12 Facts the Social Security Administration Wants You to Know

When it comes to the nation's most important social programs for seniors, Social Security is arguably at the top of the list. The guaranteed monthly income it provides to eligible retirees will prove critical in helping millions of retired workers, and perhaps even their families, meet their financial obligations.

Yet one of the biggest issues with Social Security, year in and year out, is a lack of understanding of the program. The Social Security Administration (SSA) tries to curb this lack of knowledge with the publication of fact sheets twice yearly, as well as general Q&A-styled pages that help spell out who qualifies, and how much the average American can be expected to receive. Recently, based on December 2016 statistics, the SSA published its first 2017 fact sheet, and it's packed with statistics that current and future retirees should be aware of. Following are 12 facts the SSA wants you to know about Social Security.

1. Over 62 million Americans will receive $955 billion in benefits in 2017

To begin with, understand that around a quarter of the federal budget ($955 billion) is being diverted to Social Security on an annual basis. This $955 billion is predominantly generated from a 12.4% payroll tax on earned income (87.3% of all revenue came from payroll tax income in 2016), while interest income on the programs' $2.85 trillion in asset reserves and the taxation of benefits make up the remainder.

2. 171 million workers are covered by Social Security

The SSA wants you to know that the Social Security program covers a lot of working Americans. To qualify for Social Security benefits, you only need to collect 40 lifetime work credits. You can earn up to four credits annually, with each credit being valued at $1,300 in earned income in 2017. In other words, working part-time for 10 years could ensure that you'll be receiving Social Security benefits when you retire.

3. Retired workers account for 71% of benefits paid

As you might have rightly expected, Social Security is primarily designed to provide a financial foundation for lower-income seniors during retirement. This year, an estimated 71% of the $955 billion being paid out will be headed to retired workers. Social Security payouts accrue by 8% per year beginning at age 62 and continuing until age 70, meaning a smart way to boost your payout, if you're nearing retirement, is to wait to enroll. Working at least 35 years and earning as much as you can annually when you are working, can also boost your benefit.

4. Disabled workers and survivors comprise the remainder

However, you should fully understand that the disabled and survivors of deceased workers also receive a pretty sizable component of this $955 billion pie. As of this past June, the disabled accounted for 10.5 million beneficiaries, while survivors tallied another 6 million. The disabled will receive about 16% of the $955 billion in 2017, with survivors getting the remaining 13%.

5. Approximately 90% of workers are protected in the event of a long-term disability

According to the SSA, a little more than a quarter of today's 20 year-olds will become disabled before they reach their 67th birthday. What's more, 67% of the private workforce has no long-term disability insurance in place. Thus, it's probably a godsend that Social Security is currently covering about 90% of workers ages 21 to 64 in the event of a long-term disability. If you have 40 lifetime work credits, you're taken care of. For younger folks who may not have hit that mark, a staggered lifetime work credit total, based on your age, may allow you to qualify.

6. Roughly 96% of those aged 20 to 49 have survivors insurance protection

In addition, about one in eight 20-year-olds won't live to see their 67th birthday. However, the SSA notes that practically all workers (96%) between 20 and 49 who worked in covered employment as of 2016 had survivors protection insurance for their young children and surviving spouse in case of an untimely death. Survivor benefits can be especially useful for widows, since women are far more likely to stay home to raise their children and take care of sick friends and family. Rather than rely on their own work benefits, which may be adversely affected from taking time off from their career, they may be able to take survivor benefits based on their spouse's income, assuming the survivor benefit is higher.

7. 61% of seniors rely on Social Security for half their income

It's no secret that retired workers are exceptionally reliant on Social Security income to make ends meet. According to the latest fact sheet from the SSA, 48% of married couples and 71% of unmarried elderly folks count on their benefits check for at least half of their monthly income. That's 61% of all senior citizens leaning on Social Security for half of their income, if not more.

8. 43% of unmarried seniors are almost wholly reliant on Social Security

Speaking of those who are "more" reliant, some 21% of married couples and 43% of unmarried seniors rely on Social Security for at least 90% of their monthly income. That's an astoundingly high figure, and it's increasingly worrisome given that the 2017 Board of Trustees report estimates that a benefits cut of up to 23% may be needed by 2034 should Congress fail to pass new revenue-generating legislation.

9. The average 65-year old will live about 20 years

Another worrisome issue for retirees is that many may be failing to factor in increased longevity. Back in 1960, the average American's life expectancy was less than 70 years. Today, it's nearly 79 years. In fact, if you make it to age 65, you have a pretty good chance of living nearly 20 extra years. Will you have the income necessary to take care of your financial obligations if you live until age 85? Social Security may simply not offer enough income to ensure you can, since it's only designed to replace about 40% of your working wages.

10. The elderly population is set to grow by 65% in 18 years

Making matters even more precarious, the elderly American population in this country is set to explode, given the retirement of baby boomers and an improvement in medical care, medicines, and medical care access. Right now, there are approximately 48 million people aged 65 and up, but by 2035 that figure is expected to climb to 79 million. That's a 65% increase in 18 years, and it's going to be a major strain on the Social Security program.

11. The worker-to-beneficiary ratio will decline by 21% by 2035

As the number of mouths to feed increases for Social Security, the number of workers providing that all-important payroll-tax revenue won't be growing by nearly enough to offset the baby boomer exodus from the workforce. Between 2017 and 2035, the SSA is estimating that the worker-to-beneficiary ratio, which currently sits at 2.8-to-1, could fall by 21% to 2.2-to-1. Raising payroll taxes on the wealthy, or all workers, is one solution that could help hedge against this beneficiary ratio decline.

12. 31% of workers report having no money set aside for retirement

Lastly, and this just adds fuel to an already burning fire, the SSA reports that nearly a third of all workers (31%) don't have a red cent saved for retirement, meaning they're on track to be wholly reliant on Social Security once they retire. Once again, Social Security could be just 17 years away from a 23% across-the-board cut in benefits if Congress doesn't get its act together. That's scary for these folks who aren't saving and creating a secondary channel of income for retirement.

Long story short: Social Security probably covers a lot more than you thought, but it was never designed to be your primary source of income during retirement.

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