If you're like many Americans, your knowledge of Social Security is relatively limited. You know that you're paying into the system, and you expect or hope that when you're older, it will provide some income. If you're already retired, you may already be enjoying that income. Still, there's a lot more to know about Social Security -- some of it merely interesting and some of it useful. Here are 15 stats about Social Security.
- Social Security pays more than 59 million Americans more than $850 billion in benefits annually. If that sounds like a heck of a lot, it is. But it's just $14,400 or so, on average, per person.
- About 40 million of recipients are retirees collecting retirement benefits. Other recipients include dependents of those retirees, disabled workers and their dependents, and survivors, including children.
- Social Security is critical for many Americans. According to the Social Security Administration itself, the majority of elderly beneficiaries get 50% or more of their income from Social Security, while 22% of married elderly beneficiaries and 47% of unmarried ones get fully 90% or more of their income from Social Security. Among all stats about Social Security, these are among the most surprising to many.
- Social Security keeps many millions out of poverty. According to the White House, "Excluding Social Security benefits, the elderly poverty rate -- as measured by the supplemental poverty measure -- would be more than 50%, far higher than its actual level of 15%."
- The average monthly retirement benefit was recently $1,344. That amounts to $16,128 per year. If your earnings have been above average, though, you'll collect more than that. Still, the overall maximum monthly Social Security benefit for those retiring at their full retirement age was recently $2,639 -- or about $32,000 for the whole year.
- You can boost your benefits by 24% or more. For every year beyond your normal ("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.
- Retire early, and your benefits may be 30% smaller. Those of us born in 1960 or later have a full retirement age of 67. If we start collecting our benefits as early as possible, at age 62, they will be 30% smaller than they would have been had we started at age 67.
- Shrunken benefits are not such a big problem. The system is designed so that total benefits received are about the same no matter when you start collecting, for those with average life spans. Checks that start arriving at age 62 will be considerably smaller, but you'll receive many more of them.
- Self-employed workers pay twice as much into Social Security as employees do. Employee income is taxed at 6.2% for Social Security. You may not realize it, but employers cough up a corresponding 6.2%. Those who are self-employed, though, pay both the employer and employee portions, forking over a whopping 12.4%.
- Someone earning $118,500 in 2016 and someone earning $3 million will pay the same Social Security tax. That's because the amount of our earnings taxed for Social Security is capped -- at $118,500 for 2016. Any earnings above that do not get taxed for Social Security. (This is one stat about Social Security that many view as unfair.)
- You can receive benefits based on an ex-spouse's earnings. As long as you were married for 10 or more years and you haven't remarried, you may be able to receive income based on your ex's work record.
- The contributing-workers-to-beneficiaries ratio has been plunging over time. Back in 1950, the ratio was 16.5, with about 48 million workers supporting close to 3 million beneficiaries. As of 2013, it was just 2.8 -- and it's expected to hit 2.1 by 2035. This is stressing the system, and making eventual changes to it probable.
- The Social Security program isn't going broke anytime soon. Between taxes taken in and interest earned on them, less benefit checks written, the Social Security 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 -- if no changes are made. If that happens, payment checks won't disappear, but they'll likely shrink by about 25%, according to the Social Security Administration.
- Fully 77% of the trust funds' shortfall could be eliminated via a tax hike. Increasing the Social Security tax rate for employers and employees to 7.2% in 2022 and 8.2% in 2052 would achieve that.
- Taxing all of each worker's income, instead of just the first $118,500 of it, would also wipe out much of the shortfall. It's been estimated that 71% could be wiped out by eliminating the earnings cap over a 10-year period.
See? These stats about Social Security reveal that the topic is rather interesting. And that Social Security is not going away anytime soon, too.