Financial Information

By 2005, the Social Security Disability Insurance (SSDI) fund was cashing checks its tax body couldn’t cash. That trend has continued each year - plus the number of Social Security beneficiaries grew by 489,488 last year, the highest one-year increase in history. According to the Wall Street Journal, SSDI could be empty in 7 years or fewer. Resource for this article - Social Security Disability Insurance may go dry in 4 years by MoneyBlogNewz.

Paying out $22 billion more than it makes with Social Security

By 2015, projections indicate that Social Security will spend $153 billion in benefits and other costs. Americans can have to face the issue that comes with this considering $22 billion less is anticipated to be taken in with this. It is expected that Medicare will last until 2029. The Social Security retirement fund is expected to go much longer to 2040. Social Security Disability Insurance can only be kept around for over 7 years without change from the Federal government.

Social Security applicants over the top

The recession sent a huge wave of new applicants into the Social Security program. There has been a huge increase in the last decade of the number of people getting Social Security. This number increased to 10.2 million people from 6.6 million. Numerous United States and territories depend upon SSDI funds. Texas’ enrollment has reportedly increased by 85 percent over the last 10 years, while New Hampshire’s has grown by 69 over the same span. West Virginia gets more Social Security Disability Insurance than any other state when considering the percentage of total population. There are issues that agriculture and manufacturing states are facing. Manual labor health issues have been increasing. In the last few years, military bases and factories have been closing in United States territories such as Puerto Rico. That means more people are relying on Social Security there. Not coincidentally, such states also tend to have the highest joblessness numbers. Puerto Rico politics are another issue. There is a lot of corruption.

Doctor determines Social Security Disability Insurance

SSDI is more about medical opinion instead of being based on age for instance Medicare and Social Security. Local medical officials don’t have any reasons to stop enrollment since someone else pays for it. While SSDI benefits can be modest in scope - payments averaged $1,064 per month in 2009 - participants gain access to other government benefits, which increases the cost for working class individuals. Social Security Disability Insurance expert David Autor of the Massachusetts Institute of Technology estimates that such additional programs amount to an average of $300,000 paid out per person over the lifetime of someone who receives Social Security Disability Insurance benefits regularly.

Are higher taxes on the way?

Without increasing taxes, Congress could help SSDI for a short time. The Social Security fund would have to be used for this. This would drain away retirement funds, forcing retirees to swallow benefit cuts quicker than they would have otherwise. However, as Nancy Altman of the activist group Social Security Works contends, something must be done.

“This is a program of crucial importance to every working American and his or her family,” she said.

Citations

Social Security Online

ssa.gov/disability/

Wall Street Journal

online.wsj.com/article/SB10001424052748703752404576178570674769318.html

Milton Friedman on Social Security: Save your money

youtube.com/watch?v=rCdgv7n9xCY

Myth: Social Security will provide most of the income you need in retirement

Fact: It’s likely that Social Security will provide a smaller portion of retirement income than you expect

There’s no doubt about it–Social Security is an important source of retirement income for most Americans.  According to the Social Security Administration, more than nine out of ten individuals age 65 and older receive Social Security benefits.

But it may be unwise to rely too heavily on Social Security, because to keep the system solvent, some changes will have to be made to it.  The younger and wealthier you are, the more likely these changes will affect you.  But whether retirement is years away or just around the corner, keep in mind that Social Security was never meant to be the sole source of income for retirees.  As President Dwight D. Eisenhower said, “The system is not intended as a substitute for private savings, pension plans, and insurance protection. It is, rather, intended as the foundation upon which these other forms of protection can be soundly built.”

No matter what the future holds for Social Security, focus on saving as much for retirement as possible.  You can do so by contributing to tax-deferred vehicles such as IRAs, 401(k)s, and other employer-sponsored plans, and by investing in stocks, bonds, and mutual funds.  When combined with your future Social Security benefits, your retirement savings and pension benefits can help ensure that you’ll have enough income to see you through retirement.

Myth: Social Security is only a retirement program

Fact: Social Security also offers disability and survivor’s benefits

With all the focus on retirement benefits, it’s easy to overlook the fact that Social Security also offers protection against long-term disability.  And when you receive retirement or disability benefits, your family members may be eligible to receive benefits, too.

Another valuable source of support for your family is Social Security survivor’s insurance.  If you were to die, certain members of your family, including your spouse, children, and dependent parents, may be eligible for monthly survivor’s benefits that can help replace lost income.

For specific information about the benefits you and your family members may receive, be sure to read your Social Security Statement, which you will receive every year from the Social Security Administration (SSA).  You can also visit the SSA’s website at www.socialsecurity.gov, or call 800-772-1213 if you have questions.

Myth: If you earn money after you retire, you’ll lose your Social Security benefit

Fact: Money you earn after you retire will only affect your Social Security benefit if you’re under full retirement age

Once you reach full retirement age (which ranges from age 65 to 67, depending on the year you were born), you can earn as much as you want without affecting your Social Security retirement benefit.  But if you’re under full retirement age, any income that you earn may affect the amount of benefit you receive:

• If you’re under full retirement age, $1 in benefits will be deducted for every $2 you earn above a certain annual limit. For 2008, that limit is $13,560.
• In the year you reach full retirement age, $1 in benefits will be deducted for every $3 you earn above a certain annual limit until the month you reach full retirement age.  If you reach full retirement age in 2008, that limit is $36,120.

Myth: Social Security benefits are not taxable

Fact: You may have to pay taxes on your Social Security benefits if you have other income

If the only income you had during the year was Social Security income, then your benefit generally isn’t taxable.  But if you earned income during the year (either from a job or from self-employment) or had substantial investment income, then you might have to pay federal income tax on a portion of your benefit.  Up to 85% of your benefit may be taxable, depending on your tax filing status (e.g., single, married filing jointly) and the total amount of income you have.

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Nearly 45 million people today receive some form of Social Security benefits, including 90 percent of retired workers over age 65. But Social Security is more than just a retirement program. Its scope has expanded to include other benefits as well, such as disability, family, and survivor’s benefits.

How does Social Security work?

The Social Security system is based on a simple premise: Throughout your career, you pay a portion of your earnings into a trust fund by paying Social Security or self-employment taxes. Your employer, if any, contributes an equal amount. In return, you receive certain benefits that can provide income to you when you need it most–at retirement or when you become disabled, for instance. Your family members can receive benefits based on your earnings record, too. The amount of benefits that you and your family members receive depends on several factors, including your average lifetime earnings, your date of birth, and the type of benefit that you’re applying for.

Your earnings and the taxes you pay are reported to the Social Security Administration (SSA) by your employer, or if you are self-employed, by the Internal Revenue Service. The SSA uses your Social Security number to track your earnings and your benefits.

Finding out what earnings have been reported to the SSA and what benefits you can expect to receive is easy. Just check out your Social Security Statement, mailed by the SSA annually to anyone age 25 or older who is not already receiving Social Security benefits. You’ll receive this statement each year about three months before your birthday. It summarizes your earnings record and estimates the retirement, disability, and survivor’s benefits that you and your family members may be eligible to receive. You can also order a statement at the SSA website, at your local SSA office, or by calling (800) 772-1213.

Social Security eligibility

When you work and pay Social Security taxes, you earn credits that enable you to qualify for Social Security benefits. You can earn up to 4 credits per year, depending on the amount of income that you have. Most people must build up 40 credits (10 years of work) to be eligible for Social Security retirement benefits, but need fewer credits to be eligible for disability benefits or for their family members to be eligible for survivor’s benefits.

Your retirement benefits

If you were born before 1938, you will be eligible for full retirement benefits at age 65. If you were born in 1938 or later, the age at which you are eligible for full retirement benefits will be different. That’s because full retirement age is gradually increasing to age 67.

But you don’t have to wait until full retirement age to begin receiving benefits. No matter what your full retirement age, you can begin receiving early retirement benefits at age 62. Doing so is often advantageous: Although you’ll receive a reduced benefit if you retire early, you’ll receive benefits for a longer period than someone who retires at full retirement age.

You can also choose to delay receiving retirement benefits past full retirement age. If you delay retirement, the Social Security benefit that you eventually receive will be as much as 6 to 8 percent higher. That’s because you’ll receive a delayed retirement credit for each month that you delay receiving retirement benefits, up to age 70. The amount of this credit varies, depending on your year of birth.

Disability benefits

If you become disabled, you may be eligible for Social Security disability benefits. The SSA defines disability as a physical or mental condition severe enough to prevent a person from performing substantial work of any kind for at least a year. This is a strict definition of disability, so if you’re only temporarily disabled, don’t expect to receive Social Security disability benefits–benefits won’t begin until the sixth full month after the onset of your disability. And because processing your claim may take some time, apply for disability benefits as soon as you realize that your disability will be long term.

Family benefits

If you begin receiving retirement or disability benefits, your family members might also be eligible to receive benefits based on your earnings record. Eligible family members may include:

• Your spouse age 62 or older, if married at least 1 year
• Your former spouse age 62 or older, if you were married at least 10 years
• Your spouse or former spouse at any age, if caring for your child who is under age 16 or disabled
• Your children under age 18, if unmarried
• Your children under age 19, if full-time students (through grade 12) or disabled
• Your children older than 18, if severely disabled

Each family member may receive a benefit that is as much as 50 percent of your benefit. However, the amount that can be paid each month to a family is limited. The total benefit that your family can receive based on your earnings record is about 150 to 180 percent of your full retirement benefit amount. If the total family benefit exceeds this limit, each family member’s benefit will be reduced proportionately. Your benefit won’t be affected.

Survivor’s benefits

When you die, your family members may qualify for survivor’s benefits based on your earnings record. These family members include:

• Your widow(er) or ex-spouse age 60 or older (or age 50 or older if disabled)
• Your widow(er) or ex-spouse at any age, if caring for your child who is under 16 or disabled
• Your children under 18, if unmarried
• Your children under age 19, if full-time students (through grade 12) or disabled
• Your children older than 18, if severely disabled
• Your parents, if they depended on you for at least half of their support

Your widow(er) or children may also receive a one-time $255 death benefit immediately after you die.

Applying for Social Security benefits

You can apply for Social Security benefits in person at your local Social Security office. You can also begin the process by calling (800) 772-1213 or by filling out an on-line application on the Social Security website. The SSA suggests that you contact its representative the year before the year you plan to retire, to determine when you should apply and begin receiving benefits. If you’re applying for disability or survivor’s benefits, apply as soon as you are eligible.

Depending on the type of Social Security benefits that you are applying for, you will be asked to furnish certain records, such as a birth certificate, W-2 forms, and verification of your Social Security number and citizenship. The documents must be original or certified copies. If any of your family members are applying for benefits, they will be expected to submit similar documentation. The SSA representative will let you know which documents you need and help you get any documents you don’t already have.

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