9 Social Security Facts the SSA Wants You to Know

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Social Security is one of the most important income sources for many retirees, and yet it's also one of the most misunderstood.

According to a survey conducted last year by MassMutual Financial Group, the vast majority of Americans don't have a firm grasp on basic Social Security concepts. MassMutual, which hired KRC Research to complete its survey, found that only 28% of survey-takers could get a passing grade by answering at least 7 out of 10 questions correctly. Furthermore, only one of the 1,513 test-takers answered all 10 questions correctly. In short, Americans still have a lot to learn about the Social Security program.

The good news is the Social Security Administration isn't shy about offering up information that can help current and future retirees better understand the program. Here are nine basic facts that the Social Security Administration, or SSA, wants you to know.

1. Nine out of 10 individuals ages 65 and older are receiving Social Security benefits
The first thing the SSA wants you to know is that the Social Security program covers a lot of seniors. Roughly 90% of Americans older than 65 are receiving Social Security benefits, and the only reason the other 10% aren't could be that they're between ages 65 and 70 and simply haven't filed for benefits, or they don't have enough lifetime work credits to qualify. The latest data from January 2016 shows that approximately 60 million Americans are receiving Social Security benefits.

2. Retired workers account for 72% of total benefits paid
Based on data from June 2015, the majority of beneficiaries (72%) who received benefit payments were retired workers. People should realize that the Social Security program, which was signed into law more than 80 years ago and began paying out benefits in 1940, is primarily designed to provide income to low-wage workers in retirement. But that's not all it does, as you'll see below.

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3. 90% of workers between ages 21 and 64 are covered in case of long-term disability
There's more to Social Security than just income for retired workers. The program also covers 9 in 10 workers between the ages of 21 and 64 should they become disabled over the long-term. This is particularly important, because the SSA notes that almost 7 in 10 private sector workers have no long-term disability insurance.

4. 96% of workers ages 20 to 49 are covered by survivors insurance protection
Additionally, the SSA wants you to know that the vast majority of workers between the ages of 20 and 49 (96%, to be exact) are covered by survivors insurance protection. Survivor benefits are paid to the surviving spouse and children of a deceased, but qualifying, worker. Survivor benefits account for about 10% of all Social Security benefits paid.

5. Social Security benefits account for an average of 39% of the elderly's income
As a whole, Social Security benefits are designed to replace about 40% of a worker's previous income based on data from June 2015. The SSA wants seniors to know that Social Security benefits will be there when they retire, but that it's probably not in their best interest to rely on Social Security income to provide the bulk of income during their retirement. You'll see why below.

6. The number of older Americans will increase to 79 million by 2035
America is aging, and the program is expected see a plethora of new retirees over the next two decades. In June 2015, when the SSA's fact sheet was released, there were 48 million older Americans. By 2035, this number is expected to swell to 79 million. This will lead into the next point.


Image source: Flickr user Eggybird.

7. The worker-to-beneficiary ratio is expected to fall to 2.1 by 2035
The SSA wants you to know that the worker-to-beneficiary ratio, or the number of people currently in the labor force compared to the number of people receiving benefits, is expected to drop from 2.8-to-1 in 2015 to just 2.1-to-1 by 2035. The retirement of baby boomers is a big reason why this ratio is expected to fall. But there are other problems.

8. The life expectancy of a 65-year-old is nearly 21 years
Another reason we're witnessing the worker-to-beneficiary ratio fall is the fact that life expectancies are on the rise. Since the mid-1960s, based on data from the Centers for Disease Control and Prevention, life expectancies in the U.S. have risen by about nine years. According to the SSA, a person who lives to be 65 years old today is expected to live nearly 21 more years. By comparison, a 65 year-old in 1940 was only expected to live an additional 14 years. If people are living longer, they'll be able to draw benefit payments for a longer period of time, too.

9. 34% of the workforce has no savings set aside for retirement
Finally, SSA data shows that around one in three of the estimated 165 million workers covered by Social Security haven't set aside any money specifically for their retirements. In plainer English, more than 50 million working Americans could be heavily reliant on Social Security come retirement.

This last part is a bit worrisome considering that baby boomer retirements and growing life expectancies are expected to exhaust the Trust's cash reserves by 2035 according to the Board of Trustees. If this were to occur and lawmakers are unable to come to an amicable fix over the next 19 years, it's possible a 21% benefits cut could ensue in order to keep the program solvent through 2087.

The key takeaways of the SSA's basic fact sheet from June are that Social Security will be there for you when you retire, and that it covers more people than you probably realized. However, you should consider having a plan B handy and not count on Social Security as your primary income source with an aging population expected to weigh on the program in the coming decades.

The article 9 Social Security Facts the SSA Wants You to Know originally appeared on Fool.com.

Sean Williamshas no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen nameTMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle@TMFUltraLong.The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.