Social Security Facts
Social security in the US is vital for the country’s working population. That said, few actually know how it functions exactly. That’s why we’ve compiled these handy social security facts and statistics that will help you understand the nuts and bolts of this massive program, including its history, current trends, and future prospects. So, read on for the essential information about social security and don’t forget to browse through our FAQ section for extra details.
Social Security Facts (Editor’s Choice)
- As of August 2022, there were about 65.67 million recipients of social security in the US. (SSA)
- Nearly 9 out of 10 US citizens aged 65+ benefit from social security. (SSA)
- Social security keeps 15.2 million elderly Americans out of poverty. (CBPP)
- The maximum monthly Social Security benefit receivable in 2022 is $4,194. (SSA)
- The Social Security Trust Fund has earned $2.85 trillion in reserves. (SSA)
- At 6.15 million, California was the state with the highest number of OASDI beneficiaries in 2020. (SSA)
- US workers who retire after 2034 will receive only 77% of full Social Security benefits. (SSA)
- At 26.9%, West Virginia has the highest percentage of the total population living off benefits. (SSA)
How Does Social Security Work?
1. To qualify for benefits on retirement, a US citizen must collect 40 lifetime work credits.
That’s not all. As of 2022, a working person gets one credit for every $1,510 in social security taxable earnings. A maximum of four credits could be earned in a year, so to become eligible, the person would have to work for at least ten years with earnings of at least $6,040 per year. These earnings are adjusted annually, so the figure would keep changing for every year of employment.
2. Social security statistics show that waiting to take benefits until age 70 will increase your receivables by 8% a year beyond full retirement age.
Because of legislation passed in 1983, Social Security’s full-benefit retirement age has been increased from the traditional 65 to 67 for people born in or after 1960. Early retirement benefits will continue to be available from 62.
When the full-benefit age reaches 67, however, the benefits available at 62 would be 70% of the full benefit. On the flip side, if you delay benefits until the latest claiming age of 70, your projected social security income per year would be notably higher than if you had claimed the benefits at 67 or earlier.
3. Social Security facts and figures suggest that the largest Social Security payment an individual can receive in 2022 is $4,194 per month.
This is possible when the individual files for benefits at 70. When filing for benefits at 66, the maximum amount receivable is $3,240 per month, while for a person opting for the benefits at 62, the maximum monthly amount is $2,364. This amount keeps changing every year, the benefits due to a retiree being calculated by combining his or her 35 highest-paid years (assuming a career longer than 35 years). These wages are, of course, indexed to account for inflation.
4. As of 2022, the FICA tax rate has remained mostly unchanged at 7.65% since 1990.
According to Social Security history facts, the program’s tax gets its name from the Federal Insurance Contributions Act (FICA) of 1935. The definition of Social Security tax is that it is a mandatory payroll tax the federal government levies to finance the Social Security and Medicare funds (the latter was first included in 1966).
Out of the 7.65%, 6.2% is earmarked for Social Security and 1.45% for Medicare. An equal amount is paid by employers. For the self-employed, the current Social Security rate of taxation is 15.30%. Social Security tax rate history shows that, in 2011 and 2012, the Social Security component for workers was temporarily reduced to 4.2%.
5. Social Security and Supplemental Security Income (SSI) benefits increased by 5.9% in 2022.
This fact about Social Security is a result of the Cost of Living Adjustment (COLA), a system that has ensured that the Social Security increase has kept pace with inflation. This COLA will increase the earnings limits for workers in different categories and has been applicable for payouts from January 2022.
6. The Social Security Trust Fund has earned $2.85 trillion in reserves.
The notion that since the US government brought the trust fund “on-budget,” it has been using its assets to fund its expenditure is one of the most commonly cited Social Security facts and myths.
This particular Social Security trust fund myth is the result of a misunderstanding since these funds have always been used to meet the yearly cost of Social Security. Only the way these funds were represented in the budget was changed in 1969 and then again in 1990 when they were taken off-budget. While how the funds have been invested has changed over the years, interest accrual shows that it has been beneficial for the Social Security Trust Fund.
7. In 2020, improper payments by the Social Security Administration (SSA) increased Social Security costs by a total of $8.3 billion.
These improper payments were due to fraudulent activities and included OASI, DI, and SSI. Social Security abuse statistics indicate that common frauds include false statements on a claim, concealing facts or events, buying or selling fake Social Security cards or numbers, impersonation of an SSA employee, and misuse of benefits by a representative payee. The use of fake or stolen Social Security numbers to obtain fraudulent tax refunds from the IRS further costs taxpayers billions of dollars every year.
8. In FY 2021, the Cooperative Disability Investigations program reported more than $86 million in projected savings to the disability programs.
Aggressive measures taken by the SSA, along with the Office of the Inspector General, have helped reduce the fraud incidence rate to less than 1%. Social Security fraud statistics show that one such effective measure is the Cooperative Disability Investigations program, under which the administration investigates suspicious disability claims before deciding to award DI benefits. By doing this, with the help of state and local law enforcement, the program has managed to save a substantial amount of money, with an ROI of $17 for each $1 spent.
9. Social Security numbers are generated differently for Americans born before and after 2011.
One of the interesting Social Security fun facts is that before 2011, the Social Security number was generated using markers like the issuing office’s zip code and the order in which people applied for the number.
Since 2011, newly issued numbers have been completely randomized, making it less likely for hackers to guess them. Many people also don’t know that any 9-digit Social Security number is only ever used once and is retired once its assignee dies. Even if you are assigned a new number during your lifetime, your old number will be recorded under your name.
(The Motley Fool)
How Many People Are on Social Security?
10. As of August 2022, there were 65.67 million recipients of Social Security benefits.
These include about 56.69 million beneficiaries of Old-age And Survivors Insurance (OASI), including retired workers, their dependents, or their survivors, and nearly 9 million beneficiaries of Disability Insurance (DI), including disabled workers and their family members. These numbers suggest that around 20% of Americans receive benefits through the Social Security program.
11. As of December 2020, California had the highest number of OASDI beneficiaries in the US, at 6.15 million.
Florida (4.84 million) and Texas (4.42 million) had the next highest numbers of OASDI beneficiaries. These figures also include retired workers, their dependents, or their survivors for OASI benefits and disabled workers and their family members for DI benefits. Based on Social Security disability statistics by state, the highest number of DI beneficiaries were in California (594,117), Texas (531,099), and Florida (534,714).
12. 26.9% of the total population of West Virginia receives benefits, the highest in percentage terms across all US states.
States like California, Texas, and Florida have high numbers of beneficiaries because of the high overall state population. In terms of percentage of the entire population, however, West Virginia, Maine (26.3%), and Vermont (25%) rank at the top.
Social Security statistics show that in terms of the percentage of the population aged 65 or older, the states ranking at the top are South Dakota (95.3%), Wisconsin (94.4%), and Idaho (93.8%). The national average for the US in the former category is 19.2%, and in the latter, it is 87.3%.
13. According to current projections, US workers retiring after 2034 will receive only about 77% of full Social Security benefits.
According to the SSA’s 2022 Trustees Report, the OASI fund’s reserves will be depleted by 2034. The fund will have to rely solely on the income from payroll taxes, which will be enough to pay 77% of the benefits. Based on the most recent Social Security facts, the DI reserves are estimated not to run out in the next 75 years.
Some ways to counter this problem with Social Security include increasing the retirement age, which is already being done, and increasing the FICA tax rate, which would be an unpopular measure.
14. The number of US workers per Social Security beneficiary has declined from about 42 in 1945 to 2.8 in 2021.
This is the main reason for the depletion of the funds available in the program. During the time of the post-WWII baby boomers, the worker-to-beneficiary ratio increased; however, as birth rates declined and baby boomers began retiring, the Social Security stats started showing a rapid downward trend.
The increased longevity of US citizens adds to problems with Social Security. According to the SSA’s estimates, by 2038, the number of workers supporting each beneficiary will come down further to 2.3.
Why Is Social Security Important?
15. Among elderly Social Security beneficiaries, 37% of men and 42% of women receive 50% or more of their income from Social Security.
Nearly 9 out of 10 US citizens aged 65+ receive benefits, which represent about 30% of the income of the elderly. As explained by the Social Security act facts in the FAQ section below, for a substantial number of the elderly, these benefits make up nearly all of their income.
This source of income is particularly important when you realize that the life expectancy of a 65-year-old in the US has increased tremendously from the 1940s, from about 14 additional years to 20 additional years. In the absence of this support system, many of the elderly in the country would have little to no income.
16. Social Security lifts 15.2 million elderly Americans out of poverty.
In fact, if people of all ages, including children under 18, were to be included, current Social Security facts show that more than 22.5 million people are lifted by it above the poverty line, more than any other program. Without benefits, 37.8% of elderly Americans would have incomes below the official poverty line; with these benefits, only 9% do. The program is also important for keeping millions of children from growing up in extreme poverty.
17. The absence of Social Security would take the poverty rates among elderly Black Americans to 48% from the current 17.1%.
Another major benefit of Social Security is on non-White communities in the US, as they have higher disability rates and lower lifetime earnings than White workers, on average.
According to Social Security statistics, 48% of elderly Black Americans and 45.4% of elderly Latino Americans would be below the poverty line if these benefits weren’t available to them, compared to the current rates of 17.1% and 16.6%, respectively.
For elderly White Americans, 35.8% would be under the poverty line, compared to the current 6.8%. Similarly, among elderly women of all ethnicities, Social Security helps bring down the poverty rate by 31 percentage points.
18. A young person starting a career today has a 1 in 3 chance of dying or qualifying for SSDI before reaching Social Security’s full retirement age.
This is why the disability component of Social Security, known as Social Security Disability Insurance (SSDI), is so important. Social Security disability statistics show that disability rates rise substantially with age and can have devastating economic consequences on the lives of workers and their families.
Thanks to SSDI, almost 156 million workers have earned protection in the case of a severe, long-lasting medical impairment through their payroll tax contributions, while 8.2 million are currently receiving disabled-worker benefits.
Frequently Asked Questions
How does Social Security work?
Social Security pools mandatory contributions from all workers and their employers and pays out benefits to those eligible. This way, it provides a source of income to people not working anymore, such as retirees and the disabled. Social Security recipients can also be dependents or survivors of workers.
Who contributes money to the Social Security Trust Fund?
Every US worker and their employer contribute money to the Social Security Trust Fund through payroll taxes. The current tax rates for both employees and employers are 6.2% (not including the Medicare contribution). Self-employed people also pay the Social Security tax.
What is the source for the money in the Social Security Trust Fund?
Apart from the contributions made by workers and their employers, the funds to finance Social Security come from the returns on the investments made by the fund. The surplus remaining after paying out benefits to Social Security recipients is invested by the fund into government securities.
Who pays Social Security?
All US workers contribute to the Social Security Trust Fund through payroll taxes, which then pays out the benefits through the Social Security Administration. There are certain exemptions, such as some religious groups, students with a job at their university, individuals working for a foreign government, and non-resident aliens.
When was Social Security established?
The original Social Security Act became law under President Franklin D. Roosevelt in August 1935. The current version of the Act encompasses several subsequent social welfare and social insurance programs.
How did Social Security start?
The original purpose of Social Security was to implement social insurance during the Great Depression of the 1930s, when poverty rates among senior citizens exceeded 50%. It was an attempt to limit the dangers of modern American life, including old age, poverty, unemployment, and the burdens of widows and fatherless children.
What four programs are included in the Social Security bill?
The four programs included in the Social Security bill are unemployment compensation, old-age pension, increased services for the protection of children, and prevention of ill health.
When did the Social Security Administration become an independent agency?
The Social Security Administration (SSA) was created as the Social Security Board in 1935 to administer Social Security. It assumed its present name in 1946.
Which party started taxing Social Security?
The taxation of Social Security was the result of a bipartisan reform in 1983, which made up to one-half of the value of Social Security benefits potentially taxable income.
This amount was later raised to 85% in 1993. In 1983, the president was Ronald Reagan (Republican), Congress had a Democratic majority, and the Senate was controlled by the Republicans.
When did Social Security become mandatory?
Social Security has been mandatory since it was first introduced by President Franklin D. Roosevelt in 1935. It is a common myth that the program was voluntary initially.
It is true, however, that only those workers whose jobs were covered by Social Security had to mandatorily pay the payroll taxes, and in the program’s early years, only about half of US jobs were covered.
How much does Social Security cost the government?
The US Government’s financial year ends on September 30. Based on the most recent data, the cost of Social Security for the US government for FY2022 was $1.135 trillion.
Almost $1 trillion is accounted for by current payroll taxes, while the rest comes from the interest earned by the Social Security Trust Fund on its investments.
How much is paid out in Social Security each year?
A total amount of $1.135 trillion was paid out in Social Security in FY2022. This amounted to an average of about $20,000 a year per retiree and a little less for the average disabled worker and aged widow/widower.
Can Congress borrow from Social Security?
The surplus generated by the Social Security program, i.e., the money from the income left after all the payouts, is required to be invested in special-issue government bonds and certificates of indebtedness. The Social Security debt gives access to the federal government to this surplus to use for normal line items in its budget.
How much does the government owe Social Security?
The annual balance sheet of the Social Security Trust Fund shows a certain amount of reserves that are held in government securities. This can be seen as the money borrowed from Social Security by year. This figure has been declining steadily, but as of June 2022, it stood at $2.853 trillion.
Which president first borrowed from Social Security?
Based on the available history of government borrowing from Social Security, the first president to do so was Lyndon B. Johnson, whose administration made the decision to bring the Social Security Trust Fund “on-budget” after the massive expense of the Vietnam War.
While the funds from the trust fund were not used to fund the war, the benefit of the unified budget was that the surplus of the trust fund helped bring the overall deficit down. This budget treatment of the fund continued until FY1993, when it was taken off-budget again.
How much have I paid into Social Security?
Your Social Security statement shows how much you have paid into Social Security over your entire working life, as well as the benefits due to you in case of retirement or disability.
The amount you have paid can also be calculated using the Social Security tax rate, which has remained mostly unchanged at 12.4% (6.2% each for employee and employer) since 1990, and the maximum taxable earnings figure, which has consistently increased over the years, as per the Social Security wage base history. The latter figure is USD 147,000 for 2022.
How long does it take to get my first Social Security check?
It generally takes six weeks for the SSA to process your application and start sending your Social Security checks. However, if you have provided incorrect information or if the SSA required additional information from you to process your case, it might take longer.
Can a person who has never worked collect Social Security?
Yes, if they are disabled and unable to work, they can be paid from a program called the Supplemental Security Income (SSI) under the SSA.
This is different from the Social Security Disability Insurance (SSDI) program under the SSA, which is meant for those who have made Social Security payments during their working lives. The payment under SSI is much lower compared to that under SSDI. To be eligible for benefits, the person has to prove that their disability meets the payment criteria.
What happens to my Social Security if I leave the US?
If you are a US citizen eligible for Social Security and leave the US to live in another country, the SSA sends checks to you for the amount due to you.
There are some countries where the SSA is not allowed to send checks (Cuba, North Korea) or requires an exception application (Cambodia, former Soviet Union countries). In these cases, your checks are withheld and sent to you if you visit a country where checks can be sent. The rules are more complicated for citizens of other countries who receive Social Security.
What is the lowest Social Security payment?
Since 1973, the special minimum benefit program has been in place for low-income retirees. This uses the worker’s years of coverage, and not earnings, to calculate the Social Security payment.
In 2018, the payment under this program for 11 years of employment was $40.80. This is the special minimum primary insurance amount. Because of the difference in calculation between the special minimum benefit and the regular benefits, 2018 was expected to be the last year when new retirees would be eligible for a special benefit.
How many Social Security recipients die every day?
About 1.6 million retired beneficiaries and 250,000 disabled worker beneficiaries of Social Security die every year. This brings the per day figure to about 4,380 for retired workers and 680 for disabled workers.
What percent of seniors live only on Social Security?
According to 2022 figures from the SSA, among elderly Social Security beneficiaries, 12% of elderly men and about 15% of elderly women rely on Social Security for 90% or more of their post-retirement income.
Will Social Security be around in 2055?
While Social Security is expected to be still around in 2055, it is estimated that the Social Security Trust Fund will be depleted by 2035.
This means that, from 2035 onward, Social Security payouts will be funded only by the income from payroll taxes. These taxes are expected to be able to account for only about 75% of the benefits due to retirees. This is, of course, assuming that the present trends continue and Congress doesn’t come up with alternatives to ensure the continuation of 100% benefits.
A mix of issues like changes in age demographics in the US and current government regulations has impacted Social Security. And yet, the program is even more important than ever. These Social Security facts, however, also show that a resolution is not impossible. It just requires a strong will to implement the necessary changes.
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