The Top Five Facts You Need to Know about Social Security
Retirement Daily Guest Contributor
By Donna Clements
Social Security was established in 1935 and is a vital program that provides financial protection for workers and their families when earnings are lost due to retirement, disability or death. In addition to the worker’s benefit, Social Security benefits may be paid to the spouses and children of workers. These benefits are earned throughout your working career and they maintain their value with automatic annual cost-of-living increases. Here are the top five facts for why Social Security is an important program.
Fact #1: A significant portion of the population receives Social Security benefits and pays taxes to fund the program
In 2020, benefits will be paid out to about 64 million people –that’s about one out of every five people. With approximately 176 million workers paying Social Security taxes, that is currently 2.8 workers paying Social Security taxes for each one person collecting benefits. Workers’ taxes are matched by employers to help fund the program.
Fact #2: Social Security provides more than just retirement benefits
In addition to retirement benefits, Social Security also provides benefits in the event of disability or death. Currently, workers and their dependents account for 74% of benefits being paid. Another 16% of benefits are paid to disabled workers and their dependents, with the remaining 10% paid to survivors.
Fact #3: It’s the only retirement plan for many people
The average worker’s monthly Social Security retirement benefit in 2020 is $1,503. Career low-level workers are more dependent on Social Security since this is the only source of income in retirement for many in this group.
Fact #4: Social Security benefits are updated yearly and payable for life
Benefits are adjusted annually using the cost-of-living adjustment (COLA) in order to keep pace with projected inflation. With factors such as an aging population, longer life expectancies and lower birth rates all greatly affecting Social Security, it is important that the program is adjusted each year to allow for the continued payment of future benefits. Effective in December 2019 and payable in January 2020, there was a 1.6% COLA increase in benefits. Once benefits start, they are paid monthly for life. These payments can be direct deposited into a bank account, too, for faster access.
Fact #5: Social Security is the largest source of income for the majority of people age 65 and over
For 70% of single people age 65 and over (50% of married couples), Social Security accounts for at least 50% of their income. For 45% of single people (21% of married couples), it is 90% or more of their income. In total, more than nine out of 10 people age 65 and over receive Social Security benefits.
About the Author
Donna Clements is a Senior Associate at Mercer with over 30 years of experience in Social Security and Medicare. Mercer’s more than 25,000 employees operate in over 130 countries and help you redefine the world of work, reshape retirement and investment outcomes, and unlock real health and well-being. Visit www.imercer.com/socialsecurity for more information and publications written on these topics.