Social Social SecuritySecuritySocial Social SecuritySecurity

Frank Van NostrandFrank Van Nostrand

Public Affairs Public Affairs SpecialistSpecialist

Social Security Programs

Retirement

Insurance

Survivors

Insurance

Disability Insurance

Medicare

Supplemental

SecurityIncome

Other Programs

RetirementRetirementIncomeIncome

Social SecuritySocial SecurityCost-of-Living AdjustmentsCost-of-Living AdjustmentsEffective Date Amount Effective Date Amount June 1975 8.0% Dec 1992 3.7%June 1976 6.4% Dec 1993 2.6%June 1977 5.9% Dec 1994 2.8%June 1978 6.5% Dec 1995 2.6%June 1979 9.9% Dec 1996 2.9%June 1980 14.3% Dec 1997 2.1%June 1981 11.2% Dec 1998 1.3%June 1982 7.4% Dec 1999 2.4%June 1983 3.5% Dec 2000 3.5%June 1984 3.5% Dec 2001 2.6%June 1985 3.1% Dec 2002 1.4%Dec 1986 1.3% Dec 2003 2.1% Dec 1987 4.2% Dec 2004 2.7%Dec 1988 4.0% Dec 2005 4.1%Dec 1989 4.7% Dec 2006 3.3%Dec 1990 5.4% Dec 2007 2.3%Dec 1991 3.7% Dec 2008 5.8%

Worker & 2007 Earnings Worker (65/10mo) Spouse (65/10mo)

Lower $18,182 $863 $1,294Average $40,405 $1,421 $2,131Maximum $97,500 $2,185 $3,277

Social Social SecuritySecurity

Retirement Retirement Insurance Insurance BenefitsBenefits

2009:2009:

--1 credit for each $1,090 --1 credit for each $1,090 in covered employmentin covered employment

--maximum of 4 credits/yr --maximum of 4 credits/yr ($4,360)($4,360)

How Credits How Credits Are EarnedAre Earned

Credits Needed For Retirement:Credits Needed For Retirement:

Who Can Get Who Can Get Retirement Retirement

BenefitsBenefits

WorkerWorker Reduced benefits at 62 (must be insured; 40 credits/10 Reduced benefits at 62 (must be insured; 40 credits/10

yrs)yrs) Full benefits at age 65 (age 67, if born after 1960)Full benefits at age 65 (age 67, if born after 1960)

Year of Birth Full Retirement AgeYear of Birth Full Retirement Age 1937 1937 6565 1938 1938 65 & 2 months 65 & 2 months 19391939 65 & 4 months65 & 4 months 1940 1940 65 & 6 months65 & 6 months 19411941 65 & 8 months65 & 8 months 1942 1942 65 & 10 months65 & 10 months 1943-1954 1943-1954 6666 19551955 66 & 2 months66 & 2 months 19561956 66 & 4 months66 & 4 months 1957 1957 66 & 6 months66 & 6 months 19581958 66 & 8 months66 & 8 months 1959 1959 66 & 10 months66 & 10 months 1960 & later 1960 & later 6767

Full Retirement AgeFull Retirement Age

Who Can Get Who Can Get Retirement Retirement

BenefitsBenefits

WorkerWorker Reduced benefits at 62 (must be insured; 40 credits/10 yrs)Reduced benefits at 62 (must be insured; 40 credits/10 yrs) Full benefits at age 65 (age 67, if born after 1960)Full benefits at age 65 (age 67, if born after 1960) Increased benefits for retirement after full retirement ageIncreased benefits for retirement after full retirement age

Wife or HusbandWife or Husband At age 62At age 62 At any age if caring for child under 16 or disabledAt any age if caring for child under 16 or disabled Divorced spouses may qualifyDivorced spouses may qualify

ChildChild Unmarried under 18 (under 19 if still in highUnmarried under 18 (under 19 if still in high school)school) Unmarried if disabled before age 22Unmarried if disabled before age 22

Social Security benefits are based on Social Security benefits are based on earnings:earnings:

Step 1Step 1 - Adjust wages for inflation - Adjust wages for inflation

Step 2Step 2 - Average over most of your working - Average over most of your working lifetime--(Your highest 35 years) lifetime--(Your highest 35 years)

Step 3Step 3 - Result is “average indexed - Result is “average indexed monthly earnings” monthly earnings”

How Social SecurityHow Social SecurityRetirement Benefits Are FiguredRetirement Benefits Are Figured

90% of first $74490% of first $744

32% of the next $3, 73932% of the next $3, 739

15% of remainder 15% of remainder

over $4,483over $4,483

Retirement Benefit Retirement Benefit Computation - 2009Computation - 2009

Example:Example:

AIME = $4700AIME = $4700

90% X 744 = 90% X 744 = 669.60669.60 32% X 373932% X 3739 = = 1196.481196.48 15% X 217 = 15% X 217 = 32.5532.55

Primary Insurance AmountPrimary Insurance Amount 1898.631898.63

Low Income Worker: 55%

Average Income Worker: 40%

Upper Income Worker: 25%

Replacement Rates

RetirementRetirementIncomeIncome

Total Retirement IncomeTotal Retirement IncomeSocial Security Represents:Social Security Represents:

Lower 1/3

Middle 1/3

Higher 1/3

First Three yearsFirst Three years 5/9 of 1% per month5/9 of 1% per month 6.66% per year6.66% per year 20% for first three years20% for first three years

Each additional yearEach additional year 5/12 of 1% per month5/12 of 1% per month 5% per year5% per year

Reduction is permanentReduction is permanent

Early Retirement BenefitsEarly Retirement Benefits(earliest - age 62)(earliest - age 62)

% of Benefits% of Benefits You will turn Received at You will turn Received at

Year of Birth age 62 in: Age 62 Full Retirement Year of Birth age 62 in: Age 62 Full Retirement AgeAge

1937 1937 1999 and before 80% 1999 and before 80% 65 65 1938 1938 2000 79 1/6% 2000 79 1/6% 65 & 2 months 65 & 2 months 19391939 2001 2001 78 1/3% 78 1/3% 65 & 4 months 65 & 4 months 1940 1940 2002 2002 77 1/2% 65 & 6 months 77 1/2% 65 & 6 months 19411941 2003 2003 76 2/3% 65 & 8 months 76 2/3% 65 & 8 months 1942 1942 2004 2004 75 5/6% 65 & 10 months 75 5/6% 65 & 10 months 1943-1954 2005-161943-1954 2005-16 75% 75% 66 66 19551955 2017 2017 74 1/6% 74 1/6% 66 & 2 months 66 & 2 months 19561956 2018 2018 73 1/3% 73 1/3% 66 & 4 months 66 & 4 months 1957 1957 2019 2019 72 1/2% 72 1/2% 66 & 6 months 66 & 6 months 19581958 2020 2020 71 2/3% 66 & 8 months 71 2/3% 66 & 8 months 1959 1959 2021 2021 70 5/6% 66 & 10 months 70 5/6% 66 & 10 months 1960 & later 2022 & later 70% 1960 & later 2022 & later 70% 67 67

The Cost of Early RetirementThe Cost of Early Retirement

If you elect reduced If you elect reduced Benefits and die...Benefits and die...

Your widowinherits

the reduction!

Your benefits may be Your benefits may be taxed!taxed!

Good newsGood news: only 30% : only 30% have to pay taxeshave to pay taxes

Bad newsBad news: you’re : you’re probably in that 30%probably in that 30%

If your 1040 adjusted If your 1040 adjusted gross income gross income (INCLUDING ½ of your (INCLUDING ½ of your Social Security) is over Social Security) is over $25,000 for individual $25,000 for individual or $32,000 for a or $32,000 for a couple, you’ll pay couple, you’ll pay taxes.taxes.

Yearly Rate of Yearly Rate of Year of BirthYear of Birth Increase (%) Increase (%)

1927-281927-28 4.04.01929-301929-30 4.54.51931-321931-32 5.05.01933-341933-34 5.55.51935-361935-36 6.06.01937-381937-38 6.56.51939-401939-40 7.07.01941-421941-42 7.57.51943 or later1943 or later 8.08.0

Delayed Retirement Delayed Retirement CreditsCredits

Withheld/Withheld/Age Age Earnings Limit Earnings Limit Above Above Full Retirement AgeFull Retirement Age(FRA) & Above (FRA) & Above No Limit No Limit

Under FRA Under FRA $14,160 ($1180/mo.) $1 for every $2$14,160 ($1180/mo.) $1 for every $2

Year attaining FRA $37,680 ($3,140/mo.) $1 for every Year attaining FRA $37,680 ($3,140/mo.) $1 for every $3$3

How Work Affects How Work Affects Social Security Social Security Benefits - 2009Benefits - 2009

Widows/WidowersWidows/WidowersReduced benefits at age 60Reduced benefits at age 60

As early as age 50 if disabledAs early as age 50 if disabled

At any age if caring for a child At any age if caring for a child of worker under 16 or disabledof worker under 16 or disabled

Divorced widows/widowers qualifyDivorced widows/widowers qualify

ChildChildUnmarried child under 18, or Unmarried child under 18, or under 19 if still in high schoolunder 19 if still in high school

Unmarried child disabled before Unmarried child disabled before age 22 who continues to be disabledage 22 who continues to be disabled

Who Can Get Survivors Who Can Get Survivors BenefitsBenefits

ParentsParents

Age 62 and was receiving Age 62 and was receiving at least one-half support from at least one-half support from deceased workerdeceased worker

Lump Sum Death Payment Lump Sum Death Payment ($255)($255)

Living with or Living with or entitled spouseentitled spouseEntitled childEntitled child

Who Can Get Survivors Who Can Get Survivors BenefitsBenefits

PercentagePercentage

Full Retirement AgeFull Retirement Age 100.0 100.0

Age 60 Age 60 71.5 71.5

Age 50 (Disabled)Age 50 (Disabled) 71.5 71.5

Young Widow(er)Young Widow(er) 75.075.0

Child Child 75.0 75.0

Survivors BenefitsSurvivors Benefits

WorkerWorker Must be insured (20/40)Must be insured (20/40) Any ageAny age

Who Can Get Disability Who Can Get Disability BenefitsBenefits

SpouseSpouse Age 62 or olderAge 62 or older Any age if caring for aAny age if caring for a

child of worker under age 16 child of worker under age 16 Divorced spouses qualifyDivorced spouses qualify

ChildChild Unmarried child under 18, or under 19Unmarried child under 18, or under 19

if still in high schoolif still in high school Unmarried child disabled beforeUnmarried child disabled before age age

22 who continues to be disabled22 who continues to be disabled

Who Can Get Disability Who Can Get Disability BenefitsBenefits

65 and older65 and older

Receiving Social SecurityReceiving Social Security

Disability benefits at leastDisability benefits at least

24 months (Except ALS)24 months (Except ALS)

Permanent kidney failurePermanent kidney failure

Medicare CoverageMedicare Coverage

Hospital InsuranceHospital Insurance In Patient Hospital CoverageIn Patient Hospital Coverage

Hospital Deductible: $1068Hospital Deductible: $1068 Coinsurance: Day 61-90: $267 per dayCoinsurance: Day 61-90: $267 per day Lifetime Guarantee days (60): $534 per day Lifetime Guarantee days (60): $534 per day

Skilled Nursing FacilitiesSkilled Nursing Facilities Day 21-100: $133.50 per dayDay 21-100: $133.50 per day

Home Health CareHome Health Care Hospice CareHospice Care Premium - $443Premium - $443

$244 with at least 30 QCs$244 with at least 30 QCs

Medical InsuranceMedical Insurance

Doctors and other ProvidersDoctors and other Providers Hospital Outpatient ServicesHospital Outpatient Services Home Health ServicesHome Health Services X-ray and Laboratory ServicesX-ray and Laboratory Services Durable Medical EquipmentDurable Medical Equipment AmbulanceAmbulance

What Does It Cost You?What Does It Cost You?

Monthly Premium: $96.40Monthly Premium: $96.40

Wealthier Seniors will PayWealthier Seniors will PayMore for their Part B in 2009More for their Part B in 2009

Beneficiaries who file anBeneficiaries who file anindividual tax returnindividual tax return with with

income: income:

Beneficiaries who file a Beneficiaries who file a Joint tax returnJoint tax return with with

income: income:

Income RelatedIncome RelatedMonthlyMonthly

AdjustmentAdjustmentamount amount

TotalTotalMonthlyMonthlyPremiumPremiumamountamount

Less than or equal to Less than or equal to $85,000 $85,000

Less than or equal to Less than or equal to $170,000 $170,000 $0.00 $0.00 $96.40 $96.40

Greater than $85,000 andGreater than $85,000 andless than or equal toless than or equal to

$107,000 $107,000

Greater than $170,000 and Greater than $170,000 and less than or equal to less than or equal to

$214,000 $214,000 $38.50 $38.50 $134.90 $134.90

Greater than $107,000 andGreater than $107,000 andless than or equal toless than or equal to

$160,000 $160,000

Greater than $214,000 and Greater than $214,000 and less than or equal to less than or equal to

$320,000 $320,000 $96.30 $96.30 $192.70 $192.70

Greater than $160,000 andGreater than $160,000 andless than or equal toless than or equal to

$213,000 $213,000

Greater than $320,000 and Greater than $320,000 and less than or equal to less than or equal to

$426,000 $426,000 $154.10 $154.10 $250.50 $250.50

Greater than $213,000 Greater than $213,000 Greater than $426,000 Greater than $426,000 $211.90 $211.90 $308.30 $308.30

What Does It Cost You?What Does It Cost You?

Monthly Premium: $96.40Monthly Premium: $96.40 Yearly Deductible: $135Yearly Deductible: $135 Medicare pays 80% of Approved Medicare pays 80% of Approved

ChargeCharge You pay 20% of Approved ChargeYou pay 20% of Approved Charge By law, Physician cannot charge more By law, Physician cannot charge more

than 15% on top of Approved chargethan 15% on top of Approved charge

InitialInitial

GeneralGeneral

SpecialSpecial

Medicare Medicare EnrollmentEnrollment PeriodsPeriods

What is the MediGap?What is the MediGap? Part A Deductibles and CoinsurancePart A Deductibles and Coinsurance Hospital Care after day 150Hospital Care after day 150 Part B Deductible and CoinsurancePart B Deductible and Coinsurance Non-covered ServicesNon-covered Services

How Do I Close the How Do I Close the “Gap”“Gap”

Self InsureSelf Insure

MediCalMediCal

Medicare SupplementMedicare Supplement

Medicare AdvantageMedicare Advantage

And Now There’s Part D!And Now There’s Part D!

You may You may NOTNOT need it! need it! When you become eligible for When you become eligible for

Medicare, you can purchase Part D Medicare, you can purchase Part D Prescription Drug PlansPrescription Drug Plans

You want to sign up when first You want to sign up when first eligible, or you will pay moreeligible, or you will pay more

Program is voluntaryProgram is voluntary

1- 800 – 434 - 02221- 800 – 434 - 0222

REVIEW

VERIFY

PLAN

The Social Security StatementThe Social Security Statement““The Future’s In Your The Future’s In Your

Hands”Hands”

Online retirement application

Retirement/ Survivors/Disability Planner

FAQ’s

Medicare Card Replacements

Request a Statement

Online ServicesOnline Services

Call orCall orVisit our WebsiteVisit our Website1-800-772-1213

www.socialsecurity.govwww.socialsecurity.gov

That’s All Folks!!

Questions?Questions?