Social Security has been a part of retirement ever since it was established back in 1935. Most people try to understand how Social Security works, but do you? In order to help, we’ve published 9 facts about Social Security that may really surprise you! According to the Social Security Administration, in an average month, 48.2 million people age 62 and older receive a retirement benefit from the Social Security Administration!
Check your Social Security earnings and see an estimate of your benefits on the website, www.ssa.gov.
9 Facts about Social Security
- The Social Security trust fund is huge. At $2.9 trillion at the end of 2017, it exceeds the gross domestic product (GDP) of every economy in the world except the nine largest: China, the European Union, the United States, India, Japan, Germany, Russia, Indonesia, and Brazil.
- Most workers are eligible for Social Security benefits, but not all. For example, until 1984, federal government employees were part of the Civil Service Retirement System and were not covered by Social Security.
- You don’t have to work long to be eligible. If you were born in 1929 or later, you need to work for 10 or more years to be eligible for benefits.
- Benefits are based on an individual’s average earnings during a lifetime of work under the Social Security system. The calculation is based on the 35 highest years of earnings. If an individual has years of low earnings or no earnings, Social Security may count those years to bring the total years to 35.
- There haven’t always been cost-of-living adjustments (COLA) in Social Security benefits. Before 1975, increasing benefits required an act of Congress; now increases happen automatically, based on the Consumer Price Index. There was a COLA increase of 2.0% in 2018, but there was only an increase of 0.3% in 2017.
- Social Security is a major source of retirement income for 61% of current retirees.
- Social Security benefits are subject to federal income taxes — but it wasn’t always that way. In 1983, Amendments to the Social Security Act made benefits taxable, starting with the 1984 tax year.
- Social Security recipients received a single, lump-sum payment from 1937 until 1940. One-time payments were considered “payback” to those people who contributed to the program. Social Security administrators believed these people would not participate long enough to be vested for monthly benefits.
- In January 1937, Earnest Ackerman became the first person in the U.S. to receive a Social Security benefit—a lump sum of 17 cents.
In an average month, 59 million people age 62 and older receive a retirement benefit from the Social Security Administration.
Source: Social Security Administration, 2018