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#help.tut Extra help for tutorials #define.stb On line glossary- definitions of legal terms /* We now continue with Social Security Basics */ Work Credit For Retirement Benefits The following table shows how much work credit is needed to be eligible for retirement benefits. The people at any Social Security office will be glad to give you more details. Work Credit For Retirement Benefits ********************************* If you reach Years you 62 in need 1981 7 1/2 1982 7 3/4 1984 8 1/4 1985 8 1/2 1987 9 1991 or later 10 ************************************ Work Credits For Survivors And Disability Benefits The following tables show how much work credit is needed for Survivors or Disability benefits. The amount of credit needed varies by age and when you become disabled. The people at any Social Security office can give you more information. If you are disabled by blindness, you do not have to meet the requirements of recent work. But you do need credit for one-quarter year of work for each year since 1950 (or the year you reached 21 if later),up to the year you became blind. A minimum of one and one-half years of credit is needed. Under a special rule, cash payments can be made to a worker's children and their mother or father provided he or she worked under Social Security one and one-half years in the three years before death. Work Credit For Survivors And Disability Benefits ******************************* Born after 1929, die Years or become disabled you at age need **************** ******* 28 or younger 1 1/2 30 2 32 2 1/2 34 3 36 3 1/2 Born after 1929, die Years or become disabled you at age need *********** ****** 38 4 40 4 1/2 42 5 44 5 1/2 46 6 48 6 1/2 50 7 52 7 1/2 Born after 1929,die Years or become disabled you at age need ************** ******* 54 8 56 8 1/2 58 9 60 9 1/2 62 or older 10 Work Credit For Survivors And Disability Benefits ******************************* Born before 1930, die Years or become disabled you before 62 in year need 1981 7 1/2 1983 8 1985 8 1/2 1987 9 1989 9 1/2 1991 or later 10 Special Work Credit Rules Although almost all jobs in the United States are covered by Social Security, there are special rules which apply to some. You should check with a Social Security office about these special rules if you work in or about someone's home doing housecleaning, gardening, or babysitting; if you are a student and also employed by the school or college; if you own, operate or work on a farm; if you are a member of a religious order; if you have a job where you get cash tips or if you are an employee in an international organization. Special rules also apply to people who work or are self-employed outside the United States. As of Jan. 1, 1984, coverage has been extended to all employees of nonprofit organizations and to new Federal Government employees. Terminations of Social Security coverage for employees of State and local governments is prohibited. Leaflets containing information of special interest to self-employed people, farmers, farm landlords, people who receive cash tips and others are available free at any Social Security office. Work Credits Required For Medicare Benefits You will be entitled to Medicare hospital insurance at age 65 if you have worked long enough under Social Security, the railroad retirement system, or Federal employment, or you are entitled to Social Security or railroad retirement benefits. For more information contact any Social Security office. No earnings credits are needed for the medical insurance part of Medicare. To get medical insurance protection, you must enroll for it and pay a monthly premium. *********************** WHAT ARE BENEFITS WORTH *********************** Amount Of Monthly Checks In figuring benefits for workers who reach 62, become disabled or die after 1978, actual earnings for the past years are adjusted to take account of changes in average wages since 1951. These adjusted earnings are averaged together and a formula is applied to the average to obtain the benefit rate. This method is intended to insure that benefits will reflect changes in wage levels over your working lifetime. This is important because average wages in our economy can change greatly over a 30 or 40 year period. Following are examples of benefits that can be paid: - If you reach 65 in 1985, your retirement benefit can be as much as $717. - If you reach 62 in 1985, your monthly retirement benefit can be as much as $591. - If you become disabled in 1985, the monthly benefit to you as a disabled worker can be as much as $909, depending on your age and past earnings. If you have eligible dependents, the total monthly family benefit payable can be up to $1,363. - Survivors of a worker who dies in 1985 can expect to receive up to $1,633 a month for a family of three or more. There is no fixed minimum benefit amount for workers who reach 62, become disabled, or die after 1981. The benefit rate for these workers and their dependents and survivors will be based entirely on the worker's earnings covered by Social Security. There is one exception: Members of religious orders who have taken a vow of poverty will continue to qualify for a fixed minimum benefit if they first become eligible for benefits before 1992. Retired and disabled workers who become eligible after 1985 for a pension based in whole or in part on work not covered by Social Security will have any Social Security benefit which they have earned figured under a different formula. This will result in a lower Social Security benefit to take account of the years of work outside of covered employment. This will apply to people who reach 62 or become disabled after 1985. This will not generally apply to Federal Government and nonprofit organizational employees who are mandatorily covered in 1984. Social Security benefits for people on the rolls will increase automatically each January as the cost of living rises. Each year living costs will be compared with those of the year before. If living costs have increased 3 percent or more, benefits will be increased by the same amount. Starting with the increase payable in January 1985, if the balance of the Social Security trust funds is below 15 percent (20 percent beginning with the January 1990 increase) of the total amount required to pay benefits for the year, the annual increase will be based on the increases in average wages if lower than the increase in the cost of living. If you qualify for checks on the record of more than one worker (for example on your own work and your spouse's), you'll get an amount equal to the larger of the two amounts. If in addition to your Social Security benefit as a wife, husband, widow, or widower, you receive a pension based on your work in Federal, State, or local government not covered by Social Security, your benefit as a dependent or survivor may be reduced. For more information, ask for a copy of the leaflet, "Government Pension Offset - How It May Affect You" at any Social Security Office. Benefits to a disabled worker and his or her family may be reduced if he or she also receives a disability benefit paid by Federal, State, or local government programs. Benefits May Be Taxable Starting with 1984, up to one-half of your benefits may be subject to the Federal income tax for any year in which your adjusted gross income for the Federal tax purposes plus nontaxable interest income and one-half of your Social Security benefits exceeds a base amount. The base amount is $25,000 for an individual, $32,000 for a couple filing jointly and zero for a couple filing separately if they lived together any part of the year. The amount of benefits subject to tax will be the smaller of: - One-half the benefits, or - One-half the amount of combined income (adjusted gross income plus nontaxable interest plus one-half of total benefits) in excess of the base amount. Complete information can be found in Internal Revenue Service publication 915. Getting Bigger Checks Through Additional Work If you return to work after you start getting retirement checks, your added earnings may result in higher benefits. Social Security will automatically refigure your benefit amount after the additional earnings are credited to your record. In addition, there is a special credit that can mean a larger benefit. The credit adds 3 percent to a worker's benefit for each year (one-fourth of one percent for each month) after the full benefit retirement age (currently age 65) that he or she did not get benefits because of work. The worker's additional credit also increases payments to widows and widowers. Starting for workers who reach 65 in 1990, the delayed retirement credit will be increased gradually until it reaches 8 percent. Reduced Benefits For Early Retirement You can retire as early as 62, but your retirement check will be reduced permanently. Payment amounts are also reduced if a wife, husband, widow, or widower starts getting payments before 65. The amount of reduction depends on the number of months you get checks before you reach 65. If you start your checks early, you'll get about the same value in total benefits over the years, but in smaller amounts to take account of the longer period you'll get them. Starting in 2000, the age at which full benefits are payable will be increased in gradual steps until it reaches 67. This will affect people born in 1938 and later. Reduced benefits will still be payable at 62, but the reduction will be larger than it is now. ********************* WHY PAYMENTS MAY STOP ********************* Working After Benefits Start If you go back to work and are under 70, your earnings may affect your Social Security benefits. You don't have to stop working completely, though, to get Social Security benefits. You can receive all benefits if your earnings do not exceed the annual exempt amount. The annual exempt amount for 1985 is $7,320 for people 65 or over and $5,400 for people under 65. If your earnings go over the annual exempt amount, we withhold $1 in benefits for each $2 of earnings above the limit. Starting in 1990, $1 in benefits will be withheld for each $3 in earnings above the limit for people 65 and over. Beginning in 2000, the age at which this withholding rate applies will increase as the retirement age increases. Income from savings, most investments, or insurance won't affect your checks. A monthly test can be used the first year you have a month in which you have little or no earnings or you don't work much in your business. This test allows you to retire and get benefits the rest of the year even though your total earnings go over the annual limit. This monthly test can also be used in the year benefits end by children, students, or a mother or father who gets benefits because he or she is caring for a child. In future years, the annual exempt amounts will increase automatically as the level of average wages rises. NOTE: Different rules apply to work performed by people getting benefits because they are disabled. For more information, ask for a copy of the leaflet, "If You Become Disabled", at any Social Security office. If you are getting retirement checks, your earnings may affect your dependent's checks as well as your own. If you get checks as a dependent or survivor, your earnings affect only your own check. Your earnings for the entire year in which your checks start or stop count when we figure the amount of benefits that can be paid for that year. Earnings in or after the month you reach 70 won't affect your check. Going Outside The U.S. Special rules apply to people outside the U.S. If you go outside the country for 30 days or more while you are getting checks, your absence from this country may affect your right to checks. Ask at any Social Security office for a copy of the leaflet, "Your Social Security Checks While You're Outside The United States." ******************************* HOW SOCIAL SECURITY IS FINANCED ******************************* The Basic Idea The basic idea of Social Security is simple: During working years, employees, their employers, and self-employed people pay Social Security taxes. This money is used to pay benefits to the 36 million people getting benefits and to pay administrative costs of the program. Then, when today's workers' earnings stop or are reduced because of retirement, death or disability, benefits will be paid to them from the taxes paid by people in covered work and self-employment at that time. Part of the taxes goes for hospital insurance under Medicare so workers and their dependents will have help in paying their hospital bills when they become eligible for Medicare. The medical insurance part of Medicare is financed by premiums paid by the people who have enrolled for this protection and amounts from the Federal Government. The Government's share of the cost for the medical insurance part of Medicare and certain other Social Security costs comes from general revenues of the U.S. Treasury, not from Social Security taxes. Funds not required for current benefit payments and expenses are invested in interest-bearing U.S. Government securities. Tax Rates If you're employed, you and your employer each pay an equal share of Social Security taxes. If you're self-employed, you pay taxes for retirement, survivors and disability insurance, and hospital insurance at a rate twice the employee rate. As long as you have earnings that are covered by the law, you continue to pay Social Security taxes regardless of your age and even if you are receiving Social Security benefits. The following tables show the present and future Social Security tax rates now scheduled in the law for both employees and for people who are self-employed. Tax Rates For Employees And Employers (each) ******************************* Percent of Covered Years Earnings 1983 6.70 1984 7.00 1985 7.05 1986 - 87 7.15 1988 - 89 7.51 1990 and after 7.65 ******************************* ******************************* Tax Rate For Self-Employed People ******************************* Percent of Covered Years Earnings 1983 9.35 1984 14.00 1985 14.10 1986 - 87 14.30 1988 - 89 15.02 1990 and after 15.30 Tax Credits Self-employed people will receive a credit against the self-employment Social Security tax. The credit amounts to 2.3 percent of self-employment income for 1985 and 2.0 percent for 1986 - 1989. After 1989, this credit will be replaced with deductions designed to treat the self-employed in much the same manner as employees and employers are treated for Social Security and income tax purposes under present law. Automatic Increases In The Earnings Base The maximum amount of annual earnings that counts for Social Security is $39,600 for 1985. The maximum will rise automatically in future years as earnings levels rise. Every year the increase in the average covered wages will be figured; and if wage levels have increased since the base was last set, the base will be raised - but only if there is an automatic benefit increase the same year. How Taxes Are Paid If you're employed, your Social Security tax is deducted from your wages each payday. Your employer matches your payment and sends the combined amount to the Internal Revenue Service. If you're self-employed and your net earnings are $400 or more a year, you must report your earnings and pay your self-employment tax each year when you file your income tax return. This is true even if you owe no income tax. Your wages and self-employment income are entered on your Social Security record throughout your working years.This record of your earnings will be used to determine your eligibility for benefits and the amount of cash benefits you and your dependents will receive. Excess Earnings, Taxes When you work for more than one employer in a year and pay Social Security taxes on wages over the maximum amount, you may claim a refund of the excess amount on your income tax return for that year. If you work for only one employer who deducts too much in taxes, you should apply to the employer for a refund. A refund is made only when more than the required amount has been paid. Questions about taxes or refunds should be directed to the Internal Revenue Service. Earnings over the maximum may appear on your Social Security earnings record, but they cannot be used to figure your benefit rate. Appeal Rights If you feel that a decision made on your claim is not correct, you may ask the Social Security Administration to reconsider it. If, after this reconsideration, you still disagree with the decision, you may ask for a hearing by an administrative law judge of the Office of Hearings and Appeals. And, if you're not satisfied with the hearing decision, you may request a review by the Appeals Council. If you're still not satisfied, you may take your case to the Federal Courts. The Social Security Administration makes no charge for any of the appeals before the administration. You may, however, choose to be represented by a person of your own choice, and he or she may charge you a fee. Someone in any Social Security office will explain how you may appeal and will help you get your claim reconsidered or request a hearing. For More Information If you want more information about Social Security monthly benefits or SSI, contact any Social Security office. The people there will be glad to help you. To find the address of the nearest office, look in the phone directory under "Social Security Administration".