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The amount of benefits to which
you are entitled under any Social Security program is not
related to need, but is based on the income you have earned
through years of working. In most jobs, both you and your
employer have paid Social Security taxes on the amounts you
earned. Since 1951, Social Security taxes have also been paid on
reported self-employment income. Social Security keeps a record
of these earnings over your working lifetime, and pays benefits
based on the average amount earned.
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| The specific requirements vary
depending on the type of benefits, the age of the person filing
the claim and, if you are claiming as a dependent or survivor, the
age of the worker. There is one general requirement, however: The
worker on whose earnings record the benefit is to be paid must
have worked in "covered employment" for a sufficient
number of years -- that is, earned enough of what Social Security
calls work credits -- by the time he or she claims retirement
benefits, becomes disabled, or dies. This usually means a total of
at least ten years of work at which you or your employer
paid into Social Security. To find out about your
eligibility, call the Social Security Administration at
800-772-1213.
Note that Social Security has
separate eligibility rules for some specific types of workers,
including federal, state, and local government workers, workers
for nonprofit organizations, members of the military, household
workers, and farm workers. If you have been employed for some time
as one of these types of workers, check with the Social Security
Administration for the rules that may affect your eligibility.
Since its inception in 1936, Social
Security considered 65 to be full or normal retirement age for the
retirement benefit. Benefits amounts were calculated on the
assumption that most workers will stop working full time and will
claim retirement benefits when they reach age 65. While the
system has long provided for early retirement, to give incentive
for people to delay making their retirement claims, Social
Security offers higher benefits for people who wait to make their
claims after reaching full retirement age.
Now that people are generally
living longer, however, the Social Security rules for what is
considered full retirement age are changing. Age 65 is still
considered full retirement age for anyone born before 1938.
However, full retirement age gradually increases from age 65 to 67
for people born in 1938 or later.
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| The amount of any benefit is
determined by a formula based on the average of your yearly
reported earnings in covered employment since you began working.
To further complicate matters, Social Security computes your
average earnings differently depending on your age. If you reached
age 62 or became disabled on or before December 31, 1978, the
computation is simple: Social Security averages the actual dollar
value of your total past earnings -- and bases the amount of your
monthly benefits on that amount.
If you turn 62 or become disabled
on or after January 1, 1979, Social Security divides your earnings
into two categories: earnings from before 1951 are credited with
their actual dollar amount, up to a maximum of $3,000 per year;
and from 1951 on, yearly limits are placed on earnings credits, no
matter how much you actually earned in those years.
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No. You may qualify for more than
one type of Social Security benefit, but you can collect just one.
For example, you might be eligible for both retirement and
disability, or you might be entitled to benefits based on your own
retirement as well as on that of your retired spouse. You can
collect whichever one of these benefits is higher, but not both.
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No. You may qualify for more than
one type of Social Security benefit, but you can collect just one.
For example, you might be eligible for both retirement and
disability, or you might be entitled to benefits based on your own
retirement as well as on that of your retired spouse. You can
collect whichever one of these benefits is higher, but not both.
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| You are eligible for dependents
benefits if both you and your former spouse have reached age 62,
your marriage lasted at least ten years, and you have been
divorced for at least two years. This two-year waiting period does
not apply if your former spouse was already collecting retirement
benefits before the divorce.
You can collect benefits as soon as
your former spouse is eligible for retirement benefits. He or she
does not actually have to be collecting those benefits for you to
collect your dependents benefits.
If you are collecting dependents
benefits on your former spouse's work record and then marry
someone else, you lose your right to those benefits. You may,
however, be eligible to collect dependents benefits based on your
new spouse's work record. If you divorce again, you can return to
collecting benefits on your first spouse's record, or on your
second spouse's record if you were married for at least ten years
the second time around.
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Yes, and many people do just that. People who are
past full retirement age may work and earn any amount without losing any of
their Social Security benefits. However, people who collect Social Security
before the year in which they reach full retirement age will lose one dollar of
those benefits for every two dollars they earn over a set yearly limit. For the
year 2004, that limit is $11,640. The limit applies only to earnings from work;
it does not apply to income from such things as savings, investments, pensions,
or rental property.
The Social Security Administration has added a
special twist for the year in which you reach full retirement age. During the
months of that year that are prior to your birthday, you will lose one dollar of
benefits for every three dollars you earn over a set yearly limit. For the year
2004, that limit is $31,080 (counting only earnings from the months prior
to your birthday). After your birthday, you can earn any amount of money without
losing benefits.
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Social Security most commonly refers to four programs financed through Social
Security (FICA) payroll taxes: retirement pensions (frequently called old-age
insurance), survivors insurance, disability insurance, and Medicare for the aged
and disabled.
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As the single largest source of income for the elderly, accounting for two of
every five dollars older Americans receive, Social Security has been
extraordinarily successful in reducing poverty among America's 65 plus
population. Likewise, Medicare has been instrumental in making health care
available to all elderly Americans, as well as preventing high medical bills
from depleting their lifetime savings.
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As a pay-as-you-go system, the solvency of Social Security is directly tied to
the ratio of workers to those receiving benefits. The rapid population growth of
the post-World War II "baby boom" created a huge generation - some 77
million strong - which now, as active workers, pays far more in taxes than the
benefits paid out to retirees from previous generations. However, after 2010
this huge population bulge of boomers will begin to retire and the taxes from
the workers available to support them will be increasingly unable to fully pay
their Social Security benefits.
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Since its inception, taxes from current workers have exceeded the benefits paid
out to retired and disabled workers, as well as their survivors and eligible
dependents. However, by 2013, benefits paid out are projected to begin exceeding
Social Security tax income, with the balance made up from the federal
government's general budget (as it begins paying back money borrowed from the
Social Security trust fund during the many years that it ran a surplus). By
2032, the trust fund surplus is expected to be exhausted as the deficit between
taxes paid and benefit costs reaches its peak.
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By 2030, the Social Security entitlement shortfall is projected to reach massive
proportions as retirement benefits increase from 4 to a whopping 6 percent of
the gross domestic product (GDP) and Medicare costs increase from less than 3 to
6 percent of the GDP. As the benefit shortfall increases after 2013, politicians
will be faced with the difficult choice of raising taxes, increasing deficit
spending, cutting non-Social Security expenses and programs, and/or cutting
Social Security benefits.
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Although the U.S. has continued to steadily grow since the baby boom generation,
three factors have combined to create Social Security's future dilemma. First,
the cost of Social Security benefits has continued to rise due to cost-of-living
adjustments, the skyrocketing costs of medical care and the fact that Americans
are living longer. Second, as the baby boomers entered the work force in the
1970s they had fewer babies (future workers) in what some called the "baby
bust."
The third factor involves the changing source of
growth, as high immigration replaced native-born births as the driving force
behind U.S. population growth. In general, new immigrants have less education,
lower skills, a higher tendency to avoid taxes, and overall lower earnings with
consequently lower Social Security tax contributions.
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Insuring the long-term solvency of Social Security, as well as our nation's
broader social safety net, requires the kind of solid foundation provided by a
stable population with an evenly balanced age-structure.
Getting off the population growth treadmill and
beginning the necessary and gradual transition to a smaller, optimal population
is essential to this long-term sustainability. Such an optimum population would
feature an even distribution among all age groups with a solid ratio of working
Americans (aged 18-64) to both the young and old. Our rapid population growth
has played a major part in creating the Social Security dilemma, it is now time
to recognize that continued growth is part of the problem, not the solution.
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More population growth, especially through high immigration, would be an
illusory approach that will only pass the problem along to future generations.
More workers today will inevitably result in more retirees tomorrow, thus
requiring the addition of ever more new workers to support them. Realistically,
increasing the ratio of workers to retirees could only be done through massive
increases in our already historically high immigration levels. This perpetual
growth treadmill would create many more additional costs that would far out
weigh any benefits to Social Security.
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Guaranteeing the long-term solvency
of Social Security as part of a broader commitment to the
financial and medical well being of America's elderly is
absolutely crucial to any transition to a smaller, optimum
population. Any society that seeks to stabilize its population
size must go through a period where a larger group of elderly move
through retirement. Taking the steps necessary to stop our current
population growth —like an all-inclusive cap on immigration at
100,000 per year— will help insure that any measures to protect
Social Security really do bring about long-term solvency. By
working together to save Social Security and stop population
growth, we can make sure that the aging of America in the next
century will be the welcome beginning of a necessary transition to
a smaller, more sustainable America.
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Portions of this information
has been taken from the website of the
Social Security Administration www.ssa.gov.
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