"We can never insure one hundred percent of the population against one hundred percent of the hazards and vicissitudes of life, but we have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age."
-- President Franklin D. Roosevelt, signing The Social Security Act
Social Security has lived up to much of its promise, keeping millions of Americans above the poverty line. There's much more to it than that, though. Check out the 15 Social Security stats below, as many of them may surprise you.
90%: According to the Social Security Administration, most elderly beneficiaries get 50% or more of their income from Social Security, while 21% of married ones and 43% of unmarried ones get fully 90% or more of their income from it.
69: The normal (or "full") retirement age for Social Security used to be 65, but it has been increased for many of us. For those born in 1937 or earlier, it remains 65. For those born in 1960 or later, it's 67, and for those born between 1937 and 1960, it's somewhere in between. There's a decent chance the full retirement age will rise again, as some Republican lawmakers are pushing to hike it to 69.
22.1 million: According to a recent report from the Center on Budget and Policy Priorities, without Social Security income, 22.1 million Americans would be poor. That's rather meaningful, considering how low the official poverty line is. For 2015, it was $11,367 for an elderly individual, $14,342 for an elderly couple, and $24,257 for an average family of four. If that 22.1 million people figure isn't eye-popping enough for you, consider this stat: It's estimated that, for those folks aged 65 and older, 41.5% of them would be living in poverty without Social Security vs. 10% with Social Security.
$918 billion: Social Security pays close to 61 million Americans about $918 billion in benefits annually. If that sounds like a heck of a lot, it is. But it's only about $15,000, on average, per person.
10: In order to qualify for Social Security benefits based on your earnings, you need to collect 40 credits, where a credit is represented by your earning of at least $1,260 (as of 2016) within a year, with up to four credits that can be earned per year. Thus, most of us can qualify simply by working for a decade. Even if you only worked half of each year, 20 years of working could qualify you.
35: Meanwhile, the formula that the Social Security Administration uses to calculate your benefits is based on your earnings in the 35 years in which you earned the most money (adjusted for inflation). So it's rather valuable to work a full 35 years. If you only earned income in 28 years, the formula will be incorporating seven zeros, which will shrink your benefits.
40%: Social Security retirement benefits are designed to replace about 40% of your pre-retirement income, if you earned an average income. That percentage is higher for lower-income folks and lower for higher earners.
$1,360: The average monthly retirement benefit was recently $1,360. That amounts to $16,320 per year. If your earnings have been above average, you'll collect more than that -- but the overall maximum monthly Social Security benefit for those retiring at their full retirement age in 2016 is still just $2,687 -- or about $32,000 for the whole year. No one is making a killing with their Social Security checks.
$0: You can make your ultimate retirement benefit check bigger or smaller than what you'd get if you started collecting at your full retirement age -- by starting earlier or later. You can claim your benefits as early as age 62 and as late as age 70. For every year beyond your full retirement age that you delay starting to receive benefits, you'll increase their value by about 8% -- until age 70. So delaying from age 67 to 70 can leave you with checks about 24% fatter. If your full retirement age is 67 and you start collecting benefits at age 62, they will be 30% smaller. Here's the kicker, though: The system is designed so that total benefits received are about the same -- a difference of $0 -- no matter when you start collecting, if you have an average life span. Checks that start arriving at age 62 will be considerably smaller, but you'll receive many more of them. So for most people, it's close to a wash!
12.4%: Employee income is taxed at 6.2% for Social Security. That figure may seem familiar, from your pay stubs. You may not realize it, but employers cough up a corresponding 6.2%. That's not news to self-employed people, though, as they pay both the employer and employee portions, forking over a whopping 12.4%.
$127,200: Someone earning $127,200 in 2017 and someone earning $3 million will pay the same Social Security tax. That's because the amount of our earnings that are taxed for Social Security is capped -- at $127,200 for 2017. Any earnings above that do not get taxed for Social Security. (Many view this as unfair, and one proposed way to bolster the Social Security funds is to eliminate this cap, or at least increase it.)
2.8: The contributing-workers-to-beneficiaries ratio has been plunging over time. Back in 1950, the ratio was 16.5, with about 48 million workers supporting close to 3 million beneficiaries. The ratio was recently just 2.8 -- and it's expected to hit 2.2 by 2035. This is making the program in its current configuration no longer self-sustaining over the long run. Thus, many ways to cut benefits or increase income to the program are being proposed.
75%: You'll often hear that the Social Security program will run out of money soon. That's far from the case. Between taxes taken in and interest earned on them and fewer benefit checks written, the Social Security trust funds have been running a surplus in every year since 1982. Surpluses are likely to stop around 2019, at which point, the Social Security system can rely on incoming interest payments to make up the deficit -- for a while. According to several government estimates, Social Security funds are likely to be depleted by 2034 -- if no changes are made. If that happens, payment checks won't disappear, but they'll likely shrink by about 25%, according to the Social Security Administration, leaving beneficiaries with about 75% of what they were expecting.
76%: Fortunately, changes can be made to shore up Social Security -- some more pleasant than others. Hiking the full retirement age to 69, for example, is a less popular option. Alternatively, it's estimated that fully 76% of the trust fund's shortfall could be eliminated by increasing the Social Security tax rate for employers and employees to 7.2% in 2022 and 8.2% in 2052.
74%: Taxing all of each worker's income, instead of just the first $127,200 of it, would also wipe out much of the shortfall. It's been estimated that 74% could be wiped out by eliminating the earnings cap over a 10-year period.
Social Security appears to be sticking around for a while, though it's certainly subject to changes. Keep an eye on proposals, and let your representatives in Washington know what you endorse, or don't want to see. And keep learning more about Social Security, because the more you know, the more money you'll likely be able to receive from the program.