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9 Social Security Statistics That Will Surprise You

Source: Flickr user SalFalko.

We're all familiar with Social Security -- with what it is and how it might help us in retirement. But there's still a lot we don't know about it, some of which is important and some simply interesting.

A great place to find data on the program is from the horse's mouth -- the website of the Social Security Administration, or SSA. Its 2013 "Fast Facts & Figures About Social Security" document, for example, tell us:

  1. In 2012, 61.9  million people received benefits from the SSA. (That's about 20% of the entire U.S. population.)
     
  2. Fifty-five percent of adult Social Security recipients are women. This makes sense, as women generally live longer. (Women in the U.S. recently averaged a lifespan of 81 years, versus 76 for men.)
     
  3. For most elderly Social Security recipients, Social Security benefits make up the majority of their income. (As of 2011, that was so for 64% of aged beneficiaries.)
     
  4. Employee income is taxed at 6.2% for Social Security. You may not realize it, but your employer coughs up a corresponding 6.2%. Those who are self-employed get hit with a whopping 12.4% tax rate, paying both the employer and employee portions.
     
  5. That Social Security tax rate only applies to the first $113,700 of your income. If you make $1,113,700, the million dollars extra don't get taxed. Many reformers would like to see this cap eliminated, as it has most Americans being taxed on their full income, while wealthy folks are only taxed on a portion of their income.
     
  6. The maximum monthly benefit that Social Security offered in 2012 to those who retired at their full retirement age was $2,533, offering an annual benefit of $30,396. Those who started collecting Social Security earlier or later than their full retirement age would collect smaller or larger sums, respectively.
     
  7. We're used to thinking of Social Security as providing income in retirement. But it has a few other functions, too. In 2012, for example, of the 5.7 million folks who began collecting Social Security benefits, 48% were retired workers, 17% were disabled workers, and 35% were survivors and dependents of deceased workers. Not all survivors, dependents, and disabled workers qualify for these benefits, but some do.
     
  8. Those who worry about Social Security running out are focusing on data such as this: In 1955, there were more than eight workers paying into the Social Security system for every beneficiary. Today, that number is a bit less than three workers paying in, and it's projected to be close to two workers by 2031. (Those less worried about Social Security running out note that many changes to the system could strengthen it, such as eliminating the taxable income cap.)
     
  9. It's projected that the Social Security trust fund will run out in 2033 – but that means we have 20 years in which to change and improve the system. 

There's a lot to know about Social Security, even for young people. If you think and act strategically, you can maximize your benefits.

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Read/Post Comments (21) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 23, 2013, at 9:30 AM, WhiteTiger wrote:

    Just want you to know that when the government states that the Social Security Fund will "Run out of Money" they actually mean that the bonds that are IOU's will have been repaid. All the politicians through time have "raided" the Social Security Funds to continue their spending habits. They want you to believe that the money will "run out" because they want to renege on the debt "they owe" to Social Security. Please write your congressman/woman and senators that they should not touch Social Security and do not believe their double talk written statements that it will go broke on such and such date when they respond to you.

  • Report this Comment On November 23, 2013, at 11:25 AM, nevadan99 wrote:

    Why doesn't the money ever run out for welfare?

    .

    Just doesn't seem quite fair to me. The people

    that paid into Social Security are running out of

    money, but the people that pay nothing into

    welfare have plenty. That's our socialist

    government for you.

  • Report this Comment On November 23, 2013, at 11:59 AM, reddwarfone wrote:

    Obama's secret agenda is to shut down social security and channel all the money from social security into his horrible Obamacare! And all his partners in crime will applaud!

  • Report this Comment On November 23, 2013, at 12:46 PM, JoeTheEconomist wrote:

    #8. While the number of workers have fallen from 8 to 1 to a projected 2 to 1, the cost has increased more than 10 fold. In 1955 dollars, we have as many as 30 workers to 1 retiree.

    #9."that means we have 20 years in which to change and improve the system."

    Actually time is the one thing that we know with mathematical certainty that makes the system worse.

    Page 66 of the Trustees report says that SS lost roughly 500 billion dollars solely on the basis of doing nothing in 2012. At is almost as much as we spent on the entire military.

  • Report this Comment On November 23, 2013, at 1:29 PM, BillB1951 wrote:

    We do not have 20 years to fix SocSec. Within months the outflow of SS benefits paid $$ will be greater than the SS tax $$ inflow. At that point, the Fed Gov will have to borrow $$ on the open market in order to have $$ available to pay back the $$ borrowed from the SS "trust fund." This is how the SS will regain the $$ borrowed by the FedGov in order to continue paying benefits.

    Just like saving for your own retirement funding, " 'twere best done quickly."

  • Report this Comment On November 23, 2013, at 2:12 PM, g55rumpy wrote:

    and in the 40s the supreme court ruled that the money a person pays into SS isn`t their money

  • Report this Comment On November 23, 2013, at 2:43 PM, Matthias wrote:

    #1; Please let america know what the % is on the amount of people that are on welfare for a life expectancy of 81 for woman and 76 for men plus all medical, Food Stamp, Housing et al, that will never run out of funds. Because in less than 20 years it will increase by the amount of people that are on Social Security! Mind you that nobody collecting Welfare paid into THAT Program! Did you think that it's ONLY Social Security that must be fixed?

  • Report this Comment On November 23, 2013, at 3:27 PM, okjerryds wrote:

    So why do you write on this stupid topic, there is a high possibility that SS will disappear and everyone will be on their own. The government spends that money every month without fail.. It is not held for SS, it goes into the general fund, fair game for anyone in the government.. They could give a rats ass about the people and this is made apparent with this article.. and every other article that is written... The American people as a whole don't care either, that's why Obama is in his second term...

  • Report this Comment On November 23, 2013, at 4:45 PM, Hazeleyesgrl wrote:

    Yeah basically anyone under fifty years of age should be very worried like me..I am so tired of these politicians gambling with our money..Nevandan I have heard many other people say the same thing I agree.

  • Report this Comment On November 23, 2013, at 7:35 PM, neamakri wrote:

    before year 2010 there were four workers per retiree (4:1). Sometime after 2010 there will be three workers per retiree (3:1). This means that after 2010 either the workers must add 33% more taxes to make up for the missing worker -OR- the retiree must accept 25% less money due to the missing worker. So far all schemes to "fix" Social Security involve paying retirees less money.

    The country of Chili privatized their Social Security dozens of years ago. Since then every economic indicator in Chili has improved a lot. All we have to do is copy them.

  • Report this Comment On November 23, 2013, at 8:38 PM, cooneysean wrote:

    Allow me to fill in the missing paragraph between these two sentences:

    "The money you pay towards Social Security does not go into a personal account for when you retire."

    AND

    "Instead, Social Security is a "pay as you go" program meaning the money that is collected now is used towards current payouts."

    Social Security used to go into a SEPARATE Social Security account. It was such a WELL DESIGNED program it developed a HUGE surplus. Well, it really wasn't a "surplus" it was the money accumulated by ALL the baby boomers during ther working years that was SUPPOSED to be used to pay them after they retired.

    The politicians couldn't stand to see all that money just sitting there (when they could be using it to buy votes). So they moved those dollars into the "general fund".......and spent them. Oh, they gave Soc. Sec. IOU's. $3.5 TRILLION worth of them. They all decided it would be easier to convince todays young people that they are being cheated having to pay the seniors their retirement (instead of honoring those IOU's). Now it's a "pay-as-you-go" program, because that HUGE surplus is gone, now that all those baby boomers are retiring.

    They say it's because we're living longer, or because there used to be 8 people paying for 1 senior but now it's only 4 paying for 1 retiree, or because of the cost-of-living increases....

    Now, taken individually, all these STATEMENTS are facts, but, that is NOT why Soc. Sec. is underfunded. (Typical political doublespeak).

    They love to tell you about how much more we're collecting, than we put in. The figure they conveniently leave out of the equation is the COMPOUND INTEREST that money had earned EVERY YEAR for the last 50 years!

    It is underfunded because that SURPLUS was stolen and not repaid, the tax that was "cut", (Bush Tax Cuts) that eveyone is now enjoying, was the SS tax, there is a "cap" on the tax. People only pay for the SS tax on the first $108K of there income, no matter how much they make! Many people who NEVER paid into SS are collecting payments from them.

    SS is NOT an entitlement, My employer and I paid into it since I was 15 years old. We were FORCED to, it was a LAW. Now they want to make excuses why we shouldn't get it.

    I'll tell you what, cut welfare, disability, unemployment, food stamps, free school food programs, public pensions, foreign aid.......BEFORE you cut the retirements of people actually PAID INTO their own program.

    And here's a novel idea. Investigate and prosecute fraud. People on disability doubled in the last year or so. NO ONE thinks THAT'S a little suspicious?

  • Report this Comment On November 23, 2013, at 9:38 PM, 09252009 wrote:

    I will say it again, the government better stop paying out SSS and think about the people like me who already paid out a large sum of money towards Social Security. The SSS should be stopped immediately, then Social Security will never go broke. Some people who never hit a lick in the US are getting SSS as much as my SS. It isn't fair.

  • Report this Comment On November 23, 2013, at 11:21 PM, CamperDann wrote:

    Why are you perpetuating the incredible stupidity of Al Gore? There is NOT a Social Security "trust fund". It's bothersome that someone who writes a nationally published column on finance would propagate such foolishness. Now I have to wonder, what other inaccuracies you post.

  • Report this Comment On November 24, 2013, at 1:57 AM, KevinS68 wrote:

    It is sad that even Motley Fool readers -- who should be some of the most educated about financial matters -- don't understand the issues with Social Security.

    Several Fools above rail on and on about how the government "raided" the trust fund. Now, let's think about this for a minute, as investors. SS took in some large surpluses. If you had $3 trillion in SS surpluses, and you were in charge of the federal government, what would you do with the money? Let me tell you what you wouldn't do: stick cold, hard cash in a lockbox. Because that cash would lose its purchasing power over time. Those surpluses were accumulated over several decades. You all know that inflation would have eaten up much of the value of the money.

    So what, instead, would you do with the money if you were in charge? Well, you'd invest it, of course. And where would you invest it? Well, the stock market is probably too risky an investment for an account that needs to be there for 60 million people. So what investment would make sense? How about US Treasuries -- considered the safest investment in the world.

    Social Security would actually be in MUCH worse financial shape if the money had been locked away in a lockbox. Instead, it has been earning interest for years and years. Since the rest of the government needed money to fund its other operations, it makes sense that it would borrow from SS as opposed to just issuing $3 trillion more in bonds to China or other investors. This way, SS gets to earn interest on its surplus, and the government doesn't need to borrow as much money from third parties.

    Every dollar that you crazy folks think has been "stolen" from SS will be repaid, with interest. Now let's talk about the real problem. It's not the few trillion that was "borrowed" from the trust fund. It's the fact that the long term deficits facing the program are many, many trillions. When you add in the deficits facing Medicare (which are even worse), you have unfunded liabilities that are several times the current national debt. So if you think $17 trillion is a lot, think again.

    The other ignorant comment that people make is that everything would be fine if only the money hadn't been "stolen." People, when the trustees' report says that the money "runs out" in 2033, what this means is that at this point, all the surpluses that were previously earned will be depleted to zero. Yes, those are the surpluses that you think were "stolen." The government has factored in that all those surpluses will be paid back, with interest, and even then, the trust fund is gone in 2033. At that point, all SS will have is the incoming taxes -- no built-up surplus. And the incoming taxes only pay 75% of benefits from that point on. So we'd have to decide what we want at that point -- higher taxes or lower benefits. Or we can begin planning now by slightly increasing the tax rate and/or increasing the retirement age and/or begin announcing now a gradual reduction in expected benefits for future retirees. The sooner we act, the better, but let's stop perpetuating the myth that SS would be fine if Congress kept its hands off the money. That has NOTHING to do with the SS funding problem -- as I said, it makes a heck of a lot more sense for the SS surpluses to be invested in US Treasuries than to be losing their value sitting in a lockbox.

  • Report this Comment On November 24, 2013, at 6:24 AM, buz wrote:

    The TRUST FUND : a room full of govt. issued bonds that have to be redeemed by a country that's going into debt at a rate of at least 2 billion dollars a day (admitted current debt of 17.2 TRILLION DOLLARS). Do any of these astute financial writers realize that when social security has to start drawing money from this fund, the govt. will have to borrow the money from probably China in order to make the payments. Every dime social security needs from the trust fund will have to come from a very overspent Federal treasury.

  • Report this Comment On November 24, 2013, at 8:43 AM, biggreg wrote:

    first, we need 2 throw off ALL THOSE MILLIONS OF FRAUDS OFF SSI/DISABILITY!! i have 2 bros, 41, 44ys recvg, NOTHING IS WRONG W/THEM!! 1 gets 4 depression OTHER 'cause OVERWEIGHT!!! what kind of crap is that!! on top of that, i think, maybe they worked 5 yrs btwn them!! put nothinG into system, those parasite TV ssi/disb lawyers should be thrown in jail!! they hook these thieves up with lying doctors!!! if u aint in wheelchair or blind, NO SSI/DISABILTY!!!

  • Report this Comment On November 24, 2013, at 9:35 AM, KevinS68 wrote:

    Buz -- yes, people realize it. When we say the national debt is $17 trillion, this includes the few trillion that is owed back to SS. So it's already factored into the debt. Do you not realize that without the accumulated interest that SS has earned over the past several decades on all those surpluses -- precisely by investing those surpluses in bonds from the US gov't -- SS would be in much, much worse financial shape?

  • Report this Comment On November 24, 2013, at 10:08 AM, jvibora wrote:

    Over a million people apply for disability benefits every year...a number that has zoomed to unheard of heights, despite Americans generally working in safer conditions. Recent investigations indicate a good share of that is fraudulent, and this more than anything else is breaking the SS bank. This was supposed to be a retirement system, but it has become increasingly a lifetime disability system supplementing Workers Comp; the authors' point out twice their apparently preferred fix to tax all income at 12.4% further making this a welfare system and not a retirement system.

  • Report this Comment On November 24, 2013, at 12:46 PM, KevinS68 wrote:

    jvibora: I agree. And even setting aside the disability issue, even if there were no fraud, I'm tired of people suggesting that the solution is to remove the cap on the income subject to taxation. Social Security has ALWAYS had an income cap -- that's because it was designed as a program for the common worker. In the beginning the cap was only $3,000 and the tax on the worker was only 1% (2% combined employee/employer contribution). Now, sure, someone will point out that back then, people made a lot less -- but $3,000 in the 1940's is still only about $30,000 today. Imagine getting taxed at only 1% on up to $30,000 instead of 6.2% on up to $113,700. We already have one tax where the affluent pay the vast majority -- the income tax, where almost half of households pay zero and the top 10% pay around 70% of the taxes collected. So when the next bleeding heart liberal talks about how it is "unfair" that there is an income cap on the SS tax and that rich people should pay the same rate as everyone else on all their income, just say, "OK, I agree, that sounds fair. I will write my Congressman and ask for that change if you write yours and ask that the income tax be likewise set up the same way -- same rate for everyone, applicable to all of their income." I doubt you'll have any takers.

  • Report this Comment On November 24, 2013, at 6:36 PM, buz wrote:

    Kevin:

    The interest earned on the SS funds are just more govt. bonds that will have to be redeemed from our overdrawn treasury. More smoke and mirrors. From what I read, the 17.2 trillion debt is just a small part of the country's problems. The unfunded debt of SS, Medicare, Medicaid, pensions, pension guarantees and on and on bring the total up to around 100 trillion.

  • Report this Comment On November 24, 2013, at 7:14 PM, luckyagain wrote:

    "It's projected that the Social Security trust fund will run out in 2033 – but that means we have 20 years in which to change and improve the system."

    Just because the trust fund is empty, does not mean that Social Security will stop all payments. What it means is that people will no longer get their full payment. Instead payment could drop to about 70% of their previous payments. I am sure that will not make people happy but 70% is not ZERO.

    Also consider since 2007, the inflation increases for Social Security has been zero for two years and the increases have been less than the projected 3% year. This will have long term affects upon the expected payments to retirees in 20 years.

    As for the Federal government to stop deficits, the only way that would happen is to cut back on military spending to the levels that countries like Japan and Germany have. Both of these countries only spend about 1% of their GDP. The US is spending over 5% of GDP. The US spends as much money on defense as the next 13 largest spenders. Republican Ron Paul wants to bring home all US troops and close the over 700 US military bases in over 100 foreign countries. Let someone else be the world cop.

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Selena Maranjian
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Selena Maranjian has been writing for the Fool since 1996 and covers basic investing and personal finance topics. She also prepares the Fool's syndicated newspaper column and has written or co-written a number of Fool books. For more financial and non-financial fare (as well as silly things), follow her on Twitter...

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