55 All-Inclusive Social Security Facts – The Motley Fool
Social security is undoubtedly our nation's most important social program. For nearly eight decades, it has been responsible for providing a financial foundation for tens of millions of Americans.
As incredibly important as Social Security, it is also largely misunderstood. Back in 2015, MassMutual launched an online, 10-question, true false survey that only 28% of the 1,513 respondents went out (ie, got seven or more responses correctly), including just one individual with a perfect score. This study focused on basic social security concepts that adults of all ages should be familiar with.
In 2018, MassMutual's follow-up truthful survey was released, although this was only five questions and aimed at 1[ads1],007 adults aged 50 and over. Even with a focus on prerirees, who you think would have a better understanding of social security than the wider adult population, 47% failed to answer four or five questions properly.
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9. The average retirement worker took home $ 1,461.31 a month as of December 2018.
10. Although social security does not want to make the average beneficiary rich, it keeps 22.1 million people out of poverty , according to an analysis from the budget and political priorities centers.
On the rules you want to know [19659007] 11. Social security schemes for retirees may begin to be 62 years or later. However, some regulations may allow children or adults under the age of 62 to receive benefits.
12. The long-term disabled are not required to have 40 lifetime credits to receive benefits. The Social Administration Administration has a progressive scale of credit requirements based on age to ensure that younger workers still have the opportunity to qualify for the disabled.
13. Your full retirement age, or the age at which you are entitled to 100% of your monthly payment, is determined by the year of birth. For most baby boomers, your full retirement age will vary between 66 and 67 years. For anyone born in 1960 or later, it is 67 years.
14. Claiming benefits at any age before reaching full retirement age means that you accept a permanent reduction in your monthly payout of up to 30%, depending on the year of birth. Conversely, it can wait until as late as 70 years to claim benefits, increasing the payout by another 24% to 32%.
15. The full retirement age will have increased by only two years – from 65 to 67 years – between the first payment in 1940 and 2022.
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16. Retired workers are encouraged to stick to filing. Every year, a person keeps on taking advantage of his benefits between 62 and 70 years, and the payout grows by about 8%.
17. About three out of five retired employees take their advantage before reaching full retirement age. Conversely, only 10% wait for full retirement age to claim payment.
18. The maximum amount a retired employee can be paid for one month at full retirement age in 2019 is $ 2861.
19. Social Administration Administration may withhold some or all of your benefits if You start taking your payout before reaching full retirement age. The pension service test prevents the Americans in the early mid-60s from becoming "double-deep" by earning a wage and also paying social security benefits.
20. 20.
The pension service test does not apply to beneficiaries who have reached full retirement age.
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21. Withdrawn benefits from the pension income result are not lost. With the exception of going away early, you get these benefits back in the form of a higher monthly payout when you have full retirement age.
22. Social security has a built-in transfer clause known as Form SSA-521. Should you regret taking benefits early, please submit form SSA-521 and request your application to become invalid within 12 months of receiving your benefits first. If you are approved, you only have to pay back the benefits you received and your benefit can grow at about 8% per year again.
23. In rare cases, people who have never worked before can get an advantage. An example is a spouse or a spouse of a primary or deceased employee.
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On Social Security Lifetime Adjustment
24. The consumer price index for city dwellers and office workers (KPI-W) is the inflation idea that determines the program's annual lifetime adjustments, or COLA.
25. Average CPI-W reading from the third quarter (July to September) in the previous year acts as a baseline, while the average CPI-W reading from the third quarter of this year is the comparison. The other nine months do not matter for Social Security's COLA calculation.
26. Since the KPI-W data for a previous month was published by the Bureau of Labor Statistics in the second week of this month, Social Security's COLA is always announced during that month. second week of October.
27. There are eight major expense categories and dozens of dozens of subcategories to determine KPI-W.
28. COLA has been positive in all three years (2010, 2011 and 2016) since it was introduced in 1975.
29. This year where the average third quarter CPI-W reading falls year on year, payments continue statically. Fortunately, the benefits cannot fall due to inflation.
30. The purchasing power of social insurance has fallen to an estimated 34% between January 2000 and January 2018, according to The Senior Citizens League. Put the blame on this on the KPI-W, and not enough to take the pension costs into the weighting formula.
31. Not all recipients will necessarily receive a COLA in a given year as a result of the unconditional clause.
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About How Social Security Collects Income
32. Social Security has only shy of $ 2.9 trillion in asset reserves. These "resource reserves" are a fancy way to describe their total net cash profits each year.
33. The program's asset reserves are required by law to be invested in special problem federal bonds and, to a lesser extent, debt liability. As of December 31, 2018, these special issues gave an average of 2.85%.
34. Interest income from Social Security assets has generated $ 85.1 billion for the program in 2017, and is expected to take over $ 800 billion between 2018 and 2027.
35 The program's workhorse, in terms of revenue generation, is 12.4% payroll tax on labor income. Wage tax led to $ 873.6 billion of $ 996.6 billion accumulated in 2017.
36. Most employees are not liable for the entire 12.4% payroll tax, with employers and employees split by this obligation down 6.2%. Only self-employed people pay the full amount (12.4%).
37. Wage tax is applied to all labor income that varies between $ 0.01 and $ 132,900, from 2019. This upper "cap" is adjusted annually in line with the National Average Wage Index and exists on Due to the aforementioned cap on the maximum monthly allowance, full retirement age.
38. More than 9 out of 10 workers will earn less than $ 132,900 in 2019, thus paying taxes to the program on every dollar they earn.
39. Earned income in excess of $ 132,900 in 2019 is exempt from payroll tax. The amount exempted has quadrupled from $ 300 billion in 1984 to $ 1.2 billion from 2016.
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40. Insurance money can also be taxable. In 2017, taxation of benefits generated revenues of NOK 37.9 billion. However, this figure will more than double over the next decade.
41. If an individual taxpayer's adjusted gross income (AGI) and half of their benefits exceed $ 25,000 (or $ 32,000 for married couples filing jointly), they will face 50% federal income tax on their social security schemes.
42. Another level of taxation of social security benefits was introduced in 1993, so that 85% of insurance policies can be taxed if AGI plus half of the benefits exceed $ 34,000 for single taxpayers and $ 44,000 for joint filing. .
43. These income thresholds related to taxation of benefits are never adjusted for inflation.
44. A study from the Senior Citizens League finds that 56% of the elderly households owe some federal tax on their social security schemes.
45. Thirteen states also tax social benefits to some degree.
On Social Security Future
46. The annual published Trustees report predicts that Social Security will completely empty its nearly $ 2.9 trillion in asset reserves by 2034.
48. Social security cannot go bankrupt, thanks to its repeated income from the wage tax and taxation of benefits. However, an overall utility cut of up to 21% can wait for the congress to resolve the program.
Image Source: Getty Images. 19659018] 49. Trustees report points out the program's long-term (75 years) actuarial deficit of 2.84%. That is, if wage taxes increased by 2.84% today to 15.24% (12.4% + 2.84%), the program would not have to reduce the benefits through 2092 and it would end 2092 with enough money in the asset reserves. to cover a full payout to the recipients.
50. Social security is estimated to face a $ 13.2 trillion cash deficit between 2034 and 2092. The longer congress is waiting to act, the greater this is lacking.
51. The last major revision of social security took place in 1983. The two-sided changes during the Reagan administration led to additional revenue from the introduction of taxation of benefits and the gradual increase in payroll tax. It also reduced expenses as a result of the gradual increase in full retirement age.
52. The most popular social security adjustment among the public would be to increase or eliminate the income tax associated with the payroll tax.
53. To be able to change the program, there would be a need for 60 votes for support in the Senate. It has been four decades since either the Democrats or the Republicans had a super majority, suggesting that bipartite support for a amendment is a must.
54. Democrats prefer to lift or eliminate the wage tax. Similarly, Republicans prefer a gradual increase to full retirement age. Finding a midway between these ideas has proved to be elusive.
55. Despite the problems, Social Security is one of the most cost-effective programs, with more than 99% of the revenue generated in the hands of qualified recipients.
