1Social SecurityPresented by:Jessica CareyMike PriskosTim DrisdomSocial Security Basics*Facts Social Security is the popular term used in place of Old-Age, Survivors, and Disability Insurance (OASDI) program. Benefits are paid as a matter of earned right to workers who gain insured status and to their eligible spouses and children and survivors.Social Security Basics*Facts Continued A person builds protection under the OASDI program through work in employment covered under Social Security.  All taxes are credited to the OASI and DI Trust Funds, which by law may be used only to meet the cost of: – Monthly benefits when the worker retires, dies, or becomes disabled– lump-sum death payments to survivors– vocational rehabilitation services for disability beneficiaries– administrative expensesSocial Security Basics*Facts Continued To become eligible for his or her benefit and benefits for family members or survivors, a worker must earn a certain number of credits based on work in covered employment or self-employment. In the case of workers who die before achieving fully insured status,benefits may be paid to a worker's children or to his or her widow(er) caring for such children under age 16.Social Security Basics*Facts Continued Each pay period when workers contribute to Social Security through their FICA deduction, they are purchasing insurance for their families against loss of income should they become disabled, die or live to old age. About one in three Social Security beneficiaries is not a retiree, but a recipient of disability or survivor benefits.History*Timeline 1920: The Federal Government established its system of civil service retirement for Federal workers. 1934: The Railroad Retirement Act was passed, providing pensions for railroad workers. Railroads and employees contributed to the retirement fund, making the system self-supporting.2History*Timeline Continued 1935: Congress passed the Social Security Act, establishing a system of old age retirement insurance for workers under age 65 in commerce and industry, agricultural laborers, and domestic workers. 1937: The first Social Security payroll taxes were collected. The tax rate for both employees and employers was 1 percent.History*Timeline Continued 1939: Congress amended the Social Security Act to provide survivors insurance and to authorize the first payment of pensions in 1940. 1946: The Social Security Administration was created.History*Timeline Continued 1950: Social Security was expanded to include public workers not covered by a government program, farm workers, and domestic workers-and benefits were increased. 1954: Social Security was extended to self-employed workers (not including lawyers, and those in medical professions).History*Timeline Continued 1956: Coverage was expanded again to include members of the uniformed services and additional self-employed workers. Early Social Security retirement benefits became available to women at age 62. Disability insurance was also added to the program.History*Timeline Continued 1960: The payroll tax is increased to 3percent for employees and employers. 1961: Men become eligible for early retirement benefits at age 62. 1972: Congress enacted legislation adjusting Social Security benefits automatically to the cost of living.History*Timeline Continued 1977: To address the problem of increasing benefit levels, the Social Security Administration adjusted the cost-of-living indexing formula downward and increased payroll taxes. 1982: The payroll tax moves to 6.7 percent (including hospital insurance) for employees and employers.3History*Timeline Continued 1983: Congress enacted amendments gradually raising the age for full benefits from 65 to 67, taxing benefits of higher-income beneficiaries, and including Federal and and nonprofit workers in the system. The amendments also provided for the conversion of the Social Security trust funds to “off budget” status, exempting them from the Federal budget enforcement procedures.History *Timeline Continued 1994: A Bipartisan Commission on Entitlement and Tax Reform, was unable to agree on a specific set of reforms, but recommended immediate action to ensure the future solvency of the trust funds. The Social Security payroll taxed again increased to 7.65 percent for both employees and employers. … 2006: The country is trying to find some kind of solution to the Social Security problem. Who knows.The Public’s Attitude In mid January of 2005, AARP and Rock the Vote randomly surveyed one thousand people over the age of 18 in an attempt to better understand current public attitudes toward Social Security.The Public’s Attitude*Continued Although details of the Social Security program seem to be widely misunderstood by many Americans, and while people convey pessimistic attitudes about certain aspects of the program's future, the research shows that young Americans do have a positive attitude about the program and hope that it will be sustained for them.The Public’s Attitude*Continued In fact, all age groups indicated a positive attitude about the program, with favorable views increasing with age: – 51 percent of 18-39-year-olds indicated a favorable view– 63 percent of 40-59-year-olds– 78 percent of people over 60The Public’s Attitude*Continued 91 percent of young adults reported that they believed that Social Security had problems that could be fixed.– www.google.com4Problems Most of the debate regarding Social Security is focused on how the system might function decades from now. Problems*Continued The social security funding problem stems primarily from demographics. As the baby boomers age, the U.S. age distribution, if graphed, is changing from a triangle to a rectangle, lowering the ratio of workers to retirees. By the time the last of the baby boomers retires in 2030, there will be only 2 active workers supporting each pensioner, down from 5 in 1960 and 3.3 today.Problems*Continued Current and past retirees have been promised benefits worth several times what they contributed, including interest. Because the benefit formula is progressive, low-paid employees receive more relative to their contributions than do highly paid workers. In the future, however, baby boomers reaching retirement age can on average expect significantly lower returns from their contributions than their predecessors