More than 75 years ago, the U.S. government created Social Security, the federal insurance program that provides benefits to individuals and their families who can no longer work because of disability, retirement or death. The program is complex, and its details are often debated among politicians.
Earlier this year, the Economic Policy Institute and the National Academy of Social Insurance published a guide that explains the facts about the Social Security program to young people. The document includes detailed, evidence-based explanations of Social Security’s history, beneficiaries, financing, and shortfalls. It pulls data from the Office of the Chief Actuary of the Social Security Administration, Congressional Budget Office, the Employee Benefits Research Institute, and the Center for Retirement Research.
Here’s a sampling of interesting facts from the document:
- In 2012, about 159 million individuals or 94% of the American workforce, worked in Social Security-covered employment. (Those not covered include government employees covered by other insurance programs, farm workers who do not meet minimum work requirements and students.)
- Approximately 55 million Americans received Social Security benefits in 2011. Seventy percent were retirees; 19 percent were disability beneficiaries and 11 percent were survivors of deceased workers.
- Without Social Security income, it is estimated that nearly half senior citizens would be living in poverty. Instead, fewer than 10 percent of seniors live in poverty.
- Because the U.S. population is aging and people are living longer, the Social Security program is projected to run up a deficit. The projected shortfall is 2.67% of taxable earnings over the next 75 years.
- There are a variety of ways to compensate for the deficit including raising taxes, expanding coverage, investing in equities, increasing the retirement age and reducing cost-of-living increases.
The guide concludes that Social Security fulfills an important need in our society as an insurance program for American workers. To learn more about Social Security benefits and about how your payroll taxes are used, it’s worth checking out this evidence-based document.