An Overview of Social Security Benefits

Social security was established in 1937 as anFactors effecting how social security is used and
emergency net for workers of this nation. It was toplanned by the administrations.
cover all workers and has grown to cover a wide1. The life expectancy has increased by 34% since
range of benefits. These benefits are funded by1938. By living longer the demand for retirement
worker payroll taxes and are paid into a fundbenefits has increased causing rates paid by workers
managed by the federal government.to increase.
To be insurance and to receive benefits a worker is2. The high birth rate of baby boomers has caused a
required to "pay in" for a minimum of 40 quarters (10short term financial issue that has created some
years). The amount paid in will depend on the amountstress on the retirement fund. Once the baby boomers
of taxable income the worker earns. Current lawsgeneration has passed through the numbers will be
require anyone earning up to $100,000 is taxed. Somemore in line with past planning.
restrictions apply when calculating the benefit such asWhen social security was originally conceived
to be covered a worker must have been covered byPresident Roosevelt promised that the income benefits
at least 6 quarters of the past 13 calendar quarters.would not be taxed for income tax purposes. In 1984
There are several ways to receive social securityPresident Reagan changed the rules so that 50% of all
benefits. Here is a list of who can benefit.social security benefits were taxed. In 1992 President
Worker's benefit: This is a monthly payment payableClinton changed the taxation rate to 85%. These
for life to either a retired worker or a disabled worker.current tax rates are still in effect.
Spousal benefits: This refers to a monthly income forBased on current projections, the social security
a spouse or a retired or disabled worker.administration has determined that enough funds are in
Child's benefit: This is a monthly benefit for aplace to keep the plan solvent until 2075. A suggested
dependent child of a deceased, disabled or retiredincrease in the amount of income that is included in
worker.social security calculations from the current $100,000
Widow's benefit: This is a monthly retirement incomeof taxable income to $125,000 will provide additional
for a surviving or former spouse of a deceased orsolvency to the projected year of 2150.
disabled worker.