Components of Legally Required Benefits OASDI

1. Amendments
a. Old age (retirement) was in the original bill
b. Survivor benefits added in 1939
c. Disability insurance in 1965
2. Three classes of workers exempt from Social Security Administration
a. Civilian employees working for federal government, and railroad workers
with over ten years of service
b. Workers for state or local governments covered by other retirement plans
c. Children
i. Younger than age 21 who work for a parent
ii. Except those 18 years and older who work in parent’s business
3. Old age (retirement) benefits
a. Determined by how much credit each worker has earned
i. Based on “quarters of coverage”
ii. Through eligible payroll deductions
b. In 2013, a worker earns credit for one quarter of coverage for each quarter in
which she makes $1,160 of Social Security taxable income
c. Will be fully insured after earning credit for 40 quarters of coverage, or 10
years of employment
d. Once eligible, individuals remain fully insured during their lifetime
e. To receive benefits, the retired worker must:
i. Be at least 62 years of age to receive reduced benefits
ii. Be at least 65 years of age to receive full benefits
iii. The U.S. Bureau of Census estimated that individuals age 65 in 1997
would live and additional 17.7 years and in 2007, this estimate increased
to 22.5 years
iv. Between 2000–2022 age will increase to 67 (to receive full-benefits)
v. The average monthly benefit for all retired workers was $1,261 in 2013
vi. The Social Security Administration increases retirement benefits by a
designated percent of each month worked beyond full retirement until age
of 70 (subject to maximum percentage increase)
Example:
 Let’s assume that an individual’s full retirement age is 66 years and his benefit at
that age is $1,000.
 His monthly benefit would be $750 if he were to take retirement at 62.
 His monthly benefit would be $1,320 if he were to delay his retirement until age
70.

4. Survivor benefits
a. Based on insured’s employment status and survivor’s relationship to deceased
i. Spouse (at least age 60)
ii. Dependent, unmarried children
iii. Parent (at least age 62)
b. Deceased must be fully insured for dependents to receive full benefits
c. In 2013, the average monthly benefit was $1,214
5. Disability benefits
a. Worker must be fully insured when disabled
b. Two criteria for seriously disabled workers:
i. Worker must have accumulated at least 40 credits
ii. Worker must have earned at least 20 credits of the last 40 calendar
quarters in the last 10 years ending with the year of disablement
c. Worker must be disabled for at least a year, or the injury diagnosed as
terminal
d. In 2013, $1,132 average monthly disability