Social Security Fact Sheets

Social Security Fact Sheets Social Security Benefit Planners

Eighty-one years after President Franklin Roosevelt signed the Social Security Act on August 14, 1935, Social Security remains one of the nation’s most successful, effective, and popular programs.

Fact #1: Social Security is more than just a retirement program. It provides important life insurance and disability insurance protection as well.

About 60 million people, or more than one in every six U.S. residents, collected Social Security benefits in June 2016. While older Americans make up about four in five beneficiaries, another one-fifth of beneficiaries received Disability Insurance (DI) or were young survivors of deceased workers.

In addition to Social Security’s retirement benefits, workers earn life insurance and DI protection by making Social Security payroll tax contributions:

About 96 percent of people aged 20-49 who worked in jobs covered by Social Security in 2015 have earned life insurance protection through Social Security.

For a young worker with average earnings, a spouse, and two children, that’s equivalent to a life insurance policy with a face value of over $600,000, according to Social Security’s actuaries.
About 90 percent of people aged 21-64 who worked in covered employment in 2015 are insured through Social Security in case of severe disability.

The risk of disability or premature death is greater than many realize. Some 6 percent of recent entrants to the labor force will die before reaching the full retirement age, and many more will become disabled.

Fact #2: Social Security provides a guaranteed, progressive benefit that keeps up with increases in the cost of living.

Social Security benefits are based on the earnings on which you pay Social Security payroll taxes.  The higher your earnings (up to a maximum taxable amount, currently $118,500), the higher your benefit.

Social Security benefits are progressive: they represent a higher proportion of a worker’s previous earnings for workers at lower earnings levels.  For example, benefits for a low earner (with 45 percent of the average wage) retiring at age 65 in 2016 replace about half of his or her prior earnings.  But benefits for a high earner (with 160 percent of the average wage) replace about one-third of prior earnings, though they are larger in dollar terms than those for the low-wage worker.

Fact #3: Social Security provides a foundation of retirement protection for nearly every American, and its benefits are not means-tested.

Almost all workers participate in Social Security by making payroll tax contributions, and almost all elderly Americans receive Social Security benefits.  In fact, 97 percent of the elderly (aged 60 to 89) either receive Social Security or will receive it, according to SSA estimates.  The near-universality of Social Security brings many important advantages.

Fact #4: Social Security benefits are modest.

Social Security benefits are much more modest than many people realize; the average Social Security retirement benefit in June 2016 was about $1,350 a month, or a bit over $16,000 a year.  (The average disabled worker and aged widow received slightly less.)  For someone who worked all of his or her adult life at average earnings and retires at age 65 in 2016, Social Security benefits replace about 39 percent of past earnings.

For more information on Social Security Benefit Planning, Take our Quiz or contact Faye Sykes to and learn how to maximize your Social Security.