Social Security Part 2 – Jacob Kokaly

Social Security Part 2

To The Editor:

Continuing my letter on Social Security, part 2: Old-age, survivors, and disability insurance forms the foundation of the U.S. social security system, protecting about 95% of our nation's workers.

Workers, or their families, become eligible to receive retirement, or survivors benefits after the worker earns a specified number of work credits in jobs covered by social security. In 1996, workers received one (1) work credit for every $640 of covered annual earnings, the amount adjusted yearly to reflect rising average wages. But workers may receive only four work credits each year: 1 no matter how much they earn.

To qualify for benefits, workers must be "fully insured". Fully insured workers are those who have earned 40 work credits. Workers who reached age 65 before 1991 needed fewer than 40 credits. Fully insured workers are entitled to complete old-age, survivors, disability, and hospital coverage. Currently insured workers are those who have earned at least six work credits during the 39 months before their death or disability. Such workers only qualify for limited survivor's coverage.

Workers disabled before age 31 may collect disability benefits if they have earned six work credits for at least half the time between their 21st birthday and the time they became disabled. Workers disabled after their 31st birthday generally need at least five years of work credits in the 10-year period before they became disabled.

To collect benefits, retired or disabled workers or their survivors must file a claim with the Social Security Administration. Benefits are paid monthly, except for lump-sum death payments.

Insured workers may collect full retirement benefits if they are 65 or older and their annual earning do not exceed a maximum amount which in 1996, was $12,500. At age 70, workers become eligible for full retirement benefits regardless, of their income.

Beginning in 2003, the retirement age increased gradually from 65 to 67, and has risen by two months per year to age 66 by 2009 and remained fixed through 2020, and then will increase gradually to 67 by 2027, unless the current Congress changes the plan.

Workers also may collect retirement benefits as early as age 62, but such workers get a permanently reduced benefit, the amount of reduction depends on their age at retirement. Workers who retire at age 62 collect 80% of the monthly amount they would have received on retiring at age 65. Workers who retired at age 62 between 2005 and 2016 collected 75% of the full monthly benefit, and after that, the benefits received by 62-year-olds who are entering retirement gradually received reduced amounts until retirees at age 62 in 2022, or later get only 70% of the full monthly benefit.

Beneficiaries age 65 to 69 lose $1.00 in benefits for every $3.00 they earn above an exempt annual limit, and beneficiaries under age 65 lose $1.00 in benefits for every $2.00 they earn above an exempt limit (in 1996, annual exempt limits for beneficiaries age 65 to 69 were $18,500 and for beneficiaries under 65 were $8,280.

To collect disability benefits, workers must have a severe physical or mental condition that lasted at least 12 months or must be expected either to last that long or to result in death.

Social Security also provides benefits to the families of retired or disabled workers. Spouses may collect full benefits at age 65 if their annual earnings do not exceed a certain amount; in 1996, this amount was $12,500. A spouse's full benefit equals 50% of the worker's benefit. Spouses may collect reduced benefits if they apply while age 62 to 64. The age at which spouses may collect full benefits, like that of retired, workers, will gradually increase to 67 between 2003 and 2027, unless the current Congress changes that plan. Additional benefits are paid to the child of a retired or disabled worker if the child is (1) unmarried and under 18, (2)under 19 and in elementary or high school, or (3) 18 or older and unmarried and disabled. However, the child must have become disabled before age 22. A spouse under age 62 may also claim benefits if he or she is caring for a child who is under age 16 or disabled. A divorced wife may collect benefits based on her former husband's work record if the marriage lasted ten years.

Jacob Kokaly

Newport, Vermont