10 Jaw-Dropping Stats About the State of Retirement in America
I think that some changes are needed to the program - both in how it is funded and how it is distributed and taxed.
Social security was intended to be self-funding by the current workforce contributing and maintaining the fund while retirees were getting payments from the fund.
Social payments are intended for those that have contributed to the fund by being part of the work force, but the wife or husband of a social security contributor that spent all or the majority of their work age life as a primary care giver in the home, should be able to draw an amount equal to one-half that of their working spouse.
Social is not and never was intended as a welfare program - it is funded by working people contributing to it and is intended to benefit former working people during their retired years.
I think the cap on the level of income subject to social security tax should be raised significantly to bolster contributions - the increase need not be mirrored by an exact percentage raise in benefit payment amounts as those who be affected by raising the income level subject to social security tax are less likely to be solely dependent on social income in their retired years than lower income earners.
S E E D E D C O N T E N T
T he Social Security Administration (SSA) will pay benefits to nearly 68 million Americans every month in 2024 for a total of more than $1.5 trillion over the course of the year. That’s more than the entire annual GDP for many countries. But even those gargantuan numbers aren’t the most striking statistics regarding the biggest program for retirees in America’s social safety net.
It Keeps Nearly 23 Million Americans Out of Poverty
According to the Center on Budget and Policy Priorities , 22.7 million more people would live below the poverty line without their Social Security benefits. No anti-poverty program in America can boast a comparably successful track record.
The number of minors living in poverty would jump by 900,000 without Social Security. For adults between 18-64, it would increase by around three percentage points. But older Americans stand to lose the most by far.
For those 65 and up, the percentage living in poverty would rocket from the current 10.2% to 38.7%.
Around 90% of Older Americans Rely On It
Those over 65 would suffer without Social Security the most, because so many in that age group rely on the program to get by. According to the SSA, nearly nine out of 10 in the 65-plus demographic collect benefits — and those benefits account for 30% of all income among seniors, in general. About 40% of them — 37% of men and 42% of women — rely on Social Security for at least half their income.
Another 12% of men and 15% of women count on Social Security for 90% of their income.
More Than 1 Out of 5 Beneficiaries Are Not Retirees
While most beneficiaries are retired workers — about 77.8% — more than one in five are not.
Additionally, about 7.2 million recipients are disabled workers, and the program also covers their 1.1 million dependents. Roughly 25% of today’s 20-year-olds will become disabled before they turn 67, which is especially problematic considering 65% of private-sector employees do not have long-term disability insurance.
Another 5.8 million Social Security recipients are survivors, which leads to another distressing statistic: More than one in eight of today’s 20-year-olds will not live to the current full retirement age of 67.
Women Get About 77 Cents for Every $1 Paid to Men
According to the SSA, women have longer life expectancies than men and therefore spend more years collecting Social Security — 21.1 years after turning 65 compared to 18 years for men. The result is that women account for 55.2% of beneficiaries ages 60 and up, and that number naturally rises with age. Women represent 63.3% percent of beneficiaries 85 and older.
According to the SSA, women also tend to earn lower incomes and spend fewer years in the workforce, which reduces their average benefits. The median woman’s monthly benefit is $1,623, which is much lower than the $2,080 paid to the median man.
Each Degree Level Adds Hundreds per Month in Benefits
The median monthly Social Security benefit increases with each consecutive educational level achieved. According to the SSA, here’s how median monthly benefits vary by degree:
- Less than high school: $1,301
- High school diploma: $1,697
- Associate degree: $1,870
- Bachelor’s degree: $2,077
- Graduate degree: $2,333
White Recipients Get Hundreds More per Month Than Minorites
Race joins gender and education as the three major factors behind Social Security disparity. According to the SSA, here’s how median monthly benefits vary by ethnicity:
- White, non-Hispanic: $1,926
- Black or African-American, non-Hispanic: $1,618
- Hispanic or Latino, any race: $1,328
- All other races, non-Hispanic: $1,606
Beneficiaries Got Their Biggest Raise in 4 Decades Last Year
Congress mandated annual cost-of-living adjustments (COLAs) to help benefits keep up with inflation in 1975 — and the biggest COLA in history came just six years later in 1981.
The second-biggest was in 2023, in response to the painful inflation of 2022: Recipients got an 8.7% raise in 2023, increasing the average beneficiary’s monthly check to $1,827 from $1,681 the year before — and that, too, was the result of a big boost. In 2022, recipients enjoyed an unusually high 5.9% COLA.
The SSA Cuts Dozens More Checks per Recipient Today
In 1940, the average 65-year-old had a life expectancy of just under 14 years. Today, it’s more than 20 — at a bare minimum, that’s 72 extra checks for someone who claims benefits at 65.
The SSA has to dig deeper every year to meet its obligations, and that trend is not on pace to change any time soon.
Each Recipient Will Lose Half a Taxpaying Worker in 12 Years
In 2022, there were 58 million Americans over 65. The SSA projects that number will grow to 77 million in 2035.
As the number of potential beneficiaries increases, the workers supporting them are spread thinner and thinner. In 2023, there were about 2.7 covered workers for every beneficiary. By 2035, it will be just 2.4.
Benefits Are on Pace To Fall by Over 15% in 2035
According to the SSA, the trusts that fund Social Security will be depleted by 2035. That year, incoming taxes alone will have to fund the program — but it won’t be enough. Without congressional action, the program will be able to pay just 83% of scheduled benefits in 12 years.
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From the article
It Keeps Nearly 23 Million Americans Out of Poverty
Around 90% of Older Americans Rely On It
More Than 1 Out of 5 Beneficiaries Are Not Retirees
It is the most popular entitlement of all time for the simple fact that there always seems to be people who do not or cannot plan for their retirement.
Vic
I disagree with your assertion that Social Security is an entitlement, it is a self-funded program for the retired worker paid for by them and maintained by the current work force for the future.
Welfare is an entitlement; food stamps are an entitlement; Medicaid is an entitlement and so many other government programs are entitlements
But social security is an earned and self-funded benefit, like an IRA, 401(k), pension if you will where the worker contributes to his own future retirement.
The simple fact is that many people dont make enough money to be able to self finance their retirement. America is a consumer culture, and a ton of people go into significant debt to take part.
If we want capitalism we have to accept a "welfare" state, they go hand in hand.
Explain Social Security disability benefits.
That falls under those who cannot right?
America is a consumer culture, and a ton of people go into significant debt to take part.
It is a land of opportunities.
If we want capitalism we have to accept a "welfare" state, they go hand in hand.
Actually, they don't.
Actually they do. Through capitalism there is an eternal "race to the bottom" for wages. It is a major precept of capitalism that the least amount of money possible be paid to workers. Unless you believe that no one will ever accept the lowest paying jobs, poverty and lack of resources to finance retirement is completely inevitable.
Or should someone say "I wont buy that big screen tv I see advertised every day so I can save enough money for retirement that I wont need social security". When you have a consumer culture like this , everyone wants to take part. It is human nature.
How is it possible to plan for retirement when the banks keep printing money and destroying the value of savings? If a $1 million retirement nest egg hasn't 'earned' $ 203,431.43 over the last four years then retirement has stolen by fat cats in finance. Run the numbers for yourself: And medical inflation has been far, far worse to keep all the unproductive middlemen in the insurance industry fat and happy.
There are many more grifters in the financial sector than in government. When the financial sector is allowed to control government then the country goes bankrupt. The boom/bust 'business cycle' is caused by finance; not by production and not by consumption. People who know everything about stealing money but know absolutely nothing about running a business are getting rich off of everyone's retirement plans.
Why are insurance companies entitled to my Social Security? What has Wall Street done to earn a lion's share of my Social Security? Why are banks allowed to grift on my retirement savings without paying me anything?
Social Security works for working people. Finance works for scammers, shysters, thieves, and grifters who don't produce one damned thing in our economy other than debt and destitution.
John
Thanks for the view - I think anyone, making any amount is capable of planning for the future, bettering themselves , doing better and making more and then saving for retirement.
But that is just me, I believe in the American dream - work hard and make a better life for oneself.
I would like to repeat a points I made above -
1. I think that some changes are needed to the program - both in how it is funded and how it is distributed and taxed.
2. Social security was intended to be self-funding by the current workforce contributing and maintaining the fund while retirees were getting payments from the fund.
3. Social payments are intended for those that have contributed to the fund by being part of the work force, but the wife or husband of a social security contributor that spent all or the majority of their work age life as a primary care giver in the home, should be able to draw an amount equal to one-half that of their working spouse.
Absolutely agreed. I'd like to see means testing. Even If you paid into it, once you reach a certain level, for example $250,000 per year in income, you should forfeit benefits.
2. Social security was intended to be self-funding by the current workforce contributing and maintaining the fund while retirees were getting payments from the fund.
Why did we leave that road?
3. Social payments are intended for those that have contributed to the fund by being part of the work force, but the wife or husband of a social security contributor that spent all or the majority of their work age life as a primary care giver in the home, should be able to draw an amount equal to one-half that of their working spouse.
That sounds reasonable.
About the only way that could work is if it is assessed at retirement , and it wouldnt be done on annual income but on savings , and at 250k , spread out over 15 years , thats roughly $1300 a month as a budget .
That is not even mentioning that if someone is to not get benefits due to saving too much , then the system would have to revert to being strictly voluntary on the individuals part whether or not to participate in paying into the system like it was originally started .
It could be done on an annual basis, if you are working while in retirement you still need to file your taxes annually so that could be the mechanism used. Would require closer ties between the IRS and Social Security but they do a fairly good job today so it's not insurmountable. Let's face it, if you are working and bringing home in excess of $100,000 you really don't need the extra income from Social Security IMO.
I don't like the idea of restricting benefits based on them saving too much. That IMO would encourage people to spend more money and save less to avoid that issue. I would rather that people plan ahead and save as much as they can to offset the costs born in retirement and to allow them to live the retirement they would enjoy rather than where they just sit at home watching the world go by.
As it stands right now , as far as i know , a person can draw a SS retirement , and make up to a specified amount , including that SS benefit, before the government starts taking money away at a rate of for every $2 you earn , they withhold $1. And you do have to report those earnings to the SSA directly .
for some people , it wont take long to earn too much to get the payment or even owe it back .
Let's face it, if you are working and bringing home in excess of $100,000 you really don't need the extra income from Social Security IMO.
Americans generally live in accordance with their means. That may be your opinion, but it is meaningless in the grand scheme. The house someone chooses to finance is chosen by their economic situation, and that situation includes their eventual right to social security income that they have been contributing to their whole life. To just apply your economic situation to everyone is obtuse. Should they be forced to sell their home and downsize when they learn that the lifetime of savings that they had sent to social security has suddenly been essentially converted to nothing but a nonrefundable tax payment?
"you should forfeit benefits"
If you paid into it SS owes you. They took money from me at 16 and that obligated the government to give me money when I reached the age that was set when I first paid in. .
Only if they continue to work in retirement until they die. Once they quit working then the SS payments would resume as they are no longer bringing home more than $100k while drawing on SS payments. After all, the system does work that way now. If you are drawing SS payments, you can work and bring home the extra money but the limit is set currently at $22,320. Above that dollar amount, you lose $1 of SS money for every $2 above that amount so if you are bringing in more than the $100k it is simple math that you will receive zero SS money during that time.
The bigger issue is that SS has a cash flow issue and the "bank" will be emptied in 10 years unless something is done to fix the issue. Once the trust fund hits zero, everybody will suffer a 23% decrease in payments and any future payments will be at the rate of money paid in. So if another recession hits where mass layoffs occur that also impacts future payments as the number of workers decreases and the money paid in decreases.
Agree in part. How it's funded definitely needs to be changed. I suggest that the cap limit needs to be removed entirely and all income should be taxed. While I was working it was nice to max out in November and get those extra large paychecks in November & December due to maxing the SS tax but the cap should be removed. I would also suggest that the tax should be increased by 1%.
I would also support another round of raising the full retirement age. When Social Security was first set up and the age for full retirement at 65 was selected, the average life expectancy was 64.5. As the average life expectancy is now in the 70's, I would suggest raising the minimum retirement age to 65 and full retirement to 70, following the same process they used in 1983 where anybody within 20 years of retirement (ie, 45 and older) would see no changes to their full retirement age and the age would increase slowly based on the person's birth year.
Gotta love those legal Ponzi schemes. Anybody else does it they go to jail but since it's the government they can do it.
Not sure how it currently works but I'm concerned that this would force more people into poverty. SS payments alone are not enough to live on. As more husbands die before their wives, wouldn't this cause more widows to try to live on only a 1/4 of the income they had before?
That would cover 73% of the current shortfall. Currently there is only support for raising the limit to $350,000 which might cover 22% of the shortfall.
That would probably cause a surplus.
So the answer is a blend of the two proponents
and doesn't necessarily need the ages to be adjusted.
I'll admit I didn't do the math. But just how much surplus could those two actions provide? Can't ignore that we are moving into a period where there will be many more boomers who are drawing on it. In 1950 there were 16 workers paying into SS for each retiree who was withdrawing from the system. The estimate is that by 2025 there will be just 2.3 workers paying into the system for each beneficiary.
Rather than just fund for the current issue I believe that we should also look towards the future as well. If the surplus can give a good 50 year run before these funding issues crop up again than perhaps that might be enough. But I'm also very tired of Washington just looking for the bandaid fix to cover the short-term issues and continue to ignore long-term. I would love to see a plan to set up SS for the next 100 years.
At the same time, more education needs to be put forth on the importance of building one's own retirement savings. A retiree should not be counting on SS for all funding needed when one retires yet there are so many who do. Just looking at some depressing numbers, the average retirement savings for those turning 65 is only around $600k. That's admirable but not enough to properly retire.
One of the articles i read that has stuck with me , is that 53% of boomer aged individuals have 0 dollars in savings to speak of .
The other 47% is broken down somewhat like this , about 50% of the 47 have between 0 and 250 k saved , another 20% of that have between 250 and 500k saved , about 10% have between 500k and a million saved , the rest have greater than that saved .
There are many factors to consider in how long any of those amounts will eventually last and those depend on the individuals choices .
100 years from now the great majority of Americans wont be working anywhere. Automation will make most Americans unemployed and there will be universal basic income paid for through taxes on the trillionaires who own all the robots.
After all, someone has to buy those products.
Utopia is living on the largess of others.
You can call it whatever you want, I call it reality. 70-80% of people will not have a job. How are they supposed to buy anything without any money? The government will have to give them money in order to keep the wheel greased.
Perhaps you're right, and an even higher percentage of people won't have any skills or abilities of value.
Says all lifelong givernment workers!
Must be nice...
Or we could just not build robots that will make people unemployable, but then there wont be any trillionaires.
I believe the current model for that is Russia. Put everyone in the military and go reclaime long lost lands in perpetual wars.
This has prompted several family members to sell their California properties and move to the cheapest place they can buy a smaller home in AZ or Appalachia, so they can sit around quietly until they pass.
I believe you , and it seems to be a common action from what i have been hearing . people deciding to downsize and make it so what they have already stretches as far as they can, hopefully doing so comfortably .
The factors i am thinking of, of course are uniquely individual and those choices are theirs alone , it falls to what that individual to decide , what level that falls to , decide what is a need , or simply a want thats not really needed , but desired . i think that alone gets people into trouble later in life .
Mark
I think that number is way high , but I would like to read the article if you can provide a link.
If that number is right wow!
Baby boomers are hitting "peak 65." Two-thirds don't have nearly enough saved for retirement. - CBS News
if i can find it again i will share it , but as it is i am seeing 2-3 articles a day on my MSN feed about boomers and retirement and have been for the last month or so . and never a repeat .
It wasnt an article i thought to save , but was one that the numbers struck me as a WTF moment .
I dont know about anyone else , but i have been noticing lately ( could be because i turned 62 ), that there have been a lot of articles in the financial section of my news feed online , dealing with the retirement situation of the "Boomer " generation ,those born between 1943 -1965 alone . Some of the figures i have read , if true , are very concerning to say the least . and it doesnt simply have to do with the social security program itself .
I have also read about "issues" in the boomer generation , of which I am one of those retired.
Any articles you can provide links for I would appreciate.
Thanks to everyone who has contributed.
Enjoyed the conversation on a very important issue