President Franklin D. Roosevelt signed the Social Security Act on August 14th, 1935. Just over 83 years later, this act remains one of America’s most successful, effective, and popular programs. This system of government sets out to offer monetary assistance to people with little to no income. As established in Article 22 of the Universal Declaration of Human Rights, the system may also refer to the action program of organizations that intend to promote the living standards of the populace through assistance measures that guarantee access to sufficient resources for food and shelter, promoting health, and the general well-being of citizens – especially children, elderly, disable, sick, and sometimes the unemployed.
Social security provides a source of income by which workers can build and plan for their retirement and their families in case of uncertainties, such as disability or death.
Even in its immensity, the value of the program is still vague to some and not understood by many. Therefore, these are a few facts about the social security program:
- Social security has lifted a lot of elderly Americans out of poverty: according to official estimates based on the 2017 current population survey, 4 in 10 Americans aged 65 and older would have incomes below the poverty line without social security. To put this number in perspective, this means the system provides a lift for over 15 million elderly Americans.
- Social security is not just a retirement program: social security goes beyond long-term retirement plans, as it also comes with life insurance and disability insurance protection. As of June 2018, at least 1 in 6 American residents and about 4 in 5 older citizens have been beneficiaries. Workers can earn life insurance and protection by making social security payroll tax contributions. However, social security should not be relied on as sole retirement assets, but rather as a piece of their full financial plan.
- Children have a very important stake in social security: as of 2017, about 6 million children under the age of 18 had lived with families that received income from social security. This includes about 3 million children that also got their benefits.
- Social security is designed to replace about 40% of the average American worker’s pre-retirement income: this is generally higher for low-income earners and vice versa. There is also a formula in place in case of inflation that may suggest that social security is weighted in favor of lower-income earners.
- Social security provides and guarantees progressive benefits that will keep up with the increase in the cost of living: these benefits rely on the earnings of an individual paying the social security payroll taxes – which can be up to a maximum taxable amount of $128,400. So, the more the individual earns, the higher the benefits.
- Social security is especially beneficial for women: women tend to earn less in comparison to men, take more time out of the paid workforce, accumulate fewer savings, and receive fewer pensions – all while living longer. Making up 96% of the social security survivor beneficiaries, women tend to benefit from the programmed inflation-protected benefits due to their extended lifespan and spousal benefits.
Social security is an important social program for the people of the United States and has become imbedded in our society as a tool used to help us out when we need it. Though, as we continue to grow as a country, the cost of social security will continue to grow with us. This could result in the shrinkage in benefits in years to come. This is why planning for your retirement at a young age is critical.
I hope you learned some important information from all of the facts listed above. If you would like to learn more about social security, check out the book Get What’s Yours by Laurence Kotlikoff, Paul Solman, and Philip Moeller.