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Taking Care of Mom and Dad: Calculating Social Security Benefits

Social Security benefits are a percentage of earnings averaged over most of one's working lifetime. Social Security wasn't intended to be anyone's only source of income when retired or disabled, or any family's only income if the breadwinner dies. It's intended to supplement other income your parents have from pension and savings plans, investments, etc. That said, there are five major categories of benefits paid for through Social Security taxes:

  • retirement;
  • disability;
  • family benefits;
  • survivors; and
  • Medicare (covered in detail in Chapter 1).

Retirement benefits are payable at full retirement age (with reduced benefits available as early as age 62) for anyone with enough Social Security credits. The full retirement age is 65 for persons born before 1938. The age gradually rises until it reaches 67 for persons born in 1960 or later. People who delay retirement beyond full retirement age get special credit for each month they don't receive a benefit until they reach age 70.

Disability benefits can be paid to people at any age who have enough Social Security credits and who have a severe physical or mental impairment that is expected to prevent them from doing "substantial" work for a year or more or who have a condition that is expected to result in death. Generally, earnings of $780 or more per month are considered substantial. The disability program includes incentives to smooth the transition back into the workforce, including continuation of benefits and health care coverage while a person attempts to work.

If your parents are eligible for retirement or disability benefits, other members of your family might receive family benefits, too. For example, if your dad is eligible for either of these benefits, your mom is eligible if she is at least 62 years old or under 62 but caring for a child under age 16. You can be eligible if you are unmarried and under age 18, under 19 but still in school or 18 or older but disabled. If your parents are divorced, both are eligible for benefits on one earnings record.

When one or both of your parents die, certain members of your family may be eligible for survivors benefits based on how much the deceased earned in credits with Social Security during their working years. The family members eligible for these benefits include: a widow(er) age 60 or older, 50 or older if disabled or any age if caring for a child under age 16; you as a child if you are unmarried and under age 18, under 19 but still in school or 18 or older but disabled; and your grandparents if your parents were their primary means of support. (This is highly unlikely given the average age of baby boomer parents, but it's worth noting for your own sake.)

If, for example, your mom dies and is survived by your dad, a special onetime payment of $255 may be made to your dad or his minor children when she dies. Try not to spend it all at once!

If your parents were divorced, your dad could be eligible for a widower's benefit on your mom's earnings record. This would depend, of course, on your mom having gained the credits needed on her earnings record.

Supplemental Security Income Benefits (SSI) makes monthly payments to people who have a low income and few assets. To get SSI, your parents must be 65 or older or be disabled. Children as well as adults qualify for SSI disability payments. As its name implies, Supplemental Security Income "supplements" one's income up to various levels -- depending on where one lives.

The federal government pays a basic rate and some states add money to that amount. Check with your parents' local Social Security office for the SSI rates in their state. Generally, people who get SSI also qualify for Medicaid, food stamps and other assistance.

SSI benefits are not paid from Social Security trust funds and are not based on past earnings. Instead, SSI benefits are financed by general tax revenues and assure a minimum monthly income for elderly and disabled persons.

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