Social Security 101: What's in it for me? - Transcript

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Hi, I am Brittny Thompson from the Social Security Administration. Welcome to Social Security 101: What's In It For Me? Let's discuss some things you probably didn't know about Social Security, like how it can help you at many different points throughout your lifetime, not just at retirement. Social Security has served as a financial safety net for millions of people and their families. So let's take a closer look at how Social Security works. First, we need to keep in mind that Social Security affects just about everyone because most of us pay into it. Do you remember your first job and the day you got your first paycheck? Do you remember what it actually looked like? Were you surprised to see those deductions come out for federal and state taxes and something called FICA or OASDI? I know I was. If you haven't started to work yet, you will see what we mean once you do. It's important to know that FICA or OASDI represents Social Security taxes. You may not have realized this when looking at your pay record, but the law also requires your employer to match what you pay and contribute money to the Social Security Trust Fund. So what do you we mean by the Social Security Trust Fund? Well, when we talk about the Social Security Trust Fund, we are referring to the money received from the FICA tax dollars. Eighty-five cents of every Social Security tax dollar you pay goes into a trust fund that is used to pay current retirees, widows and widowers, and any eligible family members of retirees and workers who have died. The other 15 cents goes into a trust fund that is used to pay people with disabilities and their eligible family members. Now, you only pay Social Security taxes on your earnings up to a certain amount. That amount usually goes up each year to keep pace with wages. In 2013, the maximum taxable wage is $113,700. For more information, go to It's important to understand the money you pay in Social Security taxes is not held in a personal account for you to use when you get a Social Security payment. Your taxes are used right now to pay people who are currently getting Social Security payments. In turn, your future Social Security benefits will be paid for by future workers. Another tax you pay as you work goes towards Medicare. Maybe someone you know is on Medicare, like your parent or grandparent. Medicare is a health care insurance program that helps with doctors and hospital bills when you are retired or if you become disabled. So, as you see, your contributions to Social Security begin the minute you start working. Now, you may be asking yourself: How do we keep track of what you have paid into Social Security, and how do we determine what your future Social Security Payments will be? The answer is: through your Social Security Number.

As Brittny said, we use your Social Security Number to keep track of your earnings and calculate your future payments. You should all be familiar with your Social Security Number. You may have used it to apply for college, get financial aid, and apply for a job, open a credit card account. Well, our agency is responsible for assigning Social Security Numbers and issuing Social Security cards. For most of you, your connection with us started at birth, which is usually when Social Security Numbers get requested and assigned. For those of you who are working, you had to give your Social Security number to your employer before you started your job. Your employers use that number to report your earnings to us through your W-2, wage, and tax statement. We use these reports to determine whether you qualify for benefits and the amount those payments would be. We calculate your Social Security payments based on your earnings. The higher your earnings, the higher the monthly benefit. You need to be sure you always use the correct Social Security Number, so your earnings will be properly recorded. Also, if you ever change your name, you should notify us, as it will help us keep track of your earnings. While we are talking about Social Security Numbers, we want to remind you of the importance of guarding your number carefully to protect yourself against identity theft. Put your Social Security card away in a safe place. Don't carry it with you. If you ever think you are a victim of identity theft, you should contact the Federal Trade Commission at That's the agency that handles ID theft. Here is an important note: You should get in the habit of checking your Social Security Statement at least once a year. Your statement contains a year-by-year breakdown of your earnings history, estimates for your retirement, disability, and survivor benefits, and how much you have paid in Social Security and Medicare taxes. You can access your Social Security Statement online at First, you will need to create a My Social Security account with us. To create an account, you just have to give us some personal information about yourself, along with answers to some questions that only you are likely to know. Next, you create a user name and password that you will use to access your online account. This simple process protects you and keeps your personal Social Security information private. Once you have an account, you can view your Social Security Statement at any time. As I mentioned, your statement will provide estimates of your retirement, disability, and survivor benefits, your earnings record, and the estimated Social Security and Medicare taxes you have paid. Social Security offers several other important services that people can get through creating a My Social Security account. For people currently getting benefits, creating a My Social Security account will allow them to get a benefit verification letter. Check their benefit and payment information and earnings record. Change their address and phone number and start or change their direct deposit. Over time, we'll be adding other services to the My Social Security page, as well, to allow people to conduct other business with us online securely.

Let's hear from Jennifer Lauver who works in support of the Social Security Administration. She will discuss more details about the programs and services the agency offers.

Social Security is far more than a retirement program. We also make payments to eligible family members of deceased workers, as well as people who have become disabled or who need Medicare. Before I explain those programs to you, I want to tell you what we mean by eligible. In order to receive Social Security payments, a person must have earned 40 credits. When you work and pay Social Security taxes, you earn up to a maximum of four credits for each year. So you need ten years of covered work to become eligible to collect Social Security Retirement benefits. In certain circumstances you can qualify for Social Security disability payments with fewer than the usual 40 credits. If you die, your family may qualify for benefits on your record. Even if you have less than 40 credits. When it comes to the Social Security program, many people think only of retirement. And it's true, that most of the people getting Social Security receive retirement payments. Although retirement may be a long time away for students and young workers, we want to give you an idea of how we will determine your retirement payments when the time comes. We calculate your payments based on the monthly average of your highest 35 earning years. The amount of your monthly payment will depend on how much money you earned and the age you choose to start collecting benefits. Currently, the earliest point a worker can start collecting Social Security retirement is at age 62, but it is at a reduced rate. Or, you can wait until your full retirement age, which for most of you is age 67, because most likely you were born in 1960 or later. The bottom line is, the later you wait to claim your retirement benefits, the higher your monthly payment could be. There are many factors that go into deciding when to retire, such as your current cash needs, your health, your family longevity, whether you plan to work during retirement, whether you have other retirement income sources, your anticipated future financial needs and obligations, and the amount of your future Social Security benefit. Check out to find out more about this. You may think it is too early for you to think about retirement, but it is never too soon to start planning for it. Later on in this video we'll cover some steps you can take now to have a comfortable retirement later. By the way, if your parents or grandparents are ready to retire now, tell them to do it online at It's easy and convenient.

Next we have AJ Foster, also from our agency, who will tell you about other Social Security benefits and who is eligible to receive them.

Many other people, besides retirees, including young people just like you, can get Social Security. For instance, you or your dependents could be entitled to survivors benefits. Of course, we all hope to live long and healthy lives, but the truth is about one in seven of today's 20-year-olds will die before age 67. The loss of the family wage earner can be devastating, both emotionally and financially. Social Security helps by providing income for the families of workers who die, including families of young workers just like you. Dependents of deceased workers could receive survivor’s benefits until they have reached age 18. If they are in high school when they turn 18, they will continue to get benefits until they graduate or turn 19, whichever happens first. For more information, go to and look at the children's benefits section. Another way young people can qualify for Social Security payments is through our disability programs. We have two types: Social Security disability and Supplemental Security Income, or SSI. Almost three in ten of today's 20-year-olds will become disabled before age 67. It is good to know that if that happens, Social Security pays benefits to disabled workers and their families. We pay disability benefits to people who cannot work, because they have a medical condition that is expected to last at least one year or result in death. We use the five-step process to decide if you are disabled, where we evaluate your work activity and the severity of your medical condition. If you or someone you know has a medical condition or gets hurt and is unable to work, you or they should visit our website for more information on how to apply online for disability. Also, if you become disabled and would like to transition back into the work force, we have special rules that allow people who get Social Security disability benefits to return to work without losing their monthly benefits. For more information about this, go to and check out our information on work incentives. There are two special initiatives related to our disability program that I want to mention here. One is called Compassionate Allowances. It is a way to expedite the processing of Social Security and SSI disability claims for applicants whose medical conditions are so severe that they obviously meet Social Security's definition of disability. The other initiative is for wounded warriors. Military service members can receive expedited processing of disability claims from Social Security if they became disabled while on active duty on or after October 1, 2001, regardless of where the disability occurs. Young people also can qualify for benefits through the Supplemental Security Income or SSI program. SSI is a federal income supplement program funded by general tax revenues, not by the taxes people pay into the Social Security Trust Fund. It is designed to help aged, blind, and disabled people who have little or no income, and it provides cash to meet basic needs for food, clothing and shelter. Many people who receive SSI may not be eligible for Social Security disability, because they may not have earned enough credits. People can start receiving SSI at any age. Even children can receive it. See our website for more information about applying for SSI.

Let's talk a little about the future of Social Security. For more than 77 years now, the Social Security program has touched the lives of nearly all Americans. Each year, more than 160 million workers pay into Social Security and more than 56 million people are receiving benefits. However, in the last several decades a couple of major changes have happened in American society. First, people are living a lot longer than they used to. On average, today's young workers can expect to live about 20 years in retirement. In addition, people are having fewer children than past generations. The end of World War II produced a large spike in births, forming the Baby Boom Generation. Since 1960, the birth rate has declined, which means there will be fewer workers in the future to support the 80 million boomers who are reaching retirement age. The combination of the large Baby Boomer Generation and the increased life expectancy will result in almost 20 percent of the population being over age 65 by the year of 2035. It is no secret that changes are needed to make sure the Social Security program remains strong, not only for you, but for your children, grandchildren, and, of course, future generations. Any changes to Social Security will need to be worked out between Congress and the President. Jennifer is back to explain some important information that will help you in planning for your future.

You should know that Social Security was only meant to be part of your income during retirement. At your age, you probably spend most of your money on things like rent, a car, food, school, clothes, and hanging out a little. You are probably not really thinking about retirement yet. Most financial advisers say that retirees will need 70 percent or more of their preretirement earnings just to live comfortably. But Social Security makes up only about 40 percent of those earnings for the average worker. So you will also need savings and investments to make up the difference. We know it's difficult for young people who usually don't have much income to start saving for retirement. But through compound interest, even setting aside a small portion of each paycheck can really pay off later. For instance, if you can set aside just $25 a week and can earn five percent annual interest on that money, it will grow to about $165,000 in 40 years. Any amount of money you save can add up over time. One way you can do this is through your job. Ask your employer if you can participate in a retirement savings plan at work. Your employer might even match your contributions to the plan. If your employer doesn't offer a retirement savings plan, check with a bank or other financial institution for ways that you can save and invest on your own. You can also go to or Even though retirement may seem light years away, the sooner you start planning and saving, the greater your retirement savings will be.

Let's recap. We gave you a brief overview of Social Security and a general concept of how it works. We explained how Social Security keeps track of your earnings. We shared with you the different types of Social Security benefits young people like you might be able to get throughout your lifetime and how you might qualify for these payments. We also shared with you the importance of saving and offered some tips on how to learn more about saving for your retirement. We hope you found this information helpful. Please share this information with your friends and family and let them know that we are also on Twitter, Facebook, and YouTube. You can also visit our Open Government page at for more information on steps we are taking to increase our transparency and engagement with the American public. For the Social Security Administration, this is Brittny Thompson. Thanks again for watching.