Social Security Update 2021

Social Security Update 2021 An overview of Social Security Benefits. What is Social Security? A system of social insurance benefits available to all covered workers in the United States. The Social Security System started in 1937 covers a wide range of social programs. The term “Social Security” refers to the benefits supplied under one part of the system, known by its acronym OASDI, or Old Age, Survivors, and Disability Insurance. OASDI benefits are funded primarily by payroll taxes paid by covered employees, employers, and self-employed individuals. Both the OASDI portion of the payroll tax, as well as that part of the tax that goes to finance hospital insurance HI (Medicare), are provided for by the Federal Insurance Contributions Act, FICA. Insured Status To qualify for benefits a worker must be either “fully” insured or “currently” insured. An insured status is acquired by earning credits based on the wages or self-employment income earned during a year. In 2021, an individual must earn $1470 in covered earnings to receive one credit and $5880 to receive four credits the maximum allowed for the year. A worker normally becomes fully insured by earning 40 credits, typically by working 10 years of covered employment. To be considered currently insured, a worker must obtain at least six credits in the last 13 calendar quarters, ending with the quarter that he or she became entitled to benefits. All benefits are available if a worker is fully insured. Special requirements apply , to disability benefits. What Benefits Are Available? Workers benefits: A monthly income for a retired or disabled worker. Spouse’s benefit: The monthly income for a spouse or former spouse of retired or disabled worker. Widow benefit: The monthly retirement income for the surviving spouse or former spouse of a deceased worker. Child’s benefit: The monthly income for the dependent child of a deceased, retired, or disabled worker. To qualify, a child must be under the age of 18, 18 or 19 and a full time elementary or high school student, or 18 years old or older and disabled prior to reaching the age of 22. Mother’s or Father’s benefit: A monthly income paid to a surviving spouse who is caring for a worker’s dependent child who is under the age of 16 or disabled before the age of 22. When under the age of 62 the spouse of a retired worker receives the same benefit. Parent’s benefit: A monthly income paid to the surviving dependent parent or dependent parents of a deceased worker. How is the Social Security Amount determined, based on what? Normally, a covered worker’s benefits, and those of his or her family members, are based on the worker’s earnings record. The only earning considered are those reported to the Social Security Administration (SSA), up to a specific annual maximum called the wage base. The wage base is indexed for inflation every year and strategically places a cap on the amount of SSA benefits a worker is eligible to receive regardless of earnings. The wage base for 2021 is $142800. Utilizing a worker’s earning record, the SSA calculates a number known as the Primary insurance amount referred to as the PIA. The PIA is the basic value used to calculate the dollar amount of benefits available to the worker and his or her family. What is the Benefit Amount?

To summarize the benefit amounts paid under normal circumstances under OASDI in the event of a worker’s death, retirement, or disability I will provide the amounts for each category. Remember, all monthly benefit amounts may experience a reduction to meet a “family maximum” limit. Individual benefits can also be reduced if the beneficiary earns income exceeding the specified limits. Workers benefit: 100% of PIA for Disability, 100% of PIA for retirement. Spouse’s benefit: 50% of PIA for Disability, 50% of PIA for retirement. Widower’s benefit: 100% of PIA for Death. Child’s benefit: 75% of PIA for Death, 50% of PIA for Disability, 50% of PIA for retirement. Mother’s or Father’s benefit: 75% of PIA for Death, 50% of PIA for Disability, 50% of PIA for retirement. Parent’s benefit: 82.5% of PIA for death. When workers reach age 60 and they are not receiving SSA benefits they automatically receive a paper Social Security Benefits statement each year, listing the workers earnings, as well as listing the workers estimated retirement, disability, and survivors' benefits.

A worker may also find out the status of their benefits by calling the SSA at 800-772-1213, TTY 800-325-0778, Monday thru Friday 7:00am to 7:00 pm or on the web at https://www.ssa.gov/.