AARP Bulletin - November 2011

Waiting for Disability

1. The payroll (FICA) tax
applies to what amount
of earned income?
A. Wages up to $106,800
B. Wages up to $250,000
C. Total earnings

2. When was Social
Security started?
A. 1864
B. 1929
C. 1935

3. Who was president
at the time?
A. Abraham Lincoln
B. J. Edgar Hoover
C. Franklin D. Roosevelt

While she waited for her first So- cial Security disability check, Cathie Nowicki, a former computer programmer, lived off her 401(k) savings, draining the nearly $20,000 she’d saved for retirement.

Nowicki, 52, received benefits five months after she applied—a light-ning-fast response from a federal program plagued by lengthy delays.

“I was lucky,” says the Trenton, N.J., woman, who has bipolar disorder, diabetes and other conditions.

For hundreds of thousands of dis-
ability applicants, however, the proc-
ess is far more arduous. About 60
percent of cases are initially rejected.
Applicants can ask for review by an
administrative law judge, hire an at-
torney and wait months for a hearing.

4. Can my ex-wife and
my current wife both
collect benefits based
on my record?
A. Yes, if certain qualifi-
cations are met.
B. No, only one of them
can collect.

“You don’t need millions. Have realistic expectations.”

5. Can children receive
survivor benefits?
A. Yes, if certain qualifi-
cations are met.
B. No

6. Social Security has
enough money to pay
100 percent of benefits
until what year?
A. 2014
B. 2036
C. 2050

7. What percentage of
beneficiaries are dis-
abled workers?
A. 8 percent
B. 15 percent
C. 30 percent

Answers: 1. A. 2. C. 3. C. 4. A. 5. A. 6. B. After that year, payroll taxes will provide enough to pay 77 percent of benefits. 7. B.

; Prakash Akut, 65, Pennsylvania My beagle, Rudy, and I live comfortably on our Social Security benefit of $2,179 and a pension of $1,056. The key is to make a realistic budget and stick to it. In my case, I moved out of my house into a $500-a- month apartment. Utilities are $350, a three-year loan on a new car $570. I also pay $270 on a personal loan. The premiums for auto and funeral insurance are $125. These fixed expenses total $1,815. This leaves me with $1,420 for discretionary expenses—it helps that my rent is relatively low. This is where my budget comes into play: $1,000

is earmarked as follows: food and eating out $450, cleaning supplies and paper products $50, personal care supplies $50, Rudy food, treats and meds $100, gas $100, medical copays $100, and housekeeping service $150. I keep track of all my spending on a spreadsheet. Purchases are deferred if there are insufficient funds budgeted. The remaining $420 goes into savings, which are used only for emergencies, off-budget purchases such as clothes, and planned items such as vacations, which are only taken when the funds have been saved. The key is discipline. And living within your means.