3 common questions about Social Security, answered

For many retired seniors, Social Security benefits are an essential source of income. With fewer employers offering pensions, these benefits — along with 401(k)s and IRAs — have become important retirement income sources for many Americans. According to the Center on Budget and Policy Priorities, they comprise 90% or more of income for nearly one quarter of retirees.

Since the average Social Security monthly benefit for workers in the U.S. is only $1,666.49 as of April 2022, most people will also need to invest for retirement on their own, likely through an employer-sponsored 401(k) or an IRA. Select ranked Charles Schwab, Fidelity Investments, Vanguard, Betterment and E*TRADE as having the best IRAs.

When it comes to Social Security, understanding how the program works can help you figure out how to maximize your benefits and be better prepared for retirement. Here, Select tackles three commonly asked questions about it.

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A common misconception about Social Security is how the program actually works.

First off, Social Security is funded through payroll tax deductions, which are paid by both employers and employees — they're taken directly out of your paycheck — and put toward social insurance programs such as Social Security, Medicare, Workers' Compensation, Disability Insurance and Unemployment Insurance. 

In 2022, the Social Security payroll tax rate was 6.2% for employers and 6.2% for employees, or 12.4% in total, and applies to up to $147,000 worth of an individual's income.

Current workers are funding the benefits for current retirees, so the money that's being deducted from your paycheck isn't going to a specific Social Security account meant for you. Instead, that money is being used to fund the benefits of those who are currently retired and their families, as well as people with disabilities and their families. 

According to Suzanne Shu, professor of marketing at Cornell University, this misunderstanding about how Social Security works often leads people to collect their benefits earlier than they should.

By thinking about Social Security like it's a 401(k) or an individual retirement account, people tend to have a stronger sense of ownership over their benefits, which leads them to collect early or before full retirement age, explains Shu. Doing so means missing out on a higher monthly benefit, and you should have a clear understanding of how Social Security benefits work before you decide to collect them.

In order to earn retirement benefits, you must work at least 10 years; the monthly benefit you'll receive is calculated by a formula that uses a worker's 35 highest-earning years. While retirees can start collecting at 62, they'll receive reduced benefits unless they wait until their full retirement age.

Full retirement age ranges between 66 and 67, depending on when you were born. For every year beyond your full retirement age that you wait to collect (until the age of 70), your benefits will increase by 8%.

Of course, not everyone benefits from choosing to delay this collection, so it's also a good idea to take other factors into account as well, such as your spouse, health status, other family members or additional sources of retirement income.

Undocumented immigrants are not legally permitted to receive Social Security benefits and few actually do.

Generally, when you apply for a job, you're required to provide your Social Security number so employers and employees can pay the payroll taxes that are used to fund the program. Undocumented immigrants, who don't have an Social Security number, may choose to use an Individual Taxpayer Identification Number, or an ITIN, or may even use a fake Social Security number to pay payroll taxes.

Even though undocumented immigrants are legally required to pay taxes, those who use an ITIN to do so cannot receive Social Security retirement benefits. Sometimes undocumented immigrants do receive retirement benefits by using a Social Security number that belongs to someone else, a fake one or one held over from an overstayed visa. However, even those who use a fake Social Security number may not receive retirement benefits since they don't have tax forms that match up with an existing Social Security number.

A 2013 report by the Social Security Administration found that $1 billion worth of retirement benefits were paid out to undocumented immigrants in 2010. However, undocumented immigrants paid significantly more money into the Social Security system than they receive in benefits, contributing a whopping $13 billion in payroll taxes.

"Thus, they estimate that earnings by unauthorized immigrants result in a net positive effect on Social Security financial status generally, and that this effect contributed roughly $12 billion to the cash flow of the program for 2010," writes Stephen Goss, chief actuary of the Social Security Administration.

In other words, undocumented immigrants are not legally allowed to collect Social Security benefits and rarely do. Undocumented immigrants help fund Social Security because their contributions provide extra cash flow to the system.

Surprisingly, the answer is no. It turns out Social Security is a relatively cheap social insurance program for the federal government to administer. This is mostly because it is not a means-tested program, which would exclude individuals and families based on income. Since participation in Social Security is universal, there are lower operating costs.

In 2021, administrative costs accounted for only 0.6% of disability and old age-survivor benefits doled out, while administrative costs for just the old-age survivors trust fund were 0.4%. That means, according to the Social Security Administration, for every one dollar people contribute to Social Security, less than one cent actually goes toward operating expenses.

However, there is a fair amount of "improper payments" made by the Social Security Administration, which includes making accidental payments to the deceased all the way to willful fraud. The Social Security Administration estimates it made $7.9 billion in improper payments in the 2019 fiscal year.

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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.

This Is What a TSA Agent First Notices About You

First impressions are really important, and that’s especially true for the millions of air travelers navigating U.S. airports every day. Savvy voyagers know how important it is to follow safety rules and protocols so that going through airport security check is an easy, stress-free experience. The last thing they want is for a Transportation Security Administration agent to remove them from the line for a pat-down and search of their carry-on bags.

While such an experience may be embarrassing, keep in mind that the TSA agent isn’t trying to make your life miserable. “They are just doing their jobs, and they are on your side,” says Mike Boyd, president and CEO of Boyd Group International, an airport security consultancy in Evergreen, Colorado. “They just want to ensure the airport and airlines are safe.”

These security pros do more than just operate the body scanner. They’re trained to detect any item on a person or in carry-on luggage that poses a threat. According to the TSA, agents screen approximately 4.9 million carry-on bags for explosives and other dangerous items each day. The key is to be prepared. Make sure you know TSA carry-on rules (like what the TSA liquid limit is and which items belong in your checked luggage), whether you can bring food on a plane and how to use Global Entry or TSA PreCheck to sail through security lines.

The TSA puts out a travel checklist with clear instructions for how to pack your carry-on and checked luggage to avoid issues with security at airports. Be sure to review the special instructions for items like firearms, flammables and medical equipment. TSA agents will check those as well as any liquids you’ve packed. You can pack a quart-size bag of liquids, aerosols, gels and creams in your carry-on, as long as each is no more than 3.4 ounces.

The airport security check also screens electronics. They’re among the items permitted through security, but the TSA will ask you to remove these personal items from your carry-on bag and place them into a separate bin for X-ray screening when you go through the checkpoint.

When TSA agents ask to scan or check your ID, they want to verify your identity before you enter the security checkpoint. That’s why it’s so important to have an up-to-date license or passport. An agent will review your name, photo, address and date of birth, then cross-check to see that the information on your travel documents matches your ID.

Keep in mind that the Real ID Act is now in effect, and it aims to deter terrorists’ ability to use fake or fraudulently obtained IDs. Under the law, you need to use a state-issued ID that is Real ID compliant. You can get one through your state department of motor vehicles. Otherwise, you can present a U.S. passport, U.S. passport card or U.S. military ID.

Sometimes the most innocent items can spark a bag search at the airport security check—anything from lip balm and batteries to spreadable liquids like peanut butter. When an X-ray detects something in your luggage that may be suspicious, an agent needs to ferret through your bag by hand to determine what it is and whether it’s really a danger. The good news is that the TSA is rolling out an array of high-tech screening tools—think rotating 3D imagery and ID authentication—aimed at expediting the security check process.

To boost the odds you won’t set off alarm bells next time you go through airport security check, they spoke to travel experts, former TSA agents and airport security consultants to find out what actions can trigger a closer inspection.

The last thing you want to do is draw attention to yourself at the airport by being belligerent, angry or downright nasty. “It sends up a red flag, and TSA agents begin to wonder what the issue is,” says Jeffrey Price, a former assistant security director for the Denver Airport who is now a security trainer for the American Association of Airport Executives and a professor of airport management at the Metropolitan State University of Denver. “If your flight has been delayed or canceled, don’t let that put you in a tailspin.”

As he explains, TSA screeners primarily look for behaviors that are inconsistent with typical passenger commuters. So do your best to stay calm, cool and collected—even when you’re frustrated by airport issues.

Feeling chatty and want to break the ice with TSA officers? Resist the urge to charm them with all the airplane facts you know. Making small talk with TSA employees isn’t always a good idea, says Price. “Many criminals try to avert the attention of security agents using this approach,” he says. “So being overly talkative may be a red flag.”

That said, Boyd advises travelers to “be courteous and polite. Smile, and say ‘thank you.'” After all, having the right attitude can make all the difference.

You may be nervous because you have a fear of flying. Or you may be nervous for another, not-so-innocent reason. The TSA has been trained to be on the lookout for nervous passengers—those who clear their throats often and those who appear shaky, pale or wide-eyed. Anything that makes you look agitated could attract the attention of a TSA agent. Nervous flyers may want to find ways to calm themselves (such as by meditating or visualizing a calm, safe experience) before hitting the airport security check.

Perhaps you have other things on your mind—like all that traveling you’re about to do. Or maybe you’re just an introvert and don’t particularly like interacting with strangers. But to a TSA agent, your avoidance of eye contact could signify something else entirely, says former TSA agent Richard Rozins. “The eyes are the first place a TSA agent looks,” he says.

If you’re unable to look TSA agents in the eye when they are asking you a question, it may seem like you are avoiding or hiding something, adds Price.

Baggy clothes are comfortable, and frequent flyers know that comfort is king when it comes to determining what to wear on an airplane. But loose duds may prompt an extra screening as you move through airport security. While they’re not prohibited, baggy clothes may make TSA agents wary because they can’t tell what you might be hiding underneath. They may even need to pat you down.

“If you are wearing a ski jacket in the middle of July, that may seem really odd to a TSA officer,” says Boyd. The screening pro who is on the lookout for criminals may wonder if you’re hiding something. Is the parka you’re wearing in 90-degree heat concealing a weapon? It’s the sort of question a TSA agent may ask when scanning the airport security check line. Yes, you’ll be removing your jacket and going through the body scanner, but you may have pinged the TSA radar by then. As a result, TSA agents may decide to do a bag search or even pat you down after you go through the body scanner.

If it’s a matter of necessity—where else are you going to put your jacket?—it may be time to invest in some affordable luggage that you can pack with extras and check before heading to security.

The Federal Aviation Administration (FAA) and airport security have zero tolerance for unruly passenger behavior—and that includes drunkenness. Since the COVID-19 pandemic began, incidents of abuse by travelers at airports and on flights have risen dramatically. According to the FAA, there have been more than 7,000 reports of unruly passengers since the start of 2021. In response, lawmakers in the House of Representatives have filed a bill known as the Unruly Passenger Restraint Review Act to ban passengers who act out on flights.

If a TSA agent senses that you’re intoxicated, you could be deemed a person of interest. He or she may ask the police to do a blood alcohol test. And you may be denied boarding by the gate agent. If you do make it onto the plane, intoxication is one of the first things a flight attendant will notice about you.

Globetrotters who carry a lot of cash—including a wad of foreign currencies and coins—may be surprised to know they can get flagged by a TSA agent. It’s happened many times to Sahara Rose De Vore, a wellness travel coach and consultant who has visited more than 80 countries. “I’ve been asked at many airport security checkpoints to explain why I have multiple currencies,” she says. “They are thinking about sex trafficking, and this is something they often want to ask you about.”

According to De Vore, TSA agents may ask why you traveled to various places and whom you work for. Her advice: Convert the money back to U.S. dollars, or your native currency, at the end of your trip.

You may think a bag of coffee beans is a great travel gift or souvenir, but drug smugglers use coffee to hide the scent of drugs from canine dogs. Because it’s a common tactic used by criminals, it’s a red flag for TSA officers, says Price. If they see coffee beans in your carry-on luggage, they may question you or search your bag by hand. The TSA doesn’t prohibit coffee beans or ground coffee from either carry-on or checked bags, but you may want to buy it in the duty-free shop to avoid any hiccups.

If you’re set on bringing home coffee from your destination, separate the item when going through the security check. You want to make sure it doesn’t obscure the image on the X-ray machine.

The TSA requires that all electronics bigger than a cellphone, such as laptops and tablets, be placed in bins and X-rayed separately. Most travelers are aware of that. But many don’t know about the other items that can trigger a search. “I always get flagged for my curling iron,” says De Vore.

It’s best to review the TSA’s rules on all the items you’re packing in your luggage. The administration has special instructions for certain items—yes, even curling irons and hair dryers. Want to skip the hassle? TSA PreCheck enables travelers to keep their electronics in their carry-on bags when going through security.

Here’s something TSA agents might not tell you: It’s best to wear your hair down. However convenient off-the-face styles may be, they’re not ideal for the airport security check. According to the TSA, there’s a reason why intricate styles—like braids, updos and hairpieces—could get a second look. Bobby pins, clips, wigs, extensions and other hair accessories could set off the metal detector, which can lead to an additional inspection to check for prohibited and potentially dangerous items concealed in your hair. The good news: A pat-down of your hair will eliminate any concerns, and it can be done quickly.

Most of us can’t survive without their electronics. And heaven forbid they travel without such necessities as battery chargers and extension cords! But did you know that all battery packs face stringent travel guidelines? Per TSA guidelines, you can pack lithium-ion (rechargeable) batteries and portable batteries that contain lithium-ion only in carry-on baggage. But stick to batteries with no more than 100 watt hours per battery. With airline approval, you can bring two larger spare batteries—up to 160 watt hours per battery.

All air travelers must follow the TSA 3-1-1 rule for carry-on baggage. It states that liquids, gels and aerosols are limited to 3.4 ounces or less and must be placed in a single quart-size bag—one bag per passenger. There is an exception for hand sanitizer, which has a temporary 12-ounce limit because of the ongoing pandemic.

TSA officers notice when you try to skirt the rules, and this can trigger a bag search. One common mistake during the summer is bringing a super-size sunscreen to the checkpoint. That can be a costly mistake when a TSA agent confiscates it. So either pack it in your checked luggage or bring a travel-size sunscreen on the plane.

When experts warn against talking about “bad things,” they’re not referring to breakups. They’re talking about bombs and firearms. Discussing these items will absolutely get you pulled off to the side. Even asking the TSA agents about weapons—inquiring about which are allowed on a plane or why you can’t bring your gun—will get you questioned. In fact, you can get arrested for joking about bombs while in line. Pro tip: Keep quiet. Silence is definitely golden in regard to this topic.

Additional reporting by Danielle Braff.

Sources:

Originally Published: February 07, 2020

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Answers to Frequently Asked Social Security Disability Questions

In this post-COVID era and period of long COVID health complications, many Americans have become increasingly aware that they could become the victim of a life-threatening illness, injury or disability that makes it impossible for them to work and support their families. This has sparked new attention toward the intricacies of the Social Security Disability Insurance (SSDI) process and its many requirements for approval.

American workers should become familiar with the financial protections and career support that this federal disability insurance offers just in case the unexpected strikes. Having the right information and the right representation can increase the likelihood of approval and yield financial and professional security.

Here are answers to some common questions about this federal insurance, which covers more than 156 million U.S. workers.

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What is the minimum and maximum Social Security will pay for disability benefits?

The Social Security Administration (SSA) determines how much a person receives based on the amount of past earnings that an individual has paid into their FICA taxes for all the years they’ve worked. It’s important to know that the severity of a disability does not affect how much a person will receive. The average SSDI payment is $1,358 in 2022, with the maximum amount reaching about $3,300. In addition, individuals with dependents (under 18) could receive an additional amount of half the monthly benefit. An easy way to estimate a monthly SSDI payment is to use a benefits calculator.

What conditions are considered a disability?

Any condition could quality for SSDI benefits, if the person’s severity and medical evidence support the claim for benefits. To meet the SSA’s definition of disability, an individual must not be able to engage in any substantial gainful activity (SGA) due to a medically determinable physical or mental impairment that has lasted or is expected to last for a continuous period of at least 12 months or lead to death.

The SSA maintains a list of physical and mental impairments and guidelines for specific conditions that will automatically qualify a person for SSDI benefits. However, applicants can still apply for SSDI even if their condition is not listed. Social Security may consider the applicant's conditions as long as it limits function and ability to work.

What makes someone eligible for Social Security disability?

There are a few criteria for someone to be eligible for SSDI.

It’s also vital that the person applying for benefits is under the care of a health professional, who can confirm their condition, and has medical documentation. Working with a representative can dramatically Excellerate an applicant's chances of receiving SSDI benefits. A quick quiz can help you find out if you are eligible for SSDI.

How often does Social Security review your disability?

Benefits continue as long as the individual has a disability that prevents them from working. However, Social Security conducts Continuing Disability Reviews (CDR), which means they review someone’s claim for medical improvement. Those reviews can be scheduled at intervals of six to 18 months, three years, five years and seven years after benefits began, depending on Social Security’s test of whether medical improvement is likely.

Does Social Security disability last for life?

Technically, no, because individuals will see their disability benefits convert to Social Security retirement benefits when they reach retirement age (65-67). Also, if someone decides to return to work when they reach medical stability, they may be able to leave the SSDI program and actively work full-time until they decide to retire and then seek Social Security retirement benefits.

What other benefits can I get with Social Security disability?

Individuals receiving SSDI benefits automatically become eligible for Medicare coverage after a 24-month waiting period. During the waiting period, beneficiaries receiving COBRA can extend that health insurance coverage an additional 11 months.

Can I work while receiving Social Security disability?

Yes, you can attempt a return to work while receiving SSDI benefits. The Social Security Administration administers a program called Ticket to Work (TTW) with the help of authorized Employment Networks. The Ticket program includes important benefits and it includes protection for a participant’s SSDI and Medicare benefits while they pursue a return to work.

What is the income limit for Social Security disability in 2022?

The earning limit for receiving SSDI benefits is known as the substantial gainful activity (SGA) amount, and that is $1,350 per month, or $16,200 annually in 2022 (non-blind). You usually cannot make more than that or your benefits will stop.

What is the best way to get approved for Social Security disability?

The best way to increase your chances of receiving the benefits you have earned is to approach the application process with an understanding of how complicated it can be. The government wants to ensure people receive benefits who are truly deserving of them.

A representative like Allsup helps people with disabilities fully understand the complexities of the SSDI process. A representative has experience with the rules and regulations, they can help get medical records or additional information to support your claim. They can also assist with requesting a reconsideration, a hearing or an Appeals Council review, if needed. It’s important to have representation at the start of the application process, since it can Excellerate an individual’s chances of SSDI approval, rather than waiting to seek help at the hearing or appeals level.

This article was written by and presents the views of their contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.