1 1. 2 2 1935 Retirement Insurance 1935 Retirement Insurance History - Social Security’s Programs 1956 Disability Insurance 1956 Disability Insurance

11

22

1935Retirement Insurance

1935Retirement Insurance

History - Social Security’s ProgramsHistory - Social Security’s Programs

1956Disability Insurance

1956Disability Insurance

1939Survivors Insurance

1939Survivors Insurance

33

Other ProgramsOther Programs

1965Medicare

1965Medicare

1972Supplemental

Security Income

1972Supplemental

Security Income

2003Medicare

Part D

2003Medicare

Part D

44

A Foundation for Planning Your FutureA Foundation for Planning Your Future

44

55

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.

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.

Save for a Secure FutureSave for a Secure Future

66

51 million people51 million people

Who Gets Benefits from Social Security?Who Gets Benefits from Social Security?

32 million Retired Workers2.9 million Dependents

7.4 million Disabled Workers, 1.8 million Dependents

4.6 millionWidows/ Widowers

1.9 millionChildren of

Deceased Workers

2/20092/2009

77

Payments to

Beneficiaries

Workers&

Employers

Who Pays for Social Security?Who Pays for Social Security?

88

Ch

ild

ren

Per

Wom

anU.S. Birth Rate 1920-2020U.S. Birth Rate 1920-2020

99

The Number of Workers per Beneficiary is Decreasing

The Number of Workers per Beneficiary is Decreasing

5 3 21960 2009 2034

5 3 21960 2009 2034

1010

America Is Getting OlderU.S. Population Age 65 & Older

America Is Getting OlderU.S. Population Age 65 & Older

11 Million

1946(7% of totalpopulation)

38 Million


74 Million


1111

Life Expectancy for Those Age 65 TodayLife 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

Men Women


White 80 84


Hispanic 85 88

Asian 84 88


1212

Social Security Cost-of-Living AdjustmentsSocial 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%


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%


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%


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%

1313

Example: Worker with averagepre-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

Example: Worker with averagepre-retirement income of $30,000

(Retiring at age 66 in 2009)

1st Year of Retirement

Pension $13,000/ 50%


Inflation 3% per year

Value of Inflation ProtectionValue of Inflation Protection

1414

Value of Inflation ProtectionValue of Inflation Protection

example continued:

Worker with averagepre-retirement income of $30,000

example continued:

Worker with averagepre-retirement income of $30,000

5th Year of RetirementPension $13,000/47%












1515

Payments to Today’s BeneficiariesPayments to Today’s Beneficiaries

Reserves for FutureBeneficiariesReserves for FutureBeneficiaries

Administrative CostsAdministrative Costs

How Is Social Security Income Spent?How Is Social Security Income Spent?

73.8%

25.4%

0.7%0.7%

1616

Where Does the Money Come From?Where Does the Money Come From?

Payroll Tax 84%

Trust Fund Interest 14%

Taxation of Benefits 2%

Payroll Tax 84%

Trust Fund Interest 14%

Taxation of Benefits 2%

Social Security Trust Fund 2008Social Security Trust Fund 2008

1717

In 2017, Social Security Will Begin PayingMore in Benefits than is Collected in TaxesIn 2017, Social Security Will Begin PayingMore in Benefits than is Collected in Taxes

1717

1818

In 2017, Social Security Will Begin PayingMore in Benefits than is Collected in TaxesIn 2017, Social Security Will Begin PayingMore in Benefits than is Collected in Taxes

1818

At exhaustion in 2041,only about 78% of

benefits could be paid.

At exhaustion in 2041,only about 78% of

benefits could be paid.

1919

You Need to Work to Earn Social Security CreditsYou 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.

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.

2020

Your Age When You Retire Affects Your BenefitsYour Age When You Retire Affects Your Benefits

If You’re 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

2121

In Addition to the Retiree,Who Else Can Get Benefits?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

2222

Full Retirement AgeFull 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

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

2323

How Social Security Determines Your BenefitHow 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”

2424

If your average monthly earnings are = $5,200Then 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

If your average monthly earnings are = $5,200Then 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

Retirement Benefit Computation ExampleRetirement Benefit Computation Example

2525

Use the New Retirement EstimatorUse 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

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

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

2626

What You Can Expect at Full Retirement AgeWhat You Can Expect at Full Retirement Age

% o

f E

arni

ngs

LowEarner

AverageEarner

HighEarner

56%

41%

34%

2727

If any part of your government pensionis based on work not covered by

Social Security, you may be affected bythe Windfall Elimination Provision.

If any part of your government pensionis based on work not covered by

Social Security, you may be affected bythe Windfall Elimination Provision.

Windfall Elimination ProvisionWindfall Elimination Provision

2828

Windfall Elimination Provision (WEP) - 2009Windfall 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

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

2929

Exception to the Windfall Elimination ProvisionException to the Windfall Elimination Provision

% of First FactorYears of Coverage in Benefit Formula

30 or more 9029 8528 8027 7526 7025 6524 6023 5522 5021 45

20 or less 40

% of First FactorYears of Coverage in Benefit Formula

30 or more 9029 8528 8027 7526 7025 6524 6023 5522 5021 45

20 or less 40

3030

Government Pension Offset (GPO)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.

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.

3131

Example:$900 of government pension 2/3 = $600Social Security spouse’s benefits = $500No cash benefit payable by Social Security

Example:$900 of government pension 2/3 = $600Social Security spouse’s benefits = $500No cash benefit payable by Social Security

Government Pension Offset (GPO)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

Spouse’s Benefits Only

2/3 of amount of government pension will be used to reduce the Social Security spouse’s benefits

3232

You Can Work & Still Receive BenefitsYou Can Work & Still Receive Benefits

You Can If You Make More,If You Are Make Up To Some Benefits Will

Be Withheld

Under FullRetirement Age $14,160/yr. ($1,180/mo.) $1 for every $2

The Year Full RetirementAge is Reached $37,680/yr. ($3,140/mo.) $1 for every $3

Month of Full Retirement Age and Above No Limit No Limit

You Can If You Make More,If You Are Make Up To Some Benefits Will

Be Withheld

Under FullRetirement Age $14,160/yr. ($1,180/mo.) $1 for every $2

The Year Full RetirementAge is Reached $37,680/yr. ($3,140/mo.) $1 for every $3

Month of Full Retirement Age and Above No Limit No Limit

3333

What Will You Need When Applyingfor Your Social Security Benefits?

What Will You Need When Applyingfor 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

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

3434

Who Can Get Survivors Benefits?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

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:



3535

Parents

Age 62 and was receiving atleast one-half support from deceased worker

Lump Sum Death Payment ($255)

Most spouses or children

Parents

Age 62 and was receiving atleast one-half support from deceased worker

Lump Sum Death Payment ($255)

Most spouses or children

Other Survivors BenefitsOther Survivors Benefits

3636

Social Security’s Disability Definition:Social Security’s 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.

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.

3737

Who Can Get Disability Benefits?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

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

3838

Who Can Get Disability Benefits?Who Can Get Disability Benefits?

Child



Child



3939

65 & older

-or-

Receiving Social Security disability benefits at least 24 months

-or-

Permanent kidney failure

-or-

Amyotrophic Lateral Sclerosis (ALS)

65 & older

-or-

Receiving Social Security disability benefits at least 24 months

-or-

Permanent kidney failure

-or-

Amyotrophic Lateral Sclerosis (ALS)

Who Can Get Medicare?Who Can Get Medicare?

4040

When Can I Sign Up for Medicare?When Can I Sign Up for Medicare?

Medicare Enrollment Periods: Initial - at age 65

Special - if still working

General - January-March

4141

Medicare CoverageMedicare 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

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

4242

How Will the Prescription Drug Plan Affect You?

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.

4343

Extra Help Could Further ReduceMedicare Prescription Drug CostsExtra Help Could Further ReduceMedicare 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.

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.

4444

For More Medicare InformationFor More Medicare Information

1-800-MEDICARE(1-800-633-4227)

TTY 1-877-486-2048

www.medicare.gov

1-800-MEDICARE(1-800-633-4227)

TTY 1-877-486-2048

www.medicare.gov

4545

Who Can Get SSI?

Age 65 or older

Blind - any age

Disabled - any age

Limited income

Limited resources

Supplemental Security IncomeSupplemental Security Income

4646

What Should You Do toPrepare for Your Retirement?

What Should You Do toPrepare for Your Retirement?

Get estimates of benefits using different retirement ages and wage estimates

www.socialsecurity.gov

Get estimates of benefits using different retirement ages and wage estimates

www.socialsecurity.gov

4747

Social Security’s Online ServicesSocial 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

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

4848

Importance of Social Securityto African Americans


4949



Benefits continue for life

Benefits tied to inflation



5050


Men Women


White 80 84


Hispanic 85 88

Asian 84 88


Men Women


White 80 84


Hispanic 85 88

Asian 84 88


5151

Importance of Social Securityto American Indians


5252







5353


Men Women


White 80 84

African American 79 83

Hispanic 85 88

Asian 84 88


Men Women


White 80 84


Hispanic 85 88

Asian 84 88


5454

Importance of Social Securityto Asians & Pacific IslandersImportance of Social Securityto Asians & Pacific Islanders

5555

Longer life expectancy



Longer life expectancy



Importance of Social Securityto Asians & Pacific IslandersImportance of Social Securityto Asians & Pacific Islanders

5656


Men Women


White 80 84


Hispanic 85 88

Asian 84 88


Men Women


White 80 84


Hispanic 85 88

Asian 84 88


5757

Importance of Social Security to HispanicsImportance of Social Security to Hispanics

5858

Importance of Social Security to HispanicsImportance of Social Security to Hispanics





5959


Men Women


White 80 84


Hispanic 85 88

Asian 84 88


Men Women


White 80 84


Hispanic 85 88

Asian 84 88


6060

Projected Growth of Hispanic CommunityProjected Growth of Hispanic Community

2000 – 13% of total population




6161

Importance of Social Security to WomenImportance of Social Security to Women

6262


57% of all aged beneficiaries

69% of all aged beneficiaries over age 85

57% of all aged beneficiaries

69% of all aged beneficiaries over age 85

6363


Fewer covered by pensions


Continue for life

Fewer covered by pensions


Continue for life

6464

Women and Social SecurityWomen 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

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

6565

Women & Social SecurityWomen & Social Security

Average Monthly Benefits (12/07)

Women Men

Retirement $935 $1,216

Disability $866 $1,126

Average Monthly Benefits (12/07)

Women Men

Retirement $935 $1,216

Disability $866 $1,126

6666


Men Women


White 80 84


Hispanic 85 88

Asian 84 88


Men Women


White 80 84


Hispanic 85 88

Asian 84 88


6767

Importance of Social Securityto Young Americans


6868



Almost 3 in 10 of today’s 20-year-olds will become disabled before reaching age 67

About 1 in 7 of today’s 20-year-olds will die prior to age 67

Almost 3 in 10 of today’s 20-year-olds will become disabled before reaching age 67

About 1 in 7 of today’s 20-year-olds will die prior to age 67

6969

How Social Security Protects You with Disability & Survivors Insurance

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.

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.

7070

The Social Security StatementThe Social Security Statement

7171


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

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

7272


7373

Agency Strategic Plan for 2008-2013Agency 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

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.htmlwww.socialsecurity.gov/strategicplan.html

Documents

1 1. 2 2 1935 Retirement Insurance 1935 Retirement Insurance History - Social Security’s Programs 1956 Disability Insurance 1956 Disability Insurance