S.T.E.P.S. - Smart, Tailored, Event-Driven, Packaged Solutions
provided by Women's Financial Network at Siebert
Government Subsidized Retirement
Contributions -- Part II
Whether or not you have taken charge and invested actively, you may already be entitled to certain retirement benefits courtesy of Uncle Sam.
Social Security
By definition, social security is designed to provide a minimum level of support. For every dollar you earn today, the government takes a percentage out for you when you retire. Once you do stop working, the money becomes available to you as long as you've met one of the following conditions:
- If you've reached the age of 65 and you, your spouse, or ex-spouse has earned 40 credits, by working at least 40 quarters over the course of your life. (Those born before 1929 may need less than 40 credits).
- If you are eligible for a disability benefit due to a physical or mental impairment.
- If you are a survivor of a family member who earned enough social security credits while they were working.
HerTip: At age 62, you may be eligible to receive reduced benefits.
How it works:
As a company employed woman, the path for your social security payments are as follows:
- You earn your monthly salary
- Employer takes social security and Medicare taxes from your paycheck
- Employer matches the amount and reports salary and taxes to the IRS.
- Employer also reports earnings to Social Security Administration
As a self-employed woman, the path for your social security payments are as follows:
- You earn your monthly revenue
- You pay social security taxes and Medicare with your tax return
- IRS reports earnings to Social Security Administration.
Consider the following:
The average woman works significantly fewer years than the average man and switches jobs every 4.5 years. But, this does not necessarily disqualify women from social security. As long as you, your spouse, or ex-spouse earn 40 credits, you're still eligible for full social security benefits. Where and when the credits are earned is irrelevant. In 2000, a worker receives one credit for each $780 of earnings, up to the maximum of 4 credits per year.
Social security makes special provisions for widowed women and their families.
A widow may be eligible for survivor benefits if she or her deceased husband earned the credits necessary for retirement benefits, and she is:
- over 60 years old
- over 50 and disabled
- any age and caring for a child under age 16.
HerTip: By law, a spouse is always the beneficiary of her/his spouse's pension plan unless they decide otherwise.
Dependent children are also eligible for survivor's benefits if they are:
- unmarried and under age 18
- under 19 but still in school
- 18 or older and disabled.
Parents of the deceased can also receive social security benefits if the deceased was their primary means of support.
Social Security also has special provisions for divorced women. In certain situations, divorced women are eligible for their ex-husband's social security based on their ex-husband's social security account.
How much will I receive in social security?
Social security payments are based on your earnings throughout your working life. And, within certain limits, these benefits are tied to your income level.
Dual Income Families:
If both you and your spouse have been working, you can choose the higher of your own benefit and the benefit you could have received as a non-working spouse.
Single income families:
- The non-working spouse will receive an amount equal to about 50% of the working spouse's benefit.
- This money is available at the non-working spouse's normal retirement age. (of 65+)
- A non-working spouse can receive a reduced benefit at age 62, but only if her husband has already retired.
How do I "file" to receive my social security benefits?
In order to receive social security checks, you must first "file" for benefits. To file for social security or disability benefits, speak to a social security representative at 1-800-772-1213, or contact your local social security office.
A woman should file for benefits under the following conditions:
- She becomes too disabled to work
- A family breadwinner dies
- She is thinking about retirement
You should speak with a social security representative during the year before the year you plan to retire. All phone conversations are kept confidential so feel free to ask the questions you want!
What documents do I need to file for social security?
- Birth certificate, or other document to prove eligibility
- Marriage certificate if applying as a spouse
- Most recent W2 or tax return if self employed
How do I collect my social security?
After you have filed for benefits, social security checks are mailed to you monthly from the Social Security Administration, or you may set up a direct deposit.
Will I be taxed on my social security?
Yes. 85% of your social security benefits are taxed depending on your situation.
Want to make sure your payments are on track?
You can call the Social Security Administration office toll free at 1-800-772-1213 or contact them on the web at www.ssa.gov for a free personal Earnings and Benefit Estimate Statement. This will tell you how much government records say you have saved for social security.
HerTip: As a rule, the government will only fix errors up to 3 years, 3 months and 15 days after they occur, so if you think you may have a problem with your social security payments, don't wait to give them a call.
Times Are Changing
Social security was never intended to be the only source of income for retirees. It is intended to support other income from savings, investments, pension plans, etc.
Saving outside of social security is essential to your financial well being after retirement. In 1997, the average woman received approximately $8,000 per year in social security benefits. Clearly, not enough for most women to live on.
Medicare
In addition to social security, the government's other major retirement program is Medicare.
What is Medicare?
Medicare is a government sponsored health insurance plan for people aged 65 or over, or disabled people of any age. Medicare consists of two main parts:
- Part A: Hospital insurance. Helps pay for care in hospitals, skilled nursing facilities, hospice and some home health care.
- Part B: Medical insurance. Helps pay for doctors, outpatient hospital care, and some other medical services that Part A does not cover.
When do I become eligible for Medicare?
In the month you turn 65, you are automatically eligible for Part A and B of Medicare. At 64, 3 months prior to your birth month, you should receive your Medicare Card in the mail.
What does Medicare Cost?
Part A of Medicare is normally free. There are exceptions, but chases are if you or your spouse paid sufficient Medicare taxes while working then it will be free for you. If you are unsure if you paid Medicare taxes while working, call your local social security office to see if you are eligible.
Part B usually costs about $45.50 per month.
- The premium is normally taken out of your social security or other government retirement plans.
- If you do not receive other government benefits, Medicare sends you a bill every three months.
- It's your choice whether or not to enroll in Part B.
- If you decide not to take part B today, but choose to take it later, the future cost could go up by 10% for each 12 month period that you did not take it.
Keep in mind.
Each year, new proposals go before Congress concerning your Social Security and Medicare. While these programs will probably exist when it comes time for you to retire, they may differ significantly from what's offered today.
Continue to:
Part III. Pensions
|
To open a brokerage account, click here for Women's Financial
Network at Siebert, where Smart Women Invest.
|
 |
|
