Question: Social Security Disability Protection. Sandra
Social Security Disability Protection. Sandra Hilton of Sisseton, South Dakota, age 60, recently was in a vehicle accident, was hospitalized, and then suffered a heart attack. She took a leave of absence from her longtime job as a data analyst for an environmental lobbying firm to recuperate. Using Appendix B answer these questions:
(a) If her earnings averaged $80,000, what would be her monthly Social Security disability benefit?
(b) If her earnings instead averaged $65,000, what would be the monthly benefit?
Appendix B:
Transcribed Image Text:
Appendix B ESTIMATING SOCIAL SECURITY BENEFITS The Social Security Administration (SSA) provides basic benefits for your retirement, for a period of disability, or for your survivors. To qualify, you must have earned the number of credits required for cach benefit program. In 2016, a worker would earn one credit for cach S1,260 of income subject to Social Security taxes (this figure is adjusted upward cach year for inflation) up to a maximum of 4 credits per year. Once you qualify, the actual dollar level of benefits received is based on your income in years past that was subject to the Federal Insurance Contributions Act (FICA) taxes, commonly known as Social Security taxes. Benefits increase cach year based on a cost of living adjustment (COLA) announced by the SSA cach October for the following year. You can obtain a personalized estimate of your benefits from the Social Se- curity Administration at www.ssa.gov/myaccount or www.ssa.gov/planners/ benefitcalculators.html. However, if you have not yet earned 40 credits your personalized estimate will underestimate your likely benefits. You can use Appendix B.1 and the in- come you might expect to make per year at age 30 for a somewhat more accurate esti- mate. The amounts are for a 30-year-old worker but would not differ significantly for workers up to ten years older. Social Security Retirement Benefits To qualify for Social Security retirement benefits, any worker born after 1928 must have carned 40 credits of coverage. Others are cligible to collect benefits based on the cov- ered carnings of the retired worked: dependent children, spouses caring for dependent children, and retired spouses at age 62 (including former spouses if the marriage lasted at least ten years). See www.ssa.gov/retire/index.html. Social Security Disability Benefits To qualify for disability benefits, workers need at least 40 credits of coverage, with at least 20 of the credits attained in the previous ten years (depending on year of birth). A worker younger than age 31 must have attained at least six credits or one more than one-half of the total credits possible after age 21, whichever is greater. (For example, a 26-year-old worker would have five years, or 20 credits, possible and would need ten credits of coverage.) Social Security will pay disability benefits to an insured worker, dependent children up to age 18 (or 19, if the child is still in high school), a spouse caring for a dependent child who is younger than age 16 or disabled, and a spouse (even if divorced, but not remarried, provided that the marriage lasted ten years) aged 62 or older. See www.ssa.gov/disabilityssi for more information. Social Security Survivor's Benefits For a family to qualify for Social Security Survivor's benefits, the deceased worker must have accrued at least 40 credits of coverage or an average of one credit per year since age 21 to be "fully insured." Other individuals may be considered "currently insured" if they have six credits of coverage in the previous 13 possible calendar credits. The sur- vivors of currently insured workers receive limited types of benefits compared to those available to fully insured workers. Social Security will pay benefits to surviving children younger than age 18 (or 19, if the child is still in high school), to a surviving spouse (even if divorced from the deceased, but not remarried) caring for surviving children who are younger than age 16, and to a surviving spouse (even if divorced, if the mar- riage lasted at least ten years) aged 60 or older. See www.ssa.gov/survivors for more information. Appendix B.1 Estimates of Social Security Benefits for the Three Major Social Security Programs Present Annual Earnings $35,000 S50,000 S65,000 S80,000 $95,000 $120,000 Monthly Retirement Benefits at Age 67 in Today's Dollars $ 1,480 $ 1,890 $ 2,260 $ 27,120 Per month $ 2,450 $ 2,640 $ 2,940 Per year $17,760 $22,680 $ 29,400 $ 31,680 $ 35,280 As a percentage of income 51% 45% 42% 37% 33% 29% Monthly Retirement Benefits at Age 67 in Future Dollars Per Month $ 6, 170 $ 7,860 $ 9,550 $ 10,410 $ 11,200 $ 12,440 Per Year $74,040 $94,320 $114,600 $124,920 $134,400 $149,280 Monthly Disability Benefits if You Became Disabled in 2018 $ 1,330 $ 1,690 $ 2,040 $ 24,480 Individual benefit per month $ 2,280 $ 2460 $ 2,720 Individual benefit per year $15,960 $20,280 $ 27,360 $ 29,520 $ 32,640 As a percentage of income 46% 41% 38% 34% 31% 29% $ 2,000 $ 2,530 $ 3,060 $ 36,720 Masimum family benefit per month $ 3420 $ 3,690 $ 4,080 Maimum family benmefit per year $24,000 $30,360 $ 41,040 $ 4,280 $ 48,960 As a percentage of income 69% 61% S6% 51% 47% 41% Monthly Survivor's Benefits if You Died in 2018 Individual benefit per month $ 1,040 $ 1,310 $ 1,560 $ 1,750 $ 1,890 $ 2,090 Individual benefit per year $12,480 $15,720 $ 18,720 $ 21,000 $ 22,680 $ 25,080 As a percentage of income 36% 31% 29% 26% 24% 21% $ 2,380 $ 3,210 $ 4,700 $ 4,870 $ 3,710 $ 4,520 Maximum family benefit per manth $ 4090 Maximum family benefit per year $28, 560 $38,520 $ 49,080 $ 52,800 $ 58,440 As a percentage of income 82% 77% 68% 61% S6% 49%
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