7 Reasons to Be Thankful for Social Security

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Social Security is arguably this country's most important social program. Without taking anything away from Medicare, Social Security provides monthly payments to more than 66 million Americans (including the Supplement Security Income program), and it's been doing so, at least from a retirement benefit standpoint, for the past 77 years. 

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But the reality is that most working Americans, and probably even some retirees, don't have a clue just how important Social Security is to their financial well-being. Rather than take this program for granted, here are seven reasons you should be thankful for Social Security.

1. It only takes 10 years of part-time work to qualify for retirement benefits

Despite the popular belief that Social Security is an "entitlement program" you're given at birth, you'll have to earn your way into receiving benefits. However, meeting the requirements to receive benefits won't be too hard for the average American.

In order to qualify for retired worker benefits, you'll need 40 lifetime work credits, of which a maximum of four can be earned annually. In 2018, $1,320 in earned income equates to one work credit, meaning $5,280 in earned income next year will max out your credits for the year. That amount of income should be achievable with just a part-time job. In other words, it only takes 10 years of part-time work to qualify for Social Security retirement benefits, which really isn't that much of a burden on workers.

It should be noted that your length of work history and earnings history do factor into your retirement benefit calculation, so it's in your best interests to work a minimum of 35 years and earn as much as possible in those 35 (or more) years.

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2. It'll be there for you when you retire

Lawmakers and most Americans have known for some time that Social Security is in trouble. The ongoing retirement of baby boomers, coupled with lengthening life expectancies, is weighing on the program. By 2022, more money will be flowing out of Social Security's Trust to beneficiaries than will be generated by its revenue channels, per the latest Trustees report. By 2034, nearly $3 trillion in asset reserves is expected to be completely gone.

Despite this, Social Security is guaranteed to be there for you, in some capacity, when you retire. The reason? Payroll taxes on the earned income of workers makes up more than 87% of the revenue the program generates. As long as Americans keep working, the 12.4% payroll tax on earned income between $0.01 and $127,200 will keep collecting money that can be distributed to eligible beneficiaries.

To be clear, this doesn't mean that benefit cuts aren't a possibility at some point, but it does mean that you can count on receiving a payout when you enroll for benefits.

3. It protects nearly all workers in case of disability and/or survivors insurance

Social Security is most commonly associated with retired worker benefits, and for good reason -- 68% of monthly payouts go to retirees. But the program also provides protections to a majority of today's workers, even if they're unaware of it.

According to the Social Security Administration (SSA), roughly 90% of today's workers between the ages of 21 and 64 are protected in the event of a long-term disability. If you have 40 lifetime work credits, you'll qualify for disability benefits. But there's also a staggered lifetime work credit total, based on your age, which may allow you to qualify. Around 10.4 million people receive disability benefits as of September 2017.

Additionally, 96% of working Americans between the ages of 20 and 49 have survivors insurance protection for their young children or spouse in case of an untimely death. Nearly 6 million people are currently receiving survivor benefits. 

4. It lifts almost a third of seniors out of poverty

Ove 42 million retired workers receive a benefit each and every month, which as of September 2017 worked out to an average of $1,372. That may not sound like much, but it's enough to pull approximately one-third of elderly recipients out of poverty each year.

According to a study conducted by the Center on Budget and Policy Priorities (CBPP), the elderly poverty rate with Social Security income included was 8.8% in 2015. If no Social Security income were available, the CBPP's analysis projects that elderly poverty rates would jump to 40.5%, or nearly 32% higher. Considering that a third of seniors relies on Social Security for 90% or more of their monthly income, and 62% count on it for at least half of their monthly income, we should be thankful for the job it's doing to keep seniors above the federal poverty line. 

For those of you wondering, the SSA suggests that Social Security is designed to replace about 40% of your working wages.

5. It can buoy the ones you care about most

Social Security might have been designed to provide low-income retired workers with a lifetime stipend, but it does so much more than just help lift around a third of retired workers above the federal poverty level. It can also provide valuable income for those around you.

Today, there are almost 2.4 million spouses and 664,000 children receiving benefits based on the earnings history of a primary worker. Even ex-spouses who were married for at least 10 years, and who meet certain eligibility requirements, may have the option of receiving spousal benefits from a former partner. Best of all, these spouses, children, and ex-spouses don't reduce the monthly payout received by the primary worker, making it a win-win for everyone involved.

Also, in the event that you pass away before your spouse, he or she may have the option of receiving a survivor benefit that's based on your earnings history. As long as the survivor benefit is higher than the benefit your spouse would receive from his or her own earnings history, it could actually put your loved one on better long-term financial footing.

6. You control your destiny

With the exception of your full retirement age (the age where you become eligible for 100% of your retirement benefit), which is determined by your birth year, Social Security leaves you in the driver's seat. And who doesn't like choice?

You get to decide how many years you work, and through that work, how much you'll make on average each year. The SSA factors in your 35 highest-earning, inflation-adjusted years when calculating your retirement benefit at full retirement age. Therefore, if you want a bigger monthly payout, consider working a bit longer. After all, you should be able to command a higher salary in your 50s and 60s due to your gained experience and skills.

You'll also be able to decide when you'll begin taking benefits, which is arguably the most important decision a senior citizen will make. Retirement benefits can start at age 62, or any point thereafter, but there's a pretty notable incentive for those who wait. Beginning at age 62 and ending at age 70, your benefits will grow by approximately 8% per year for each year you hold off on enrolling. With few exceptions, you control your destiny when it comes to your Social Security payout.

7. The program wastes very little

Last, but not least, be thankful that more than 99% of the money collected by the SSA goes to eligible beneficiaries. The SSA's administrative costs usually range between $6 billion and $7 billion for the full year, which works out to around 0.7% of the total revenue collected via payroll taxes, interest earned on its asset reserves, and the taxation of benefits. This makes Social Security one of the most cost-efficient agencies in the U.S. government.

Long story short, don't take Social Security for granted. Give this program the thanks and respect it deserves, because there's a pretty good chance it's protecting you or providing for you in some form right now.

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