Social Security For Dummies

Jonathan Peterson, an award-winning journalist, is a former executive communications director at AARP. During his news career, he covered the White House, state and national political campaigns, and various facets of U.S. domestic and economic policy.

Introduction 1


About This Book 2


Foolish Assumptions 3


Icons Used in This Book 3


Beyond the Book 4


Where to Go from Here 4


Part 1: Getting Started with Social Security 5


Chapter 1: What Social Security Is and Why You Need It 7


Understanding What Social Security Means for You 8


Benefits for retirees 9


Benefits for children 9


Benefits for survivors 11


Benefits for the disabled and their dependents 11


Appraising the Value of Social Security 12


Understanding How You Pay for Social Security 14


How much you pay 14


Where your money goes 15


Getting the Most Out of Your Social Security Benefits 16


Getting in Touch with the Social Security Administration 17


Chapter 2: A Breakdown of Benefits 19


Bringing Security to Old Age: Retirement Benefits 20


Who qualifies and when 20


How you qualify 22


How much you get 23


Surviving the Loss of a Breadwinner 27


Who qualifies 30


How much you get 30


How benefits are earned 34


Paying Your Bills When You Can’t Work: Disability Benefits 35


Who qualifies 36


How you qualify 36


How much you get 37


When the Need Is Great: Supplemental Security Income 38


Chapter 3: Deciding When to Start Collecting Retirement Benefits 39


Paying Attention to Your Full Retirement Age 40


Determining your full retirement age 40


Estimating how much you’ll get each month based on when you retire 40


Looking at Life Expectancy When You Claim Benefits 45


Doing a break-even analysis: The payoff from different retirement dates 45


Considering what’ll happen if you live longer than you expect 47


Considering Your Spouse When You Claim Social Security 50


Recognizing the Potential Payoff of Working Later in Life 52


Putting It All Together: The Right Time to Begin Collecting Benefits 53


Chapter 4: Protecting Your Number and Securing Your Card 57


Getting a Social Security Number 57


For U S citizens 58


For noncitizens 59


Managing Your Social Security Card 62


If your card is lost or damaged 63


If your name changes 64


Protecting Yourself by Protecting Your Number 65


Protecting your identity 66


Knowing what to do if scammers get your number 67


Part 2: Taking the Plunge: Filing for Social Security 71


Chapter 5: Signing Up for Benefits 73


When to Apply for Social Security Benefits 73


Where to Apply for Social Security Benefits 74


In person 75


By phone 75


Online 75


How to Apply for Social Security Benefits 76


Retirement benefits 78


Survivor benefits 80


Disability benefits 82


Supplemental Security Income benefits 83


How You Get Your Money: The Check Is Not in the Mail 84


Chapter 6: Determining How Much You’ve Earned 87


Your Social Security Statement 88


How to access it 88


How to understand it 89


Social Security Calculators 90


Social Security’s own tools 91


AARP’s Social Security calculator 93


Other online calculators 95


Chapter 7: Navigating the System 97


Being a Smart Consumer of Social Security 98


Keeping good records 98


Making sense of the correspondence you get from Social Security 98


Making (and showing up for) appointments 99


Getting the Answers and Help You Need 99


Finding answers online 100


Having someone on your side when you deal with Social Security 103


Life Happens: Keeping the Social Security Administration in the Loop 105


Setting the (Earnings) Record Straight 108


Halting Your Retirement Benefits 109


Recovering a Lost or Stolen Social Security Check 111


Getting Dinged for an Overpayment 112


Getting Social Security in a Global Economy 113


U S citizens 113


Noncitizens 114


Registering a Complaint with the Social Security Administration 116


Chapter 8: When You and Social Security Disagree: The Appeals Process 121


Reconsideration: Taking Your First Step 122


Deciding whether to file a request for reconsideration 125


Taking the steps to file 126


Going to an Administrative Law Judge to Solve Your Problem 128


Requesting a hearing 128


Preparing for your hearing 130


Participating in your hearing 131


Knowing What to Expect from the Appeals Council 134


Taking Your Claim to Federal Court 136


Part 3: Who Benefits and When 139


Chapter 9: Spousal Benefits: Watching Out for Each Other 141


Who Qualifies and Who Doesn’t 142


Traditional spouses 143


Same-sex spouses 143


Common-law spouses 144


Divorced spouses 144


Widows and widowers 145


How Much You Can Expect to Get 147


How to Maximize Your Benefits 149


Maximizing your lifetime benefits as a married couple 150


Getting the biggest benefit possible for your surviving spouse 152


Chapter 10: Family Benefits: Who Gets What 155


Defining Who’s in the Family 156


Spouses 156


Parents or grandparents 157


Natural children 158


Adopted children 159


Stepchildren 159


Grandchildren 160


Parents of a worker 160


Identifying the Benefits Family Members Are Eligible For 160


Dependent children under 18 160


Dependent children 18 and over 161


Disabled adult children 161


Grandchildren 161


Parents of a worker 162


Looking at How Having a “Child in Care” May Affect Your Own Benefits 162


Understanding the Family Maximum 164


Counting on Kids’ Benefits When Parents Live Apart 167


Managing Benefits on Behalf of a Child 169


Chapter 11: When You Can’t Work: Social Security Disability Benefits 171


The Two Types of Disability Benefits 172


Social Security Disability Insurance 174


Supplemental Security Income 178


How Social Security Defines Disability 179


Are you working for money? 180


Do you have a severe medical problem? 181


Is your disability on “the list”? 181


Can you perform the tasks required by your former job or a similar job? 182


Can you do any other available work in the economy? 184


How to Make Your Case 185


Cutting through the red tape 186


Gathering the best medical evidence: The role of your doctor 188


Getting help 189


Showing that you’ve tried to solve your problem 190


Telling the truth 191


What to Do If You Get Turned Down 192


What Happens to Your Benefit If You Can Go Back to Work 192


Part 4: Social Security and Your Future 197


Chapter 12: Enrolling in Medicare 199


Understanding the ABCs (and D) of Medicare 200


Part A: Hospital insurance 200


Part B: Medical insurance 201


Part C: Medicare Advantage 202


Part D: Prescription-drug coverage 203


Qualifying for Medicare 204


Signing Up for Medicare 205


Deciding what parts to enroll in 206


Keeping track of the enrollment periods 209


Knowing your options for applying for Medicare 211


Paying Premiums 212


Getting Hit with Late Fees 213


Part A 213


Part B 213


Part C 214


Part D 214


Buying Extra Insurance: Medigap 215


Getting Financial Help If You Need It 216


Extra Help for Part D 216


Medicaid 217


Medicare savings programs 217


Pharmaceutical assistance programs 217


Programs of All-Inclusive Care for the Elderly 217


State pharmaceutical assistance programs 218


State health insurance assistance programs 218


Chapter 13: Working in “Retirement” 219


The Pros and Cons of Not Retiring at Retirement Age 220


Facing the challenges of working later in life 220


Reaping the benefits of working later in life 222


The Earnings Test: How Your Payments Are Calculated When You Work 223


How the earnings limit works 223


How exceeding the limit may cost your family 225


How the earnings test affects benefits 226


Getting a break for your first months of retirement 227


Reporting earnings to the Social Security Administration 229


When You Go Back to Work after Retirement 232


Special Considerations for the Self-Employed 233


Tax deductions 234


Work credits 234


Earnings limit 235


Reporting requirements 235


Uncle Sam Giveth and Taketh Away: How Benefits Are Taxed 236


Chapter 14: Shaping a Financial Future You Can Live With 239


Envisioning Your Life with Social Security 240


Figuring out how much money you need 241


Determining how much income you need 241


Narrowing the gap between too little income and too much spending 242


Working with a financial professional 244


Preparing for Life on Social Security 246


Purchasing an annuity 246


Signing up for Medicare 247


Handling home equity 248


Getting long-term-care insurance 249


Understanding how Social Security interacts with private pensions 249


Managing your investments 250


Part 5: The Part of Tens 253


Chapter 15: Ten Myths about Social Security 255


Myth: Social Security Is a Ponzi Scheme 256


Myth: Your Social Security Number Has a Racial Code in It 257


Myth: Members of Congress Don’t Pay into the System 257


Myth: Social Security Is Going Broke 258


Myth: The Social Security Trust Funds Are Worthless 259


Myth: You’d Be Better Off Investing in Stocks 260


Myth: Undocumented Immigrants Barrage Social Security with Illegal Claims 261


Myth: When Social Security Started, People Didn’t Even Live to 65 262


Myth: Congress Keeps Pushing Benefits Higher Than Intended 262


Myth: Older Americans Are Greedy Geezers Who Don’t Need All Their Social Security 263


Chapter 16: Ten Reasons Young People Should Care about Social Security 265


If You’re Lucky, You’ll Be Old Someday 266


Your Parents Will Be Old Even Sooner 266


You’re Paying into the System Now 267


You Benefit When Social Security Keeps People Out of Poverty 267


You May Need Benefits Sooner Than You Think 268


Social Security Ensures That Time Doesn’t Eat Away at Your Benefit 269


Social Security Benefits Are One Thing You Can Hang Your Hat On 270


The System Works 270


The Alternatives Are Worse 271


Life Is Risky 272


Chapter 17: Ten Choices Facing the Country about the Future of Social Security 273


Whether to Increase the Earnings Base 274


Whether to Cover More Workers 274


Whether to Raise Taxes 275


Whether to Cut Benefits 276


Whether to Modify the Inflation Formula 276


Whether to Raise the Full Retirement Age 277


How to Treat Women More Fairly 278


Whether to Divert People’s Taxes to Private Accounts 279


Whether to Create a Minimum Benefit 279


Whether to Give a Bonus for Longevity 280


Part 6: Appendixes 281


Appendix A: Glossary 283


Appendix B: Resources 291


Social Security 291


Medicare 292


AARP 293


Other Sources 294


Appendix C: Strengthening Social Security 297


Index 301