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7 Hard-to-Believe Social Security Facts

By Selena Maranjian - Updated Apr 14, 2020 at 12:21PM

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All of these stats are eye-opening, but some can put more money in your pocket.

Social Security is a big deal for most retirees, and it plays a significant role for all workers, as we're taxed for it throughout our working lives. Indeed, the program shells out about a trillion dollars annually to retirees, survivors, and the disabled.

The more you know about Social Security, the more you may ultimately be able to collect from the program. You might start right here, with seven facts that can be hard to believe.

A man is shown looking amazed, with his mouth open and his palms on his cheeks.

Image source: Getty Images.

No. 1: Social Security is more vital than you think

Just how vital is Social Security to most American retirees? This vital: According to the Social Security Administration (SSA), fully 21% of married elderly Social Security beneficiaries and 45% of unmarried ones get fully 90% or more of their income from it. Way more people get 50% or more of their income from Social Security: About 50% of married beneficiaries and 70% of unmarried ones. Overall, Social Security is the main source of income for most elderly people.

No. 2: Social Security benefits are likely smaller than you think

There's a good chance that you've earned an above-average income over your working life, which means you'll collect more than the average amount in benefits. But the size of the average monthly Social Security benefit might surprise you: It was recently just $1,507 per month, or about $18,000 annually. The most you might receive from Social Security in 2020 is about $3,790, or roughly 45,500 per year -- if you earned the maximum amount for your entire working life and delayed collecting benefits until age 70. (More on that move later.)

No. 3: Some people pay twice as much in Social Security taxes

If you pay close attention to your paycheck, you've probably noticed that you pay 6.2% out of each paycheck for Social Security -- along with another 1.45% for Medicare, for a total of 7.65%. That might seem like a lot, but if you're self-employed, it's only half of what you pay. Why? Well, because the full tax is 12.4% for Social Security, along with 2.9% for Medicare, for a total of 15.3%, and employers pay half of all that for you. If you're self-employed, though, you're on the hook for both halves, and you'll be forking over 12.4% of your pay for Social Security, plus another 2.9% for Medicare.

No. 4: Millions and billions in earnings go untaxed for Social Security

Here's an underappreciated fact about Social Security: While you're probably taxed for it on every dollar you earn, if you're a high earner, only some of your earnings will be taxed. That's because there's an earnings cap, above which earnings are not taxed for Social Security. For 2020, that cap is $137,700, meaning that someone who earns, say, $1,137,700, will not be taxed for Social Security on a whole million dollars of earnings. Someone who earns $5,137,700 will not pay taxes for Social Security on $5 million of their earnings. With the Social Security program facing funding challenges ahead, one easy way to make its dollars last longer and go further is to raise or eliminate the cap, so that more of wealthy people's income gets taxed. 

A cartoon woman looking surprised is next to the drawn word wow.

Image source: Getty Images.

No. 5: Social Security can be like a life insurance policy

Here's an unexpected bit of Social Security information: Survivors of workers (including children) who die are often entitled to collect survivor benefits -- which can be critical in helping many of them stay out of poverty. According to the Center on Budget and Policy Priorities, "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." If you have anyone depending on your income, don't just assume that Social Security will provide enough for your survivors. Learn more -- because you'll probably need actual life insurance, as well.

No. 6: Social Security is surprisingly efficient

Here's something that might greatly surprise you: Despite how inefficient many people think government programs can be, the Social Security program is extremely efficient -- especially when you consider how much work it does, paying out benefits to tens of millions of people regularly. Its overall budget is roughly $1 trillion (as of 2018), and only 0.7% of that went to administrative expenses.

No. 7: You can make your benefit checks a lot bigger or smaller

One of the most important things to know about Social Security is that you can control the size of your benefit checks to some degree, making your Social Security benefits bigger or smaller. A key way is by starting to collect your benefits earlier or later than your full retirement age (which is 66 or 67 for most of us). For each year that you delay, up to age 70, you increase your benefits by about 8%. So delaying from age 67 to 70 would make them about 24% bigger -- enough to turn a $2,500 check into a $3,100 one.

Keep learning more about Social Security, and you'll be able to make savvier decisions about it, which can make your retirement more comfortable and enjoyable.

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