Social Security Turns 80

Social Security turns 80 on August 14, 2015 and has fulfilled the promise made by President Franklin D. Roosevelt when he signed it into law, that it would “protect the average citizen and his family against the loss of a job and against poverty-ridden old age.”  It has done just that.  In Utah alone, Social Security lifts 94,000 Utah retirees from poverty; 42 percent of the state’s population age 65 and older would have incomes below the poverty line without Social Security. [1]

Social Security also generates $9 billion in economic output for Utah, as in 2012 Utah residents received $4.7 billion from Social Security, and every dollar received generates $2.07 in economic output. [2]  Nearly all Utah residents age 65 and older receive Social Security, with an average yearly benefit of $15,106. [3]  Social Security is the only source of income for one in three Utah residents age 65 and older, and it comprises 50 percent or more of the income for over half of Utah residents age 65 and older. [4]

But it is not just retirees who benefit from Social Security.  In 2012, one in eight Utah residents received Social Security, one-third of who were widows and widowers, people with disabilities, spouses, and children. [5]

Social Security is a financial safety net and mainstay of the American economy.  According to the Social Security Administration, the program protects 168,000,000 workers, a number that will increase by 65 percent in the year 2033.

According to the AARP Public Policy Institute fact sheet, Social Security:  Who’s Counting on It? 59 million people, including 17 million under the age of 65, received some sort of Social Security benefit.  Among people ages 20-49 who pay Social Security taxes, 96 percent have earned survivorship benefit for their families, among those ages 21-64, 90 percent can depend on a monthly cash benefit in the case of a severe or prolonged injury.

But reform is needed to keep the promise of this vital program to current and future beneficiaries.  According to Social Security trustees, the Social Security trust funds’ reserves will be depleted in 2014.  This doesn’t mean the program will go away.  Without any changes, Social Security will still pay 79 percent of benefits in 2014 and 73 percent of benefits in 2089.

But reforms can be implemented to keep the program solvent.  Some suggested reforms include an increase in the payroll tax that could eliminate the shortfall. [6]  It is important that any reform be made as quickly as possible to have time to phase in changes and allow future beneficiaries to make adjustment to their retirement plans in case benefits need to be reduced. [7]

Social Security has had many changes and milestones in its 80 year history.  In 1939 benefits for survivors, spouses, and children were added.  In 1956 monthly benefits for the permanently disabled were made available.  In 1983 Congress gradually raised the retirement age to receive full benefits, phasing it to allow for future beneficiaries to make adjustments to their retirement planning.  (Those born in 1960 and after will receive full benefits at age 67 instead of at age 65 as it is for today’s beneficiaries.)

It should be noted that Social Security was never meant to be the only source of retirement income; it is a safety net program to keep people out of poverty and provide basic protections for workers and their families.  Savings, pensions, and investments are also needed to fund a comfortable retirement.  But Social Security is a crucial component of retirement security, particularly for those with low incomes who do not have access to a pension plan or ability to save significantly for retirement.

Social Security has proven to be the most effective anti-poverty program in the United States, keeping millions of people of all ages out of poverty every year.  AARP will continue to work toward the goal of keeping Social Security solvent and strong for future generations.

 

[1] Effect of Social Security on Poverty Among the Elderly by State, 2009-2011:  http://www.cbpp.org/cms/?fa=view&id=3851

 

[2] Social Security’s Impact on the National Economy, AARP Public Policy Institute, 2013.

 

[3] OASDI Beneficiaries by State and County, 2012.  Social Security Administration:  http://www.ssa.gov/policy/docs/statcomps/oasdi_sc/2012/table02.html

 

[4] 2011 ACS Percent of Income from SS-SPSS calculation by AARP Research:  http://www.census.gov/acs/www/data_documentation/data_main/

 

[5] OASDI Beneficiaries by State and County, 2012.

[6] Board of Trustees, Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, The 2015 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds, (Washington, DC:  Social Security Administration, July 22, 2015) footnote 1 and pages 24-25.

[7] AARP Public Policy Fact Sheet, Social Security:  Who’s Counting on It?  (Fact Sheet 331, August 2015).