| Social         Security AdministrationBasic         Facts 
SSA         Publication No. 05-10080        May 2002        ICN 468350

Social         Security is part of almost everyone's life. Social Security protects more         than 150 million workers and pays benefits to more than 45 million people.

You         and your family probably are protected by Social Security...and you probably         pay taxes that help make the system work. But you also may be unsure about         what Social Security does, who it helps and how much it costs.

This         booklet gives you some basic facts about Social Security ... and tells         you how to get more information if you want it.

 
Social         Security Is More Than Retirement. It Provides Survivors Protection Worth         $403,000 To An Average Family
Younger         Americans face roughly a 1-in-7 chance of dying before reaching age 67.

Survivors         benefits, paid to a deceased worker's family, can help with financial         problems that sometimes follow a worker's death by providing a continuing         cash income.

The         value of Social Security survivors benefits for a young average wage earner         who dies and leaves a spouse and two children is equivalent to a $403,000         life insurance policy. Of course, Social Security benefits are paid monthly         and not in a lump-sum payment.

The         average monthly payment for a family consisting of a widow(er) with two         children is $1,747 per month. Social Security payments increase based         on the annual cost-of-living index--something few private insurance plans         offer.
Social         Security Survivors Benefits
Who         can get survivors benefits? Children age 18 or younger can get Social         Security survivors benefits and so can a child who is age 19 or younger         but still in high school...or a child who is age 18 or older but who becomes         disabled before age 22. A widow(er) who is caring for children under age         16 or disabled may receive benefits. A widow(er) age 60 or older, or a         widow(er) age 50 or older who is         disabled, may receive benefits.

Today,         Social Security pays monthly survivors benefits to about 7 million Americans,         almost 2 million of whom are children.

 
Social         Security Also Provides Disability Protection
While         people usually think of retirement benefits when they think of Social         Security, the program also protects a worker who becomes severely disabled.

It's         important protection.

Studies         show that a 20-year old worker has about a 3-in-10 chance of becoming         disabled before reaching retirement age.

Few         workers have private, long-term disability insurance. But nearly all workers         do have Social Security disability protection.

Under         Social Security, workers are considered disabled if they cannot do work         they did before and we decide they cannot adjust to other work because         of their medical condition(s). The disability must be expected to last         for at least 12 months or to result in death. Once benefits begin, they         continue for as long as the worker is disabled and can't work. The disabled         worker and his or her eligible family members receive checks each month.
Social         Security Disability Benefits
More         than 5 million disabled workers under age 65 and 1.6 million dependents         (including more than a million children) receive Social Security. The         average monthly payment to a disabled worker is $815; for a disabled worker         with a spouse and one or more children, the average payment is $1,360.

Also,         a worker who receives disability payments for two years becomes eligible         for Medicare.
Social         Security And SSI Are Different Programs
When         people talk about disability benefits, there is often confusion about         Social Security and Supplemental Security Income (SSI). This is understandable         because the Social Security Administration administers both programs.         But the programs are different.

Social         Security disability insurance is a program that workers, employers and         the self-employed pay for with their Social Security taxes. You qualify         for these benefits based on your work history, and the amount of your         benefit is based on your earnings.

SSI         is a program paid for through general tax revenues--not through Social         Security trust funds. SSI disability benefits are paid to people who have         a disability and who don't own much or have a lot of income.
Almost         Every Retiree Gets Social Security Benefits
Social         Security pays monthly retirement benefits to more than 32 million retired         workers and their family members. More than 9-in-10 Americans who are         age 65 or older get Social Security benefits.

Full         retirement benefits are now payable at age 65 for those people born before         1938, with reduced benefits available as early as age 62. The age for         full benefits is gradually rising, until it reaches age 67 in 2027 for         people born in 1960 or later. (Reduced benefits will continue to be available         at age 62.)
Social         Security Is A Foundation For Building A Comfortable Retirement
A         recent national poll found 3-in-4 workers "worry that they won't         have enough money to live comfortably in retirement." Often the difference         between retirees who enjoy retirement and those who struggle is financial         planning.

Social         Security has always been part of a "three-legged stool" that         could support a comfortable retirement. The other two legs of the stool         are pension income and savings/investments. 

Financial         advisers often tell people when they quit work, they'll need about 70         percent of preretirement income to live comfortably. By itself, Social         Security replaces about 40 percent of an average wage earner's salary.

To         help you plan your financial future, Social Security has a series of planners         on its Internet website, *www.ssa.gov* .         They allow you to compute benefit estimates and figure what you need to         save to live comfortably in retirement.
Social         Security-- A Foundation
Social         Security benefit amounts, as of January 2002, are shown below for low,         average and maximum wage earners who retire at age 65:

The         benefit amounts above are based on steady lifetime earnings from age 22         through the year before retirement (2001). For 2001, these earnings are         estimated to be approximately $15,200 for a low earner; $33,700 for an         average earner; $80,400 or above for a maximum earner. Married workers         can receive benefits based either on their own work record or their spouse's,         whichever is higher.

**You           Will Get An Estimate Of Your Social Security Benefits**

You           will find out how much you can expect to get from Social Security, based           on your own earnings record, from the *Social           Security Statement**.* If you are working,           age 25 and older, and not receiving Social Security benefits on your           own record, you will receive the *Statement*           three months before your birthday.

If           you think you will earn more than estimated in your *Statement* , you can request an updated one by calling our toll-free           number-- *1-800-772-1213* .

Our           lines are busiest early in the week and early in the month, so, if your           business can wait, it's best to call at other times. You also can call           at night, on weekends and on holidays, 365 days a year. Or if you prefer,           you can request a *Social Security Statement*           form at *www.ssa.gov* on the Internet.

**Your           Social Security Tax Dollars**

Almost           all American workers pay Social Security taxes. If you take a look at           your pay stub-- the part showing how much is taken out for various taxes           and benefits each pay period--you'll see deductions for Social Security           and Medicare. On some pay stubs it's called FICA, which stands for "Federal           Insurance Contributions Act," the law that authorized payroll deductions           for Social Security.

The           tax rate of 7.65 percent covers both Social Security and Medicare. The           Social Security part of the tax is 6.20 percent of gross wages, up to           $84,900 in the year 2002. The Medicare tax is 1.45 percent of all earnings.

Employers           match a worker's Social Security tax payment. Self-employed people pay           Social Security taxes equal to the combined employee/employer tax, although           half of their tax is deductible as a business cost.

Generally,           out of every dollar paid in Social Security and Medicare taxes:
-  69               cents goes to a trust fund that pays retirement and survivors benefits; 
-  19               cents goes to a trust fund that pays Medicare benefits; and 
-  12               cents goes to a trust fund that pays disability benefits. 

Your           Social Security taxes also pay for administering Social Security. The           administrative costs are less than 1 cent of every Social Security tax           dollar collected.

The           Social Security trust funds now take in more money than they pay out           each month-- on average more than $14 billion per month. These "reserve"           funds are invested in U.S. Treasury bonds, the safest of all possible           investments. Those reserves will grow, earn interest and be used to           help pay for the retirement of the baby boom generation.
Why           Social Security?
Over           the past six decades, Social Security has become the most successful           domestic government program in history.

A           basic understanding of why Social Security came about is important to           understanding today's Social Security program...and also to deciding           what Social Security should be in the 21st century.
Its             History
Before             the industrial revolution, America was mostly a country of small farmers.             But we soon became a country where more people worked for wages--and             fewer worked the land. This change helped make America strong, and             it raised our standard of living. It also made it more difficult for             families to "take care of their own" in hard times.

The             Great Depression of the 1930s dramatized the fact that many American             workers were dependent financially on factors beyond their own control.             The Social Security Act, signed into law by President Franklin Delano             Roosevelt in 1935, helped to change this situation.

In             the following years, Social Security was broadened to include survivors             benefits, disability benefits and health care benefits.
Its             Philosophy
The             Social Security system provides a minimum "floor of protection"             for retired workers, and for workers and their families who face a             loss of income due to disability or the death of a family wage earner.

Social             Security payments are based on two philosophies. First, the system             is designed so that there is a clear link between how much a worker             pays into the system and how much the worker will get in benefits.             Basically, high wage earners get more and low wage earners get less.

At             the same time, the Social Security benefit formula is weighted in             favor of low wage earners, who have fewer resources to save or invest             during their working years. Social Security retirement benefits replace             approximately 54 percent of the preretirement earnings of a low wage             earner and 40 percent of an average wage earner.

Basically,             the Social Security program is a way of providing a base of economic             security in today's society. It allows older Americans to live independently             and with dignity and relieves their families of the financial burden             for their retirement years. Social Security also provides a valuable             package of disability and survivors insurance to workers over their             working lifetimes.
Its             Future
Our             Social Security system has been a basic part of American life for             more than 60 years. It has changed frequently over the years to meet             new needs of workers and of beneficiaries. It will undoubtedly change             in the future to meet the needs of 21st century workers and beneficiaries.
More             Information
Check             our website at *www.ssa.gov* for answers             to many of the questions you may have and for other Social Security             services you may need. You can order publications and forms, use our             online *Benefits Planners* , request to             receive *eNews,* our free electronic newsletter             and even file for retirement, disability or spouse's benefits or online.             Or you may call us toll-free at *1-800-772-1213*             . We can answer specific questions by phone from 7 a.m. to 7 p.m.             on business days and provide information by automated phone service             24 hours a day. If you are deaf or hard of hearing, you may call our             TTY number, 1-800-325-0778 between 7 a.m. and 7 p.m. on business days.

             We treat all calls confidentially-- whether they're made to our toll-free             numbers or to one of our local offices. We also want to ensure that             you receive accurate and courteous service. That is why we have a             second Social Security representative monitor some incoming and outgoing             telephone calls

**Social             Security Administration**            SSA Publication No. 05-10080            May 2002            ICN 468350 |
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