Source: Flickr user SalFalko.
We're all familiar with Social Security -- with what it is and how it might help us in retirement. But there's still a lot we don't know about it, some of which is important and some simply interesting.
A great place to find data on the program is from the horse's mouth -- the website of the Social Security Administration, or SSA. Its 2013 "Fast Facts & Figures About Social Security" document, for example, tell us:
- In 2012, 61.9 million people received benefits from the SSA. (That's about 20% of the entire U.S. population.)
- Fifty-five percent of adult Social Security recipients are women. This makes sense, as women generally live longer. (Women in the U.S. recently averaged a lifespan of 81 years, versus 76 for men.)
- For most elderly Social Security recipients, Social Security benefits make up the majority of their income. (As of 2011, that was so for 64% of aged beneficiaries.)
- Employee income is taxed at 6.2% for Social Security. You may not realize it, but your employer coughs up a corresponding 6.2%. Those who are self-employed get hit with a whopping 12.4% tax rate, paying both the employer and employee portions.
- That Social Security tax rate only applies to the first $113,700 of your income. If you make $1,113,700, the million dollars extra don't get taxed. Many reformers would like to see this cap eliminated, as it has most Americans being taxed on their full income, while wealthy folks are only taxed on a portion of their income.
- The maximum monthly benefit that Social Security offered in 2012 to those who retired at their full retirement age was $2,533, offering an annual benefit of $30,396. Those who started collecting Social Security earlier or later than their full retirement age would collect smaller or larger sums, respectively.
- We're used to thinking of Social Security as providing income in retirement. But it has a few other functions, too. In 2012, for example, of the 5.7 million folks who began collecting Social Security benefits, 48% were retired workers, 17% were disabled workers, and 35% were survivors and dependents of deceased workers. Not all survivors, dependents, and disabled workers qualify for these benefits, but some do.
- Those who worry about Social Security running out are focusing on data such as this: In 1955, there were more than eight workers paying into the Social Security system for every beneficiary. Today, that number is a bit less than three workers paying in, and it's projected to be close to two workers by 2031. (Those less worried about Social Security running out note that many changes to the system could strengthen it, such as eliminating the taxable income cap.)
- It's projected that the Social Security trust fund will run out in 2033 – but that means we have 20 years in which to change and improve the system.
There's a lot to know about Social Security, even for young people. If you think and act strategically, you can maximize your benefits.
