These statistics paint a clear picture of how Social Security is doing and where it might be headed.
More than 65 million people depend on Social Security for some or all of their income, but Social Security’s financial shape is expected to deteriorate over the coming decades. Here are some eye-opening statistics about the current state of Social Security, its beneficiaries, its financial state, and how we could fix it for future generations of retirees.
1. About 65.1 million people received benefits from Social Security in 2015. This figure is already up to about 66 million in Nov. 2016. So, not only is Social Security the nation’s largest retirement plan, but it is growing rapidly and projected to continue to swell in size.
2. Social Security benefits made up 5% of the U.S. gross domestic product in 2015. This translates to more than $886 billion paid to beneficiaries.
3. Sixty-one percent of Social Security retirement benefit recipients received at least half of their income from Social Security, which is designed to replace 40% of the average retiree’s pre-retirement income. Since a popular rule of thumb states that retirees should expect to need 80% of their pre-retirement income to live comfortably, this implies that six in 10 people may be too reliant on Social Security.
4. Thirty-three percent of beneficiaries rely on Social Security for 90% or more of their income. This one is really scary. One-third of aged Americans rely on Social Security for substantially all their income in retirement. The average benefit for a retired worker is $1,355, which translates to an annual income of $16,260. Could you live on that?
5. Median annual income for married couples rose significantly over the past 40-plus years. Even when adjusting for inflation, median income rose 143% for couples and 122% for singles, as compared with 1962. In other words, even with the negative statistics that I just presented, today’s retirees have substantially more income than the average retiree did in the 1960s.
6. Despite many common misconceptions about Social Security being “broke,” the program ran a surplus in 2015. In fact, 2.5% of Social Security’s revenue was added to the trust fund to build up reserves.
7. Speaking of reserves, the Social Security Trust Fund is expected to have more than $2.8 trillion in reserves at the end of 2016. In addition, the program is projected to run a surplus through 2019. After that, however, deficits are expected for the foreseeable future, and these reserves are projected to be exhausted by 2034, at which point only about three-fourths of promised benefits will be able to be paid. There are two main ways to fix the problem — benefit cuts or tax increases.
You can read the other half of this article on USA Today: http://usat.ly/2j9SFMD