Social Security Facts and Data
The Social Security Administration is chockfull of data, and its website is a valuable planning tool. Below is some useful information.
- Sixty-six million Americans are receiving a Social Security benefit totaling one trillion dollars. As a comparison, the US GDP is $25.7 Trillion.
- Sources for Social Security revenues (2020): 89.6% = payroll tax; 6.8% = interest; 3.6% = Taxation of benefits.
- There are 2.8 covered workers for each Social Security beneficiary, which could drop to 2.3 in 2035.
- The median benefit for all beneficiaries is $1,590.
- The median benefit for men is $1,814.
- The median benefit for women is $1,403.
- About 90% of people age 65 and older are receiving Social Security benefits.
- 37% of men and 42% of women receive 50% or more of their income from Social Security benefits.
- About 1 in 4 individuals may become disabled before age 67.
- The number of Americans age 65 or older may increase to 76 million from 58 million by 2035.
- 32% of workers do not have access to a pension plan.
- 63% of workers save for retirement through their company plan.
- The 2023 cost of living adjustment for the Social Security benefit is 8.7%.
- By 2050, 80% of divorced spousal beneficiaries may be women.
- The full retirement age for individuals born before 1954 is 66.
- The full retirement age for individuals born after 1960 is 67.
- If you're divorced, your ex-spouse qualifies for benefits based on your earnings, but it will not impact your Social Security payout. To qualify for benefits, they must be 62 or older and unmarried.
- The eligibility range for benefits is age 62 to 70, and your benefit increases by approximately 8% annually until age 70. For example, if your monthly payout at age 62 is $1,700, it could rise to $3,146 at age 70.
- Your lifetime earnings determine your benefits, and the administration uses 35 years of wages in which you earned the most money.
- The life expectancy for a male aged 67 is 17.6 years.
- The life expectancy for a female aged 67 is 20.1 years.
- On your personal Social Security site, you can check your benefits, estimates for your spouse, and employment history.
- Create your Social Security page here: https://www.ssa.gov/myaccount/
- The Social Security website has several calculators to help you optimize your benefits. https://www.ssa.gov/benefits/calculators/
- I encourage you to establish your online account with the administration to track your benefits and income history to ensure you're maximizing your benefits.
The data from the Social Security Administration is helpful but frightening. For example, the median benefit for all recipients is $1,590. A significant percentage of individuals rely on their payout for half their income, meaning many live on approximately $38,000 annually before taxes. Also, women may account for 80% of divorced spousal benefits by 2050, and 63% of workers are saving for retirement through their company plan, suggesting 37% are not.
Moral of the story: You must save money when you start working, and the more you save, the better. If you don't invest regularly, you're putting your faith in Social Security to cover all your retirement expenses, and the data says it is not a good idea.
The trouble with retirement is that you never get a day off. ~ Abe Lemons
December 1, 2022
Bill Parrott, CFP®, is the President and CEO of Parrott Wealth Management in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process so our clients can pursue a life of purpose. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level. PWM's custodian is TD Ameritrade, and our annual fee starts at .5% of your assets and drops depending on the level of your assets.
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Data source: www.ssa.gov