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Retirement Insurance 1935 Retirement Insurance History - Social Security’s Programs 1956 Disability Insurance 1956 Disability Insurance 1939 Survivors Insurance 1939 Survivors Insurance

3 3 Other Programs 1965 Medicare 1965 Medicare 1972 Supplemental Security Income 1972 Supplemental Security Income 2003 Medicare Part D 2003 Medicare Part D

4 4 A Foundation for Planning Your Future 4 4

5 5 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 Save for a Secure Future

million people Who Gets Benefits from Social Security? 32 million Retired Workers 2.9 million Dependents 7.4 million Disabled Workers, 1.8 million Dependents 4.6 million Widows/ Widowers 1.9 million Children of Deceased Workers 2/2009

7 7 Payments to Beneficiaries Workers & Employers Who Pays for Social Security?

8 8 Children Per Woman U.S. Birth Rate

9 9 The Number of Workers per Beneficiary is Decreasing

10 America Is Getting Older U.S. Population Age 65 & Older America Is Getting Older U.S. Population Age 65 & Older 11 Million 1946 (7% of total population) 38 Million 2009 (12% of total population) 74 Million 2034 (19% of total population)

11 Life Expectancy for Those Age 65 Today MenWomen U.S. Population8185 White8084 African Americans7983 Hispanic8588 Asian8488 American Indians8488 MenWomen U.S. Population8185 White8084 African Americans7983 Hispanic8588 Asian8488 American Indians8488

12 Social Security Cost-of-Living Adjustments Effective DateAmount June 19758% June % June % June % June % June % June % June % Dec % Dec % Dec % Dec % Dec % Dec 19884% Dec % Dec % Dec % Effective DateAmount June 19758% June % June % June % June % June % June % June % Dec % Dec % Dec % Dec % Dec % Dec 19884% Dec % Dec % Dec % Effective DateAmount Dec 19923% Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Effective DateAmount Dec 19923% Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec % Dec %

13 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% Inflation3% per year 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% Inflation3% per year Value of Inflation Protection

14 Value of Inflation Protection example continued: Worker with average pre-retirement income of $ 30,000 example continued: Worker with average pre-retirement income of $ 30,000 5 th Year of Retirement Pension $ 13,000/47% Social Security $ 14,632/53% 10 th Year of Retirement Pension $ 13,000/43% Social Security $ 16,962/57% 20 th Year of Retirement Pension $ 13,000/36% Social Security $ 22,796/64% 5 th Year of Retirement Pension $ 13,000/47% Social Security $ 14,632/53% 10 th Year of Retirement Pension $ 13,000/43% Social Security $ 16,962/57% 20 th Year of Retirement Pension $ 13,000/36% Social Security $ 22,796/64%

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

16 Where Does the Money Come From? Payroll Tax84% Trust Fund Interest14% Taxation of Benefits2% Payroll Tax84% Trust Fund Interest14% Taxation of Benefits2% Social Security Trust Fund 2008

17 In 2017, Social Security Will Begin Paying More in Benefits than is Collected in Taxes 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 In 2017, Social Security Will Begin Paying More in Benefits than is Collected in Taxes 18 At exhaustion in 2041, only about 78% of benefits could be paid.

19 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.  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.

20 Your 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

21 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

22 Full Retirement Age Year of BirthFull Retirement Age 1937 or earlier & 2 months & 4 months & 6 months & 8 months & 10 months 1943 – & 2 months & 4 months & 6 months & 8 months & 10 months 1960 or later67 Year of BirthFull Retirement Age 1937 or earlier & 2 months & 4 months & 6 months & 8 months & 10 months 1943 – & 2 months & 4 months & 6 months & 8 months & 10 months 1960 or later67

23 How Social Security Determines Your Benefit Social Security benefits are based on earnings Step 1Your wages are adjusted for changes in wage levels Step 2Find the monthly average of your 35 highest earnings years Step 3Result is “average indexed monthly earnings”

24 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= $ % 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= $ 5,200 Then your monthly benefit would be= $ 1,974 Average Monthly Earnings $ 5,200 90% of First $ 744= $ % 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 Example

25 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 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. It’s convenient, secure and quick.

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

27 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. 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. Windfall Elimination Provision

28 Windfall Elimination Provision (WEP) Normal ComputationWEP Computation 90% of the First $ 74440% of the First $ % of the Next $ 3,73932% of the Next $ 3,73915% of the Remainder Normal ComputationWEP Computation 90% of the First $ 74440% of the First $ % of the Next $ 3,73932% of the Next $ 3,73915% of the Remainder

29 Exception to the Windfall Elimination Provision % of First Factor Years of Coveragein Benefit Formula 30 or more or less40 % of First Factor Years of Coveragein Benefit Formula 30 or more or less40

30 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.

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

32 You Can Work & Still Receive Benefits You CanIf You Make More, If You AreMake Up ToSome 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 AboveNo LimitNo Limit You CanIf You Make More, If You AreMake Up ToSome 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 AboveNo LimitNo Limit

33 What Will You Need When Applying for Your Social Security Benefits? 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 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

34 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:  Not married under age 18 (under 19 if still in high school)  Not married and disabled before age 22

35 Parents  Age 62 and was receiving at least one-half support from deceased worker Lump Sum Death Payment ( $ 255)  Most spouses or children Parents  Age 62 and was receiving at least one-half support from deceased worker Lump Sum Death Payment ( $ 255)  Most spouses or children Other Survivors Benefits

36 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.

37 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

38 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 Child  Not married under age 18 (under 19 if still in high school)  Not married and disabled before age 22

39 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?

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

41 Medicare Coverage Part AHospital Insurance  Covers most inpatient hospital expenses Deductible $ 1,068 Part BSupplementary Medical Insurance  Covers 80% doctor bills & other outpatient medical expenses after 1 st $ 135 in approved charges Monthly Premium $ Part DMedicare Prescription Drug Plan  Covers a major portion of prescription drug costs for Medicare beneficiaries average Monthly Premium $ 28 Part AHospital Insurance  Covers most inpatient hospital expenses Deductible $ 1,068 Part BSupplementary Medical Insurance  Covers 80% doctor bills & other outpatient medical expenses after 1 st $ 135 in approved charges Monthly Premium $ Part DMedicare Prescription Drug Plan  Covers a major portion of prescription drug costs for Medicare beneficiaries average Monthly Premium $ 28

42 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.

43 Extra Help Could Further Reduce Medicare Prescription Drug Costs 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 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 to apply for extra help.

44 For More Medicare Information MEDICARE ( ) TTY MEDICARE ( ) TTY

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

46 What Should You Do to Prepare for Your Retirement? Get estimates of benefits using different retirement ages and wage estimates Get estimates of benefits using different retirement ages and wage estimates

47 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  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

48 Importance of Social Security to African Americans Importance of Social Security to African Americans

49 Importance of Social Security to African Americans Importance of Social Security to African Americans  Benefits continue for life  Benefits tied to inflation  Benefits continue for life  Benefits tied to inflation

50 Life Expectancy for Those Age 65 Today MenWomen U.S. Population8185 White8084 African Americans7983 Hispanic8588 Asian8488 American Indians8488 MenWomen U.S. Population8185 White8084 African Americans7983 Hispanic8588 Asian8488 American Indians8488

51 Importance of Social Security to American Indians Importance of Social Security to American Indians

52 Importance of Social Security to American Indians Importance of Social Security to American Indians  Benefits continue for life  Benefits tied to inflation  Benefits continue for life  Benefits tied to inflation

53 Life Expectancy for Those Age 65 Today MenWomen U.S. Population8185 White8084 African American7983 Hispanic8588 Asian8488 American Indians8488 MenWomen U.S. Population8185 White8084 African American7983 Hispanic8588 Asian8488 American Indians8488

54 Importance of Social Security to Asians & Pacific Islanders Importance of Social Security to Asians & Pacific Islanders

55  Longer life expectancy  Benefits tied to inflation  Benefits continue for life  Longer life expectancy  Benefits tied to inflation  Benefits continue for life Importance of Social Security to Asians & Pacific Islanders

56 Life Expectancy for Those Age 65 Today MenWomen U.S. Population8185 White8084 African American7983 Hispanic8588 Asian8488 American Indians8488 MenWomen U.S. Population8185 White8084 African American7983 Hispanic8588 Asian8488 American Indians8488

57 Importance of Social Security to Hispanics

58 Importance of Social Security to Hispanics  Benefits tied to inflation  Benefits continue for life  Benefits tied to inflation  Benefits continue for life

59 Life Expectancy for Those Age 65 Today MenWomen U.S. Population8185 White8084 African American7983 Hispanic8588 Asian8488 American Indians8488 MenWomen U.S. Population8185 White8084 African American7983 Hispanic8588 Asian8488 American Indians8488

60 Projected Growth of Hispanic Community  2000 – 13% of total population  2050 – 24% of total population  2000 – 13% of total population  2050 – 24% of total population

61 Importance of Social Security to Women

62 Importance of Social Security to Women  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

63 Importance of Social Security to Women  Fewer covered by pensions  Benefits tied to inflation  Continue for life  Fewer covered by pensions  Benefits tied to inflation  Continue for life

64 Women 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

65 Women & Social Security Average Monthly Benefits (12/07) WomenMen Retirement $ 935 $ 1,216 Disability $ 866 $ 1,126 Average Monthly Benefits (12/07) WomenMen Retirement $ 935 $ 1,216 Disability $ 866 $ 1,126

66 Life Expectancy for Those Age 65 Today MenWomen U.S. Population8185 White8084 African American7983 Hispanic8588 Asian8488 American Indians8488 MenWomen U.S. Population8185 White8084 African American7983 Hispanic8588 Asian8488 American Indians8488

67 Importance of Social Security to Young Americans Importance of Social Security to Young Americans

68 Importance of Social Security to Young Americans Importance of Social Security to Young Americans  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

69 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. Taxes EXAMPLE: /2 Yrs Yrs. Under age 31 - Must have paid Social Security taxes for half the elapsed time since turning age 21 Age S.S. Taxes EXAMPLE: /2 Yrs Yrs.

70 The Social Security Statement

71 The Social Security Statement  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

72 The Social Security Statement

73 Agency Strategic Plan for 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