The average monthly Social Security retirement benefit was $1,420 recently, which amounts to about $17,000 per year. (For an idea of the maximum, consider higher earners, whose maximum benefit for those retiring at their full retirement age in 2019 is $2,861 monthly, or about $34,000 annually.) That may not seem like enough to support you in old age, which is why you need to save for retirement with your own money.
Still, Social Security is likely to be a major contributor to your future financial security, so it's worth spending a little time learning more about it. And while you're at it, it's worth counting your blessings as they relate to Social Security. Here, are 12 reasons to give thanks for Social Security.
1. Without Social Security, millions of people would be in poverty.
This is a biggie. Without Social Security income, 22 million Americans would be living in poverty, according to a report from the Center on Budget and Policy Priorities. That says a lot, given how low the official poverty line is ($12,140 for individuals and $16,460 for a family of two).
Here's another eye-opening stat: "For the elderly, Social Security single-handedly slashes poverty by 75%," per a 2018 report from the National Bureau of Economic Research.
2. Social Security provides a big chunk of most retirees' income.
One third of the income of elderly Americans is made up of Social Security benefits.
According to the Social Security Administration, 21% of married elderly Social Security beneficiaries and 44% of unmarried ones get fully 90% or more of their income from the program, while 48% of married elderly Social Security beneficiaries and 69% of unmarried ones get 50% or more of their income from it.
3. It's really easy to qualify for Social Security benefits.
Not only is Social Security critical to many people, it's also relatively easy to qualify for retirement benefits. You qualify by paying into the program during all the years you're in the workforce.
You need to collect 40 credits, with a credit representing earnings of at least $1,360 (as of 2019) within a year, with up to four credits earnable per year. Thus, most people can qualify simply by working for a decade and by earning at least $1,360 per quarter (that amounts to $5,440 for the year) as of 2018. The amount in benefits you receive is based on the average of your 35 most profitable years.
4. Social Security lets you start collecting early.
If you don't know your "full" retirement age for Social Security, you should. It's the age at which you're eligible to start collecting your full benefits, and it 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.
Here's a nice thing, though: No matter what your full retirement age is, you can choose to start collecting your benefits as early as age 62 or as late as age 70. The most common age at which retirees start collecting their benefits is actually 62. Millions of Americans are taking advantage of the fact that Social Security helps you retire early.
5. Social Security lets you enlarge or shrink your benefits.
While it might seem like you have little control over the size of your Social Security benefit checks, you can actually 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 to collect earlier or later.
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. That works in reverse if you start collecting early. For every year before your full retirement age that you start collecting, your benefits shrink by about 7%. So if your full retirement age is 67 and you start collecting benefits at age 62, your checks will be about 30% smaller. (There are other ways to increase your Social Security benefits, too.)
6. Social Security doesn't penalize you for starting to collect early.
Given that you can receive bigger checks by delaying when you start collecting benefits, it might seem that you should definitely try to delay as long as possible, lest you get less money, in total, from Social Security. But it doesn't work that way. The system is designed so that total benefits received are about the same no matter when you start collecting if you live an average-length life. Checks that start arriving at age 62 will be considerably smaller, but you'll receive many more of them. (Of course, if your family gatherings are chock full of people in their 90s, delaying might be worthwhile.)
7. Social Security allows a do-over.
Choosing when to start collecting your benefits can be tough, and you may find yourself regretting your choice soon after you make it. For example, perhaps you started collecting because you'd lost your job and didn't expect to find another -- but then you landed one. Social Security is forgiving in this regard, because it allows you to change your mind -- as long as you do so within 12 months of starting to collect your benefits and as long as you pay back all the benefits you've received so far. (You'll need Form SSA-521 to pull off this reversal.)
8. Social Security supports more than just retirees.
Retirees are not the only ones who should be thankful for Social Security. While, as of December 2017, 45.5 million retired workers and their dependents were collecting retirement benefits, 10.4 million disabled workers and their dependents were also collecting benefits, and 6 million survivors of deceased workers were collecting survivor benefits, as well.
Disability and survivor benefits help many people avoid financial disaster. Regarding survivor benefits for family members of eligible workers who die, the Center for Budget and Policy Priorities has noted that "For a young worker with average earnings, a spouse, and two children, that's equivalent to a life insurance policy with a face value of over $725,000 in 2018, according to Social Security's actuaries."
9. Employers contribute substantially to Social Security.
You may not like forking over 6.2% of your paycheck every pay period to the Social Security program, but be thankful for this fact: The total tax is actually 12.4%, and your employer is coughing up the other 6.2%. (Unfortunately for self-employed folks, they're on the hook for the entire 12.4%.)
10. Social Security aims to keep up with inflation.
Another blessing in the Social Security system is that benefits are designed to increase in step with inflation, and this is achieved through annual cost-of-living adjustments (COLAs). This means benefits are tied to how much prices increase, so retirees can maintain the same quality of living today as they will in twenty years.
For 2019, benefits will get the biggest boost they've gotten in a while -- a 2.8% increase. The increase in 2018 was just 2%, which was much higher than 2017's 0.3% increase and 2016, when there was no increase at all.
11. As good as it is, the program can be made even stronger.
There's frequently a lot of hand-wringing in the media about the looming demise of Social Security. It's not going anywhere anytime soon, though. The program does face some challenges, but Congress can strengthen or weaken it. One worst-case scenario has retirees ending up with about 75% of the benefits they were expecting. That would be painful, but it still leaves some significant income.
If and when our representatives in Washington want to shore up or strengthen Social Security, there are a handful of effective ways to do so. For example, as of 2019, workers are only taxed for Social Security on income up to $132,900. So someone earning $132,900 and someone earning $1,132,900 will pay the same amount. Lifting that cap or eliminating it could make up much of Social Security's looming shortfall.
12. It's a great example of efficiency.
Here's one last reason to be thankful for Social Security: Not only is it a massive program -- with a budget of roughly $1 trillion -- but it's also an impressively efficient one, spending only 0.6% of that budget for administrative expenses.
Social Security, signed into law by President Roosevelt in 1935 during the Great Depression, has been a huge boon to Americans, providing some degree of financial security in their old age. It's worth learning a lot about it so that you can make smart Social Security moves when the time comes, so you can get maximize your benefits and enjoy your retirement.