Retirement Planning | VIII. Social Security

The United States Social Security Association administers six major benefit categories to United States Citizens:

  • Retirement Benefits
  • Disability Benefits
  • Family Benefits
  • Survivors' Benefits
  • Medicare
  • Supplemental Security Income (SSI) Benefits

Social Security benefits are paid from the 6.2% tax on each employee's wages (matched by employers) and the 12.4% tax on self-employment earnings. These taxes are imposed on the first $118,500 in wages for 2015.

An additional 1.45% is paid by both employees and employers on wages for Medicare, and there is no limit on wages subject to this tax. If income is over $200,000, employees pay an additional 0.9% Medicare surtax on wages and self-employment income ($250,000 for joint returns and $125,000 for married filing separate).

Medicare Part A provides hospital coverage. The following persons are covered under Part A:

  • A person 65 or older entitles to a Social Security check
  • Disabled beneficiaries regardless of age that have received SS for 2 years
  • Chronic kidney patients who require dialysis or a renal transplant

Part B of Medicare is considered to be supplemental insurance and provides additional coverage to participants. The following are true regarding Part B coverage:

  • The premiums for Part B are paid monthly through withholding from Social Security benefits.
  • Participation can occur after the initial eligibility
  • Participation is not required to be maintained for life
  • Does have deductibles and/or coinsurance

The following are not earned income: dividends from stocks, rental income, pensions and insurance annuities. Gambling winnings are NOT an exempt type of income.

Social Security benefits disqualified? It is possible to lose eligibility (be disqualified) for those benefits under the following circumstances: Marriage, Divorce, Engaging in illegal employments, except conviction of fraud.

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