Whether you realize it or not, there's likely no social program more important to the financial well-being of seniors in this country than Social Security. As of January 2018, roughly $80 billion a month was being distributed to eligible beneficiaries, with three-quarters of these benefits going to retired workers. That should come as no surprise given that Social Security was signed into law in 1935 to provide a financial foundation for lower-income workers during their golden years.
What you may not realize is what Social Security does for more than 19 million other people each month. In certain instances, it allows the spouses and children of retired workers to receive a monthly benefit, while in others it ensures that surviving spouses have an option to claim a benefit based on their deceased partners' earnings history, assuming the survivor benefit yields a higher monthly payout than their own earnings history. The program even provides protections to long-term disabled workers.
How much do retired workers, survivors, and the disabled receive each month from Social Security?
You might be wondering just how much retirees, survivors, and the disabled can expect to receive each month from Social Security. The precise answer is that it truly depends on your earning history, and in some instances, the work and earning history of your spouse. However, the Social Security Administration does provide an average monthly benefit amount for each category via a monthly snapshot, so you can get a general sense of what the average American in each of these three categories is taking home each month.
The average retired worker benefit
Retired workers accounted for almost $60 billion of the $80 billion paid out in January, and comprise 42.6 million of the 62 million total beneficiaries. On average, retired workers walked away with a monthly check of $1,406.91, or $16,882.92 a year.
On the surface, this probably doesn't sound like a whole lot of money. However, the sheer fact that this guaranteed payment is made to retired workers who've signed up for benefits helps keep an estimated 15.1 million out of poverty. The Center for Budget and Policy Priorities notes that with Social Security income, senior poverty rates are less than 9%. Without Social Security, they'd likely be north of 40%. It's simply that important.
It's also worth pointing out that the Social Security Administration (SSA) suggests the average retiree should aim to replace 40% or less of their wage income with payouts from Social Security. Keep in mind that this percentage could be a bit higher for lower lifetime earners and lower for higher-income persons. Unfortunately, data from the SSA shows that 62% of retired workers lean on Social Security for at least half of their monthly income, with 34% reliant on the program for 90% to 100% of their income. In other words, retirees have done a poor job of saving and investing for their future, and they've become far too dependent on Social Security compared to the SSA's suggestion.
The average monthly payout for survivors
According to the latest Social Security snapshot, the SSA paid an average of $1,152.22 to "all survivors," which is an average of the nearly 6 million people receiving a check each month, including nondisabled and disabled widow(er)s, children of deceased workers, widowed mothers and fathers, and parents of deceased workers. This works out to $13,826.64 a year, and would move an individual above the federal poverty level. Among the groups noted above, nondisabled widow(er)s receive the most, at an average of $1,340.73 a month.
As noted, survivor benefits were put in place to provide financial protections to spouses and children where (in nearly all instances) a higher-earning spouse or parent passes away. Survivor benefits allow a widow, widower, and currently more than 1.9 million children, the opportunity to claim a monthly benefit based on the earnings history of their deceased loved one. In the case of a widow or widower, as long as the survivor benefit is higher than what they'd receive each month based on their own work and earning history, they can claim the higher survivor benefit.
Data from the SSA in 2016 shows that 96% of workers between the ages of 20 and 49 have survivors insurance protection in case of an untimely death, whether they realize it or not.
The average check for disabled workers
Last but not least, nearly 8.7 million disabled workers receive an average monthly payout of $1,197.07, working out to $14,363.84 a year. As with the other categories, the average disabled worker will earn enough from Social Security to move above the federal poverty level, but not by much.
According to the SSA, close to 90% of workers between the ages of 21 and 64 are protected by disability insurance in the event of a long-term disability. The data shows that more than a quarter of today's 20-year-olds will become disabled before reaching their full retirement age (67 years old), highlighting just how important disability insurance coverage has become.
It's also noteworthy that the SSA offers a staggered qualifying scale for workers who may not have otherwise met the required 40 lifetime work credits to receive benefits. Should an individual have worked, but not have reached 40 lifetime work credits prior to their long-term disability, a reduced-credits scale relative to age can be used that, in many instances, qualifies a disabled worker for monthly benefits.
In short, Social Security covers far more people than you probably realize, and it's keeping tens of millions of beneficiaries out of poverty.
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