The U.S. federal government spends in excess of $4 trillion a year, and at the top of the heap is Social Security, the government's largest single expense. Social Security, which provides disability and/or survivors insurance protection to an estimated 175 million workers and divvies out benefits to over 62 million beneficiaries a month, racked up $952.5 billion in expenditures in 2017, according to data from the Social Security Board of Trustees 2018 report.
But where, exactly, did all of this money go? Let's dive in for a closer look.
As you can probably imagine, the single-biggest expenditure for Social Security is scheduled benefits. Nearly 99% of its $952.5 billion in expenditures ($941.5 billion) went to eligible beneficiaries last year. But let's break this $941.5 billion figure down a bit further, because "beneficiary" can have a lot of different meanings when it comes to Social Security.
The Old-Age and Survivors Insurance Trust: $798.7 billion in 2017
The bulk of spending last year (nearly 85% of scheduled benefits) went to the Old-Age and Survivors Trust, or OASI. The OASI is responsible for making benefit payments to retired workers, as well as survivors of eligible workers who are now deceased. Keep in mind that while retired workers and widows/widowers are going to make up the majority of benefit payments in the former and latter categories, there are auxiliary payments being made to spouses and children who may qualify for a benefit based on a retired worker's earnings history.
With this in mind, let's break this down a bit more. (Please note these figures may not perfectly add up due to rounding.)
In total, retired workers and auxiliaries were paid $680.2 billion last year, including:
- $644.2 billion directly to retired workers (this represents 67.6% of all program expenditures last year)
- $30.5 billion to the spouses of retired workers
- $5.6 billion to the younger children of retired workers
As for survivors, they collected $118.3 billion in benefits in 2017. This includes:
- $94.3 billion to the aged widows or widowers of a deceased worker
- $2.4 billon to disabled widows or widowers
- $20 billion to the children of deceased workers
- $1.5 billion for widowed mothers and fathers who are caring for child beneficiaries
- $20 million to the parents of deceased workers
The OASI also factors in the lump-sum death benefit of $255 that can be paid out to a surviving spouse or qualifying child of a deceased worker. Last year, $210 million in lump-sum death benefits were disbursed by the Social Security Administration.
This covers the OASI's expenditures. Let's move over to the Disability Insurance Trust, or DI.
The Disability Insurance Trust: $142.7 billion in 2017
As the name implies, the DI provides monthly benefit checks to those who are long-term disabled, as well as auxiliaries who may qualify for a benefit based on the primary disabled worker. Last year, $142.7 billion, or just over 15% of scheduled benefits, was the result of DI payouts.
As you'd expect, when broken down further, an overwhelming majority of disability payments went directly to disabled workers. However, the children of these workers, and to a far lesser extent the spouses of these disabled workers, also received their share.
- $133.9 billion directly to disabled workers
- $8.3 billion to the children of a disabled worker
- $0.6 billion to the spouses of a disabled worker
If we add the DI and OASI together, we've accounted for all but $11 billion in program expenditures in 2017. Let's now take a closer look at where this smaller amount of spending went.
Administrative expenses: $6.5 billion in 2017
Of the remainder, $6.5 billion went to cover the Social Security Administration's (SSA) administrative expenses. Think about the cost of employing thousands of Social Security workers, paying rent on SSA buildings, electricity costs, and practically any other bill you'd encounter while running offices across the country. That's what's included in this $6.5 billion figure.
What's perhaps a bit maddening about this figure is that lawmakers seem to be more focused on reducing administrative expenses, which make up far less than 1% of total annual program costs, than on finding a real-world solution to the Trustees' estimated $13.2 trillion cash shortfall looming between 2034 and 2092.
Railroad Retirement financial interchange: $4.5 billion in 2017
Last but not least, $4.5 billion was disbursed to the Railroad Retirement financial interchange last year.
During the 1930s, lawmakers in Congress set up a national retirement system for railroad workers and their families since railroad-sponsored pensions were mostly failing to meet their end of the bargain. In 1951, a financial interchange was created by Congress (retroactive to 1937) between the Railroad Retirement and Social Security by amending the Railroad Retirement Act. As defined by the SSA:
The interchange was designed to allow the Social Security Trust Funds to operate as if railroad employees were covered under Social Security rather than their own system. The interchange provided Social Security with the tax revenues that would otherwise be collected directly from railroad workers, while Social Security provided to RRB [Railroad Retirement Board] the funds that would otherwise be paid directly to railroad beneficiaries.
Though the figures can adjust from year to year, this is a comprehensive breakdown of where every Social Security dollar leaving its two Trusts winds up.