Tuesday, March 23, 2010

A Closer Look at Social Security

As I’ve commented elsewhere, I do not include social security in our retirement plan in case it won’t be around for us in 40 years. That is not to say that I’m okay with being robbed my whole life, but I like to plan conservatively.

Keeping that in mind, I was intrigued when one of my regular readers, MikeS (thanks again), sent me a blog suggestion to look into social security – specifically the survivor benefits and disability. I never really thought of those aspects, so here we go…

From what I found at the Social Security site, if you have worked and contributed to Social Security for at least 10 years, the following people may be eligible to receive your survivor benefits:
  • A widow or widower -- full benefits at full retirement age, or reduced benefits as early as age 60
  • A disabled widow or widower -- as early as age 50
  • A widow or widower at any age if he or she takes care of the deceased's child who is under age 16 or disabled, and receiving Social Security benefits
  • Unmarried children under 18, or up to age 19 if they are attending high school full time. Under certain circumstances, benefits can be paid to stepchildren, grandchildren, or adopted children.
  • Children at any age who were disabled before age 22 and remain disabled.
  • Dependent parents age 62 or older

I also found that you are eligible for disability if you have paid into Social Security for a certain number of years, become disabled, and are unable to work for a year or more because of that disability. Those payments will continue until you are able to work again. Here’s how they determine if you qualify:

You earn a single credit for making $1120 or more every quarter of the year that is subject to Social Security taxes. This means that you can earn a maximum of four credits a year by making at least $1120 every three months. Here’s the table that shows how many credits you need to have accumulated in order to qualify based on age.

Your spouse, divorced spouse, and children may also qualify to receive up to 50% of your disability payments if they meet some strict criteria (you can look at this page and click on which person you want to check).

My Thoughts:

As most things that were set up with red tape, the benefits seem to be confusing enough to make me hope I never have to use them at all. You can use their benefit calculators to help you figure out exact amounts, but my eyes glazed over 20 minutes into my research. That usually doesn’t happen to me when it comes to money, but this system is inherently confusing.

Quick survivor benefits summary:  Your spouse and dependents might be eligible to receive your Social Security benefits if you contributed for at least 10 years.

Quick disability summary:  If you have contributed to Social Security for the amount of quarters (credits) they deem proper, you may or may not be approved when you become disabled to receive less than half of what you make now.

My very quick judgment:  Social Security research has left me with a slight headache and a need for chocolate.

I hope I don’t become disabled without private insurance (which I have) or I might have to jump through hoops and be denied cruddy coverage anyway. I also hope I don’t die until my husband is well taken care of financially since those benefits seem hinky too.

Do you have private disability insurance in case you aren’t eligible for Social Security disability? I’d look into it if you don’t…


  1. Sorry to make your head hurt. :-)

    The disability won't make much difference for me. The benefit for the group policy I have at work gets reduced by anything I receive from SS. Which is why I'm getting an individual policy next month. My group policy will cover my expenses, but leave nothing to save for retirement.

    My wife and daughter should be ok financially if I die, I've got about $1.8m in life insurance. But it's nice to know they might even get a little extra.

    Good stuff. Thanks BFS.

  2. MikeS, thank you! Seriously, I need to leave my comfort zone once in a while and look at headache-inducing info about real stuff. Thanks for all your suggestions and support!

  3. Want a headache? Try actually reading your DI policy. If it doesn't give you a headache, it will probably put you to sleep. :-) And I work in this industry.