

  25. What You Can Expect at Full Retirement Age 56% 41% % of Earnings 34% Low Earner Average Earner High Earner

  26. 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.

  27. 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

  28. 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

  29. Government Pension Offset (GPO) If you receive a government pension based on work not covered by Social Security, your Social Security spouse’s or widow(er)’s benefits may be reduced.

  30. Government Pension Offset (GPO) Spouse’s Benefits Only 2/3 of amount of government pension will be used to reduce the Social Security spouse’s benefits Example: $900 of government pension 2/3 = $600 Social Security spouse’s benefits = $500 No cash benefit payable by Social Security

  31. 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

  32. 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

  33. 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

  34. 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

  35. Social Security’s Disability Definition: Amedical condition preventing substantial work for at least 12 months, or expected to result in death. The determination also considers age, education & work experience.

  36. 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

  37. 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

  38. Who Can Get Medicare? 65 & older -or- Receiving Social Security disability benefits at least 24 months -or- Permanent kidney failure -or- Amyotrophic Lateral Sclerosis (ALS)

  39. When Can I Sign Up for Medicare? • Medicare Enrollment Periods: • Initial - at age 65 • Special - if still working • General - January-March

  40. 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 Medicarebeneficiaries. 2009 average Monthly Premium $28

  41. 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.

  42. 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.govto apply for extra help.

  43. For More Medicare Information 1-800-MEDICARE (1-800-633-4227) TTY 1-877-486-2048 www.medicare.gov

  44. Supplemental Security Income • Who Can Get SSI? • Age 65 or older • Blind - any age • Disabled - any age • Limited income • Limited resources

  45. What Should You Do toPrepare for Your Retirement? Get estimates of benefits using different retirement ages and wage estimates www.socialsecurity.gov

  46. 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

  47. Importance of Social Security to African Americans

  48. Importance of Social Security to African Americans • Benefits continue for life • Benefits tied to inflation

  49. 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

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