7 Things You May Not Know About Social Security

Here are seven surprising, useful, and reassuring things to know about Social Security.

Selena Maranjian
Selena Maranjian
Dec 5, 2015 at 7:07AM
Investment Planning

Life is risky. Social Security is our financial safety net. Image source: Flickr user Laura Bittner.

There are lots of fascinating aspects of Social Security that we don't typically learn about, such as the fact that so far in its history, it has taken in about $18 trillion in taxes and paid out about $15 trillion in benefits. Below you'll find some more little-known facts -- some surprising, some useful, and some reassuring at a time when the program's future looks uncertain.

President Roosevelt signing Social Security into law in 1935. Image source: Social Security Administration

1. How it was born
President Franklin Roosevelt signed the Social Security Act into law on Aug. 14, 1935. As early as 1929, months before the big crash on Wall Street which preceded the Great Depression, Roosevelt said: "No greater tragedy exists in modern civilization than the aged, worn-out worker who after a life of ceaseless effort and useful productivity must look forward for his declining years to a poorhouse. A modern social consciousness demands a more humane and efficient arrangement."

2. The story behind the numbers
There have been more than 453 million Social Security numbers issued, and given the current nine-digit format, there could potentially be over a billion. The first Social Security number ever issued was not 000-00-0001, but rather 055-09-0001, and it was given to the son of an affluent factory owner in 1936.

However, if any Social Security number can be said to be famous, it's that of Hilda Schrader Whitcher, a secretary. In 1938, her boss used her number on sample Social Security cards that were inserted into the wallets his company manufactured. As a result, more than 40,000 people used Whitcher's number for identity fraud. That was an early lesson on the importance of safeguarding your Social Security number. An interesting side note: Social Security numbers are not reused after the cardholder dies.

Ida May Fuller. Image source: Social Security Administration

3. It's powerful: Consider the first retiree to collect Social Security benefits, Ida May Fuller. She received her first check in 1940, for $22.54, when she was 65. She went on to live to age 100, by which time she had collected a total of $22,888.92 -- after only paying into the system for the three years it existed during her working life. Her total contributions: $24.75. Those who die young may not get more from Social Security than they paid into it, but those who live long can collect much more.

4. It's critical: Over the years, Social Security has become the the biggest source of income for most older Americans. Fully nine out of 10 Americans aged 65 and older receive benefits, and it makes up about 39% of their income, on average. Among single retirees, 74% get more than half their income from Social Security. Here's an even more sobering statistic: 22% of married retirees and 47% of single ones rely on Social Security checks for at least 90% of their income.

5. It's effective: One terrific thing about Social Security is that it works! The Social Security Administration estimates that it lifts 14 million elderly Americans -- about 44% of them -- out of poverty: "Without Social Security, the poverty rate for those aged 65 and over would meet or exceed 40 percent in 41 states," reports the Center on Budget and Policy Priorities. "With Social Security, it is less than 10 percent in the large majority of states."

Take into account disability and survivor benefits, and the program lifts more than a million children out of poverty, too.

6. How much average Americans can expect
In 2015, over 59 million Americans will receive almost $870 billion in Social Security benefits. As of October 2015, the average Social Security retirement benefit was $1,338 per month, or about $16,000 per year. That reflects both men and women. A closer look, though, reveals that the average benefit for men is about 28% higher than that for women -- as women tend to earn less and often work fewer years than men, due to caring for children or parents. The overall maximum monthly Social Security benefit for those retiring at their full retirement age in 2015 is $2,663 -- or about $32,000.

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7. You shouldn't worry -- too much
Many are fretting over the future of Social Security, fearing that the program is due to run out of money soon and will stop sending out checks. Here's a reality check: Between taxes taken in and interest earned on them, less benefit checks written, the trust funds have been running a surplus in every year since 1984. Surpluses are likely to stop in 2020, at which point the Social Security system can rely on incoming interest payments to make up the deficit – for a while. According to several government estimates, Social Security funds are likely to become insolvent between 2033 and 2037 – as early as 18 years from now – if no changes are made. It that happens, it won't mean that there's no more money for benefits. It will mean that the fund is no longer taking in enough money to cover all promised benefits. Thus payment checks are likely to end up shrinking – by about 25%, according to the Social Security Administration. That's bad news, but it isn't as bad as many fear.

The more you know about Social Security, the better decisions you can make about it.