ביטוח לאומי is the federal program that provides retirement, disability and survivors’ benefits. Most workers pay into Social Security through payroll taxes.
The traditional financing model of Bismarckian social insurance, which relies on mandatory earnings-based contributions, excludes informal workers (who account for 2–3 of every 10 workers in developing countries and 1 in 10 in Africa). A more comprehensive approach to labor protection is needed.
Your retirement benefit is a monthly payment that replaces part of your income when you stop working. It is calculated based on your length of service, final average salary and an age reduction factor. To see how your retirement benefit will be computed, visit our Calculator page. You can also estimate how much it will cost to buy permissive service credit or redeposit refunded contributions using our online calculators.
The retirement benefit is based on the formula that uses your highest three years of final average compensation and your length of service, including unused sick leave (unless you retire on an immediate annuity). It is also a function of the one-year early FAE option available only to Tier 6 members who were hired under a collective bargaining agreement that provided for this optional provision.
Many State and local government employers offer supplemental retirement plans that provide additional tax incentives to employees. These include SIMPLE IRAs, SEP retirement plans, employee stock ownership plans, 457 plans and non-qualified deferred compensation (NQDC) plans.
Generally, defined contribution plans like 401(k) and profit-sharing plans pay retirement benefits in installments over the life of the participant or beneficiaries, but defined benefit plans may distribute them in lump sums with the consent of the participant (and spouse, if applicable). The normal method of distribution for defined benefit plans is an annuity that provides a lifetime monthly payment called a retirement allowance.
A disability benefit is available if you become totally or partially disabled from work related injuries or illness. Permanent partial disability means your injury has permanently impaired your ability to do certain jobs or tasks, but not all jobs (not even the job you had at the time of the accident). Permanent total disability means your injury has permanently and totally lost you your ability to work at any job.
The amount of your disability benefit is based on the severity of your impairment and how long it lasts, and the medical criteria that supports your claim. Your claim is assigned a disability rating (between 0% and 100%) that corresponds to the level of impairment determined by our medical experts.
You may also be eligible for long-term disability coverage through your group health plan. Generally, you pay the entire premium cost for this coverage through your paycheck deductions. However, if you are receiving TDI and have a disabling condition covered under the plan, your employer or the insurance carrier must first pay the TDI before paying your disability benefits. Depending on the plan, if you continue to be disabled at the termination date of your TDI or disability retirement, you may be entitled to extended medical coverage under your plan for up to 18 additional months for GHI-CBP/EBCBS plans and 12 additional months for other plans.
Some of the taxes you pay while working are used to pay benefits for your family members if you die. These are called survivors’ benefits. They include a monthly income for your spouse and children.
The amount you receive depends on the type of survivors’ benefit you select when you retire. You can choose between the standard option and the supplemental option. The supplemental option guarantees you a higher pension if you predecease your spouse and provides state-sponsored health insurance for your eligible dependents after your death. The standard option pays a lower pension but, in most cases, provides more protection from the impact of inflation on your retirement income.
A surviving spouse’s lifetime survivor pension payments begin the first of the month following your death and include any adjustment for early retirement. If you die before age 55, your spouse’s payments may be accelerated to allow them to start the same month you would have reached age 55 had you lived.
Until 2023, Spouse SBP annuitants who remarried before age 55 could not continue to receive their full SBP and Dependency and Indemnity Compensation (DIC) payments at the same time. This offset was the result of a 2009 court ruling.
Beginning February 1, 2023, a remarried Spouse SBP annuitant will be entitled to their full SBP and DIC payments at the same time. They are responsible for notifying DFAS of any changes in their marital status.
Supplemental Security Income
The SSA calculates your SSI benefits based on the value of your other income. Most of the time, any kind of income other than SSI will decrease your SSI check. However, there are a few exceptions. For instance, SSA doesn’t count the first $65 a month that you earn and only counts half of any amount over that. Also, if you are a student, SSA excludes up to $1930 of your earnings from the calculation of your SSI.
Another way SSA calculates your SSI is through the use of work incentives. These are a series of programs the SSA offers to help disabled individuals find and maintain employment. The SSA also excludes money that you spend on things that you need to do your job, such as transportation costs or equipment for your disability. The SSA calls these items Impairment Related Work Expenses (IRWE).
If you have a severe disability that prevents you from working, you may be entitled to Supplemental Security Income, which will provide monthly cash payments to assist you with meeting your basic needs. To be sure you get the maximum SSI benefit, you should report any changes in your earned income, living situation, and marriage status to Social Security within 10 days of when they occur. Failure to do so could result in overpayment of your SSI checks and you may need to pay back the money.