Tip: How Much? Check your Social Security earnings and see an estimate of your benefits on the Web site, www.ssa.gov.
Social Security’s been a fact of retirement life ever since it was established in 1935. We all think we know how it works, but how much do you really know? Here are nine things that might surprise you.
- The Social Security trust fund is huge. At $2.34 trillion at the end of 2009, it exceeds the gross domestic product (GDP) of every country in the world except the five largest: the U.S., China, Japan, India, and Germany.1
- 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.2
- 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.3
- 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 35.4
- There haven’t always been cost-of-living adjustments (COLA) in Social Security benefits. Before 1975, increasing benefits required an act of Congress; now they happen automatically, based on the Consumer Price Index. There were COLA increases in 2009 and 2010.5
- Social Security is a major source of retirement income for 68% of current retirees.6
- 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.7
- 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 believed these people would not participate long enough to be vested for monthly benefits.8
- A Social Security number is split into three segments. The first three digits indicate the state where an individual applied for the number. The middle two digits are the group number. The last four digits are a serial number, in straight numerical sequence from 0001 to 9999. When the group number — the middle two digits — changes, it create a new sequence of four-digit serial numbers.9
Fast Fact: How Many? In an average month, 36.2 million people age 65 and older receive a retirement benefit from the Social Security Administration.
Source: Social Security Administration, 2011
By the Numbers
The first three digits of a Social Security number indicate the state where the individual applied for the number. The lowest numbers are allocated to states in the Northeast; the highest numbers assigned to the West Coast.
Source: Social Security Administration, 2011
1.Social Security Administration, 2011. Assets as of December 31, 2009. CIA World Factbook, 2011. 2010 GDP estimate.
2-5, 7-9. Social Security Administration, 2011
6.Employee Benefit Research Institute, 2010 Retirement Confidence Survey
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by Faulkner Media Group to provide information on a topic that may be of interest. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2011 Faulkner Media Group.