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(Photo by Derrick Warren/Mirrorpix/Getty Images)
When most Americans think of Social Security, they think of the old age pension program.
But the program is much more than that and should be strengthened for coming generations. It’s a true safety net. Do you know how it works and what it covers?
Retired workers and their dependents account for 74% of total benefits paid in December 2013, according to the Social Security Administration.
How many people are receiving Social Security benefits? An estimated 165 million workers are covered under Social Security.
This is a critical fact because 51% of the workforce has no private pension coverage and 34% of the workforce has no savings set aside specifically for retirement. For the elderly, this is true safety net. Consider that:
• Nine out of ten individuals age 65 and older receive Social Security benefits.
• Social Security benefits represent about 38% of the income of the elderly.
• Among elderly Social Security beneficiaries, 52% of married couples and 74% of unmarried persons receive 50% or more of their income from Social Security.
• Among elderly Social Security beneficiaries, 22% of married couples and about 47% of unmarried persons rely on Social Security for 90% or more of their income.
Wait, there’s more…
• Disabled workers and their dependents account for 16% of total benefits paid in December 2013.
o About 90 percent of workers age 21-64 in covered employment in 2013 and their families have protection in the event of a long-term disability.
o Just over 1 in 4 of today’s 20 year-olds will become disabled before reaching age 67.
o 68% of the private sector workforce has no long-term disability insurance.
• Survivors of deceased workers account for 10% of total benefits paid in December 2013.
o About one in eight of today’s 20 year-olds will die before reaching age 67.
o About 96% of persons aged 20-49 who worked in covered employment in 2013 have survivors insurance protection for their young children and the surviving spouse caring for the children.
What’s the bottom line? With people living longer and millions moving into retirement age, they will need more financial support.
In 1940, the life expectancy of a 65-year-old was almost 14 years; today it is about 20 years.
By 2033, the number of older Americans will increase from 46.6 million today to over 77 million.
There are currently 2.8 workers for each Social Security beneficiary. By 2033, there will be 2.1 workers for each beneficiary.
That’s why you should obtain an estimate of your Social Security benefits today and start planning for your golden years.
Find out how much you’re entitled to at different ages, ranging from 62 to 70.
The highest benefit, of course, is for those who wait the longest to claim benefits, although you’ll have to do some homework to see if you have other assets — or plan to keep working — to pay the bills until then.