What Every American Should Know About Social Security & Planning for Retirement

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1 What Every American Should Know About Social Security & Planning for Retirement 1

2 A Foundation for Planning Your Future A Foundation for Planning Your Future 1 2 2

3 3-Legged Stool of Retirement Security 3-Legged Stool of Retirement Security 1 3 3

4 Average Monthly Social Security Benefits Average Monthly Social Security Benefits As of January 2008: All retired workers $1,079 Aged couple $1,761 (Both receiving benefits) Aged widow(er) $1,041 (No dependent children) Maximum benefit $2,185 (Worker retiring at Full Retirement Age in 2008) 1 4 4

5 The Social Security Statement 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 1 5 5

6 You Need to Work to Earn Social Security Credits Each $ 1,050 in earnings in 2008 gives you one credit You can earn a maximum of 4 credits per year Example: To earn 4 credits in 2008, you must earn at least $ 4,200. Earning 40 credits throughout your working life will qualify you for a retirement benefit

7 How Social Security Determines Your Benefit Social Security benefits are based on earnings Step 1 Step 2 Step 3 Wages are adjusted for inflation Find the average of 35 highest earnings years Result is average indexed monthly earnings 1 7 7

8 What You ll Get at Full Retirement Age 56% % of earnings 41% 34% Low Earner Average Earner High Earner 1 8 8

9 Your Age When You Retire Affects Your Benefits If You re A Worker and Retire At age 62, you get less money permanently At full retirement age (65-67), you get your full benefit You get even more money if you work past full retirement age 1 9 9

10 Full Retirement Age Year of Birth Full Retirement Age & 2 months & 4 months & 6 months & 8 months & 10 months & 2 months & 4 months & 6 months & 8 months & 10 months 1960 & later

11 Reduced Benefits for Retired Workers Reduction applied to full benefit amount: 5/9 of 1% per month for first 36 months 5/12 of 1% for each additional month If born and benefits start at: Age 62 25% reduction Age 63 20% reduction Age % reduction Age % reduction Reduction is Permanent!

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13 In Addition to the Retiree, Who Else Can Get Benefits? Your Dependent Spouse At age 62 At any age if caring for child under 16 or disabled Divorced spouses may qualify Your Dependent Child Not married under 18 (under 19 if still in high school) Not married and disabled before age

14 What You ll Get as a Spouse If each member of a married couple worked in Social Security-covered employment, their benefits are calculated independently based on their lifetime earnings. Benefits as a dependent spouse may be payable if spouse s own benefit is less than 50% of worker s full benefit amount. Spouse would receive a combination of benefits equaling higher amount. At full retirement age, spouse collects 50% of worker s full benefit even if worker takes benefits early

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

17 What You ll Get as a Surviving Spouse Age Percentage % % % Surviving spouse benefit is generally the same as what worker was receiving at time of death if widow(er) waits to draw until full retirement age

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19 You Can Work & Still Receive Benefits You Can If You Make More, If You Are Make Up To Some Benefits Will Be Withheld Under Full Retirement Age $ 13,560 ( $ 1130/mo.) $ 1 for every $ 2 The Year Full Retirement Age is Reached $ 36,120 ($3010/mo.) $ 1 for every $ 3 Month of Full Retirement Age and Above No Limit No Limit

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21 Who Can Get Medicare? Who Can Get Medicare? 65 & older -or- Receiving Social Security disability benefits at least 24 months (exception: Amyotrophic Lateral Sclerosis, ALS) -or- Permanent kidney failure

22 Medicare Coverage Medicare Coverage Part A - Hospital Insurance Covers most inpatient hospital expenses No premium for most people 2008 Deductible = $ 1,024 May apply on own work record or work record of spouse (current, deceased, divorced)

23 Medicare Coverage Medicare Coverage Part B - Supplementary Medical Insurance Covers 80% doctor bills & other outpatient medical expenses after first $ 135 in approved charges 2008 Monthly Premium = $96.40 People with low income/resources may apply for assistance with premium at county Dept. of Job & Family Services Higher premium for those with higher incomes

24 Medicare Coverage Medicare Coverage Part C Medicare Advantage Programs Must have Part A and Part B May pay monthly premium for additional services (dental, vision, hearing) May be restricted to network of providers Not available in all areas

25 Medicare Coverage Medicare Coverage Part D Medicare Prescription Drug Benefit Voluntary program for anyone with Medicare Enroll with stand-alone prescription drug plan (PDP) or Medicare Advantage plan Annual enrollment period Nov. 15-Dec. 31 May have increased premium with delayed enrollment unless you have equal or better prescription coverage Extra help for people with limited income/resources; those who qualify may pick a plan at any time

26 Medicare Resources Centers for Medicare & Medicaid Services (CMS) MEDICARE Ohio Senior Health Insurance Information Program (OSHIIP)

27 Filing for Benefits When to Contact Social Security Up to 3 months before you want your benefits to begin If over age 62, contact Social Security before January of the year you wish to receive benefits How to File Via the Internet at In the office or over the telephone For an appointment, call Walk-in interview

28 Applying for Social Security Documents That May Be Needed Social Security number for worker and dependent(s) Proof of age (birth certificate) Latest W-2 or self-employment tax return Earnings estimate Bank information for direct deposit

29 Benefits of Direct Deposit Safe Protect yourself against fraud and identity theft Secure No direct deposit has ever been lost or stolen Control Your money is there when you need it

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37 You Will be Asked To Provide Information About: Marriage(s) Children (including adopted children, stepchildren) Past and future earnings Military service Non-covered government pension And more

38 Enrolling in Medicare

39 When Do You Want Benefits to Begin? Option 1 should almost always be selected, with few exceptions

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41 Social Security Recognizes Electronic Signature

42 Social Security s s Other Online Services at