Legal & Financial Challenges
It's not easy talking to your loved ones about their personal finances, and even more difficult to help them realize that it may be time to turn the reins over to you or another caregiver.
Avoiding the conversation, though, can lead to unnecessary stress and unwarranted headaches later on, and can leave your loved one open to financial exploitation. So how do you start the conversation? Our Care Experts help guide caregivers through these conversations every day, and are experts on this and other legal and financial challenges.
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+ Social security
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+ Financial challenges and bill pay
+ Power of Attorney and medical proxies
+ Advance healthcare directives
+ Tax deductions
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Understanding Types of Social Security
The Social Security Act was signed by President Roosevelt in 1935 during the Great Depression to promote economic security for America’s people. Today, when we think of Social Security, we most commonly think of the retirement benefits Americans are entitled to once they reach retirement age. However, the program is far more than just retirement security. In 1939, survivor benefits were added for the families of deceased workers, then disability insurance (SSDI) was added to support disabled workers and their loved ones in 1956. The most recent addition was Supplementary Security Income (SSI) in 1972, a needs-based program which provides monthly payments to low-income older adults over the age of 65, as well as blind and disabled people of all ages.
Here are important things to know about each program.
Most people who collect Social Security do so through the traditional program. Almost all workers in America contribute to the Social Security “pay pot” through payroll tax contributions. When a worker reaches retirement age, they are entitled to a portion of this money—dependent on age and earnings history—to support their post-retirement needs. It is a key measure to prevent older adults from falling into poverty after they can no longer rely on income from a full or part-time job.
Retirement benefits can be accessed as early as age 62. However, the amount received is lower than what one would receive upon reaching full retirement age. To figure out your full retirement age, visit the Social Security Administration’s (SSA) calculator.
Both the traditional Social Security program and the SSI program offer benefit increases called Cost of Living Adjustments (COLAs). Cost of living is defined by Investopedia as “the amount of money needed to cover basic expenses such as housing, food, taxes, and healthcare in a certain place and time period.” In times of inflation and economic hardship, a higher COLA can make it easier for retired workers to pay for necessities. The most recent COLA, which will go into effect in January 2023, was set at 8.7 percent, the highest this figure has been since 1981.
Spouses, children and parents of deceased workers may also be eligible for Social Security benefits based on the earnings of the worker. However, it is important to note that the deceased must have worked long enough under a company insured under Social Security for their family to qualify for this benefit.
A person who loses a family member should inform the SSA of the death as soon as possible. The SSA will be able to provide more information on whether or not you qualify for benefits, and how much you are entitled to. Most funeral directors also report deaths to the SSA, so be sure the director has the correct Social Security Number for your loved one.
The SSDI program provides benefits to disabled workers and qualified family members, such as a spouse or children. To qualify for SSDI, the worker must have been employed both long enough and recently enough in a job covered by Social Security, and have a disability which qualifies based on Social Security’s standards. It is important to note that SSDI does not cover those with short-term disabilities or partial disabilities.
As for the length of work needed to require for these benefits, Social Security uses a system of “work credits,” based on yearly income. Up to four credits can be earned per year. According to the SSA, a person typically needs 40 credits to qualify for SSDI, 20 of which were earned in the last 10 years ending with the year the person’s disability began.
Because the amount determining a single work credit changes by year, and there are special considerations for workers who are disabled early in their work years, it is important to work with SSA to determine eligibility, and provide full documentation when submitting an application. The SSA’s application checklist can help you prepare for this process.
Supplementary Security Income
As mentioned, the SSI program is needs-based, and supports low-income older adults as well as blind and disabled people of any age. Unlike SSDI, eligibility is determined by income rather than work credits. It is possible to qualify for both SSDI and SSI.
Unlike traditional Social Security and SSDI, SSI is not funded through Social Security tax, but through general tax revenues. SSI benefits can also increase through COLAs. The COLA percentage for SSI is typically the same as the one declared for the traditional Social Security program.
Most states additionally provide a state supplement to residents who receive SSI. The supplements vary based on several factors, so you will need to work with the SSA to determine how much you are eligible for.
By: Julie Hayes, MS, Content Manager at Benjamin Rose Institute on Aging