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T he B asics of . S ocial S ecurity. A Public Service Presentation provided by the Society of Certified Senior Advisors. What this Presentation Will Cover. Social Security Retirement How to Qualify How Social Security Income is Determined How Do I Receive My Benefits

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T he b asics of

The Basics of

Social Security

A Public Service Presentation provided by the Society of Certified Senior Advisors

What this presentation will cover
What this Presentation Will Cover

Social Security

  • Retirement

  • How to Qualify

  • How Social Security Income is Determined

  • How Do I Receive My Benefits

  • Taxes and Social Security

  • Survivor Benefits

  • Disability and Social Security

Social security overview
Social Security Overview

  • Social Security began in 1935 and was designed to be a financial “safety net” to ensure the well being of retired workers and their families

  • The 5 major components of Social Security are:

    • Retirement

    • Disability and SSI

    • Survivor’s Benefits

    • Medicare


  • Social Security (S.S.) is designed to be a foundation

  • It is not designed to be the only income source in retirement

    • Financial advisors recommend to use S.S. as 30% of retirement income

    • Average worker uses S.S. as 40% of retirement income

    • 1 out of 5 seniors uses S.S. as their only income source

  • The Social Security program will undergo changes in order to keep the system solvent and functioning

How do i qualify
How Do I Qualify?

  • By working and paying Social Security taxes workers earn credits

  • Credit requirements are dependent on your birth year

    • Anyone born after 1929 needs 40 credits to receive benefits

    • 1 credit earned in covered employment, with a maximum of 4 per year

    • Individuals are “fully insured” after 10 years (40 credits)

How do i qualify1
How Do I Qualify?

  • Workers who stop working prior to earning 40 credits cannot receive benefits

  • At full retirement age workers can receive full benefits

    • 65 used to be standard, but this varies based on year of birth:

  • How do i qualify2
    How Do I Qualify?

    • Reduced retirement benefits can be collected as early as age 62 (with 40 credits)

      • Benefits are about 25% less than they are at full retirement age

    • Although Social Security retirement age varies, Medicare eligibility remains at 65

    How is social security income determined
    How is Social Security Income Determined?

    • Retirement benefits are calculated on lifetime earnings under the Social Security system

      • Generally, your 35 highest years of earnings are averaged

      • Zero is averaged in for every year under 35 years of work

    • Calculating Social Security Income

      • The benefit computation is complex and not simple

    How is social security income determined1
    How is Social Security Income Determined?

    • Social Security sends a yearly statement to everyone age 25 or older (that has paid S.S. taxes) and not received benefits

      • Statements arrive 3 months prior to your birthday

    • Statements can be requested by asking for a form SSA-7004 from the S.S. Administration or at www.socialsecurity.gov/online/ssa-7004.html

    • Go to www.socialsecurity.gov/planners to estimate your benefits

    How do i receive my benefits
    How Do I Receive My Benefits?

    • To receive Social Security benefits you must apply

      • It takes about 3 months from when you apply to when you will receive benefits

      • To get info on applying call 1-800-772-1213 or go to www.socialsecurity.gov

    • Social Security benefits can still be received while you are working

      • There is no income restriction on receiving benefits after full retirement age

    How do i receive my benefits1
    How Do I Receive My Benefits?

    • If you are under full retirement age, every $1 in benefits is deducted for each $2 earned above the annual limit

      • Earnings limit changes yearly

    • The year you reach full retirement age, $1 in benefits is deducted for each $3 you earn above a different limit, only applied to earnings before the month you reach full retirement age.

      • Earnings limit changes yearly

    How do i receive my benefits2
    How Do I Receive My Benefits?

    • Social Security benefits can be increased by a percentage (depending on DOB)

      • Delaying receiving benefits beyond full retirement age means you will draw a higher percentage

      • The benefit increase stops at age 70, even if you continue to delay taking benefits.

    Taxes and social security
    Taxes and Social Security

    • Some people have to pay federal income taxes on their Social Security Benefits

      • Only applies if you have substantial other income (wages, businesses, interest, dividends, etc.)

    • No one pays federal income tax on more than 85% of their Social Security Benefits

    • If you are between the annual limits you may pay income tax on 50% of benefits

    Taxes and social security1
    Taxes and Social Security

    • Each January you are sent a statement (Form SSA-1099) showing amounts of benefits you received

      • This is used on your tax returns to calculate if S.S. Benefits are subject to tax and at what rate

    • Federal taxes can be withheld from Social Security benefits

      • This is not required, but can be simpler than paying out each year or each quarter

    • Combined income = sum of adjusted gross income, + nontaxable interest, + ½ of your S.S. Benefits

    Investment income
    Investment Income

    • Non-work sources of income do not count as wages for the earnings test

    • These Include:

      • Inheritance payments

      • Pensions

      • Income from investments

      • IRA distributions

      • Interest

      • Other sources determined by the Social Security program

    Survivor benefits
    Survivor Benefits

    • Family members eligible to receive survivor benefits are:

      • Widow (er) – receive full benefits at retirement age or reduced benefits as early as 60

      • Disabled Widow (er) – as early as age 50

      • Widow (er) – at any age if they take care of deceased’s child who is: under age 16 or disabled and receiving S.S. benefits

    Survivor benefits1
    Survivor Benefits

    • Unmarried Children under 18 (up to 19 if still in high school)

    • Children All Ages – disabled before age 22 and remain disabled

    • Dependent Parents – age 62 or older

    Disability and supplemental security income
    Disability and Supplemental Security Income

    • Provides a distribution of cash in the event of interruption of employment

      • Disability

      • Unemployment

    • Benefit is based on work record only

      • Must be “fully insured” under Social Security rules

    • 5 month waiting period for benefits

      • Benefits continue till able to work, or till beneficiary reaches retirement age

      • Call 800.772.1213 for more information


    • Social Security Administration Website, www.ssa.gov

    • Working with Seniors (2009), Society of Certified Senior Advisors