Weekly Online Lesson Online Lesson Archive Grade Level: 10-12 Subject: Government/Personal Finance

Social Security

Earlier this summer the United States Social Security Administration completed an audit of benefits erroneously paid to deceased individuals. Auditors say the audit shows that Social Security paid $31 million to dead people who were listed as deceased in the agency's own files.

The Social Security Administration collects death reports from funeral homes, families, financial institutions, and various other government agencies, and enters them into SSA's electronic files. But investigators discovered several cases last year in which deceased dependents were still getting checks even though their deaths had been reported. That triggered the audit.

Nearly 1400 investigations have resulted from the audit, with $11.5 million in improper payments. Of that amount, $6.1 million either has been recovered or is scheduled for recovery.

This week's lesson is about the United States Social Security system and retirement planning.

Social Security Administration

What is Social Security and what does it have to do with retirement? Find out by visiting the official web site of the United States Social Security Administration. Under the Quick Start menu on the left, click Understanding Social Security. Read the introduction, and then click on the following links as you come to them:

Award-winning history pages. There's a lot here you can explore, but for now read the Brief History of Social Security. When was the Social Security Act signed into law, and by which president? Who got the lowest Social Security Number ever issued? How much was Ernest Ackerman's lump-sum Social Security payment in 1937? When was Medicare introduced to the Social Security program?

A "Snapshot". This page summarizes the most important features of the Social Security program. What is a Social Security number for? Who pays for Social Security, you or your employer? What are the five major categories of Social Security benefits?

How You Earn Social Security Credits. Here you will learn how to become eligible for Social Security benefits. How many total credits do you need to qualify for retirement benefits? How many credits can you earn each year? How many do you need for disability benefits?

Social Security: How It's Financed. Learn how Social Security is funded, and what happens to the money from the time you pay Social Security taxes until the time you apply for benefits. What percent of your gross salary is deducted for Social Security? What are trust funds and how do they work? What is the "pay-as-you-go" system? Are Social Security Taxes Used For Other Purposes?

Compute your own benefit estimate. Use this online calculator to find out what the benefit would be for different ages and earnings levels. First, calculate the benefit in today's dollars for a 60-year-old earning $30,000 a year. What is the monthly benefit at age 62? 65? 70? Click Back and calculate the benefit in inflated future dollars for a 22-year-old currently earning $50,000 a year. What is the projected benefit for each age group? Click the "See the earnings we used" button below the results. What the projected income in 2048 that this benefit is based upon?

National Center for Policy Analysis

How does Social Security compare with different types of retirement accounts? Find out by visiting this calculator from the National Center for Policy Analysis. Enter the same information as before: Age 22, 2001 Earnings $50,000, unspecified occupation. Click Calculate. How can you account for the difference in the Social Security benefit estimate compared to the previous calculator? Why would an investment in stocks and bonds return so much more?

Click View Graphic Results below the table. On chart 2, what is the total lifetime value of each at the time of retirement? Which is more? See chart 4. Which portfolio had the greatest rate of return? At the bottom left, click Social Security vs. Personal Retirement Accounts, and then click Q&A About Social Security. According to this organization, which offers an opposing view to Social Security, why is the future of Social Security in doubt?

How do you feel about the Social Security program? Do you think Social Security will still be available when you retire? Is Social Security a good idea or a bad idea? What are the pros and cons?

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