There's More to Social Security Protection Than Retirement Benefits

Article excerpt

If you're an average working American, a hefty chunk of your earnings goes toward Social Security.

With a tax of 7.15 percent on income up to $43,800, you could be paying as much as $3,131.70 toward Social Security in 1987. Your employer pays an equivalent amount on your behalf.

If you're self-employed, you pay both the employee and employer share, although a 2 percent tax credit reduces the total to 12.3 percent.

What can you expect to get in return?

You may think ``retirement'' when you think of Social Security. And you'd be right. But there's more to Social Security than retirement benefits.

Your Social Security taxes actually go toward providing several different benefits: retirement insurance, disability insurance and survivors' insurance (they also pay for Medicare, which is administered separately). Those benefits can add up to major protection. Here's a summary:

- Retirement benefits. The maximum amount payable to a person retiring at 65 in 1987 is $789 a month. But the precise amount you'll receive depends on a complex formula based on how old you are when you retire (benefits may be claimed as early as age 62) and how much you've earned over the years.

People with higher incomes can generally expect to receive about 23 percent of their income in Social Security retirement benefits; people at the low end of the wage scale can anticipate about 68 percent. Dependents' benefits, if you're married, can increase the total amount your family receives.

In general, too, your retirement benefits will be lower if you retire before age 65, greater if you retire after age 65. Dependents' benefits are also affected by when you choose to retire.

Before you or your family can receive any retirement benefits, however, you must have credit for a certain amount of work under the Social Security system. The exact amount of work credit required depefds on your age, but 10 years of covered employment will generally do the trick. The years don't have to be consecutive; if you stop working and start again, you can add your total time in the work force toward your eligibility.

- Disability insurance. If you're covered by Social Security and are laid up with a disability that (a) prevents you from doing any substantial, gainful work and (b) lasts at least 12 months, you are eligible for Social Security disability benefits. Disability benefits are computed as if you had retired at age 65 in the year the disability began. …