Social Security
MGMT 4030 - Managing Employee Reward Systems
Social Security: Overview
Legally Required Benefit Provides a Basic Level of Security
for Employees Other Employer Provided Benefits
Give Additional Coverage Basic Economic Security for
Retirement, Disability, Survivors and Health Care for the Aged
Funding Social Security
Equal Contributions made by Employer and Employee
OASDI tax = 6.2% up to $68,400 Annual Earnings (1998)
Medicare Tax = 1.45%; No cap on Earnings
Social Security: Retirement Benefits Full Benefits at age 65; raised to age 67
by 2027 Reduced Benefits (80%) at age 62 Benefits equal aprox. 30% earnings prior
to Retirement Average Benefit Amount: $858/month. With Spouse, benefits increased by 50% Eligibility: 40 1/4 year periods with Min.
Earnings $590/Qtr.
Social Security: Medicare
Health Insurance for Age 65 and Older
Part A = Hospital Expenses: $600-700 deductible/yr.
Part B = Medical Expenses: aprox. $40/month fee
Some Limits on Lengthy Hospital Visits, Nursing Homes
Social Security: Disability Income No Age Limit Total Disability for 5 Months or
More Aprox. 30% of Replacement
Income Provided Integrate with Sick Leave, WC
benefits, LTD Insurance
Social Security: Survivor Benefits Income for Survivors of Deceased
Worker Widow(er) age 60+; Child < 18
yrs. Benefits Related to Deceased
Worker’s Retirement Benefits
Problems with Social Security Funding May Be Exhausted by
2020 Due to Demographics Government Uses Soc.Sec. Taxes
to Pay Current Debts Long Life Spans Means more
Beneficiaries to Support
Fixing Social Security - Alternatives #1.All Social Security Funds can be
Managed by Individuals: Choice of Mutual funds, Bonds, or Treasury notes.
#2. 1/3 of Social Security money can be Invested as in #1, and 2/3 of money managed by Government as is the case now.
#3. The government puts all the Social Security money in a portfolio of stocks of blue chip US companies.