Social Security has for decades been the basis of income on which workers have built their retirement plans. It has also proved to be a valuable social insurance protection for disabled workers and their families. It has also sustained families when their breadwinners moved on.
It was in 1935 that President Franklin Roosevelt signed the Social Security Act. Since then, it remains one of the most effective, successful, and popular programs in the US. and it is more than a retirement policy as it also provides disability and life insurance protection for beneficiaries.
Around 20% of all Americans comprising around 66 million have collected Social Security benefits in February this year. Of these around 80% are older retired adults. The rest 20% of the SSDI beneficiaries are families of deceased workers and the disabled.
Operating under the Social Security Administration are SSDI and life insurance protection. Workers pay SSDI payroll taxes to be considered eligible for this insurance.
The 2022 figures reveal the extent to which workers depend on the SSDI Administration for their retirement plans. Around 97% of people between the age of twenty and forty-nine who were covered by Social Security were under life insurance protection through Social Security.
A worker with even average earnings and with a family consisting of their spouse and two children have coverage of around $852,000 in life insurance. And those are 2021 figures.
90% of workers between 21 years and 64 years who were covered by SSDI in 23022 were insured in cases of severe disability which rendered them unfit to work.
Premature death and early disability are an ever-present danger for many workers. Around 8% of the labor force either die or are rendered unable to work due to severe disability well before they reach retirement age.
Social Security Is In Sync With Rising Living Costs
SSDI payments are directly linked to the earnings over which people pay their payroll taxes. Their benefits are directly linked to an increase in their earnings. For 2023, the earnings are up to a maximum taxable amount of $160,200.
SSDI payments are also progressive. Low earners earn a higher percentage of their wages while they were employed. Social Security is thus a popular source of income and in most instances the only source of income that is immune to financial market fluctuation.
And once a retired or disabled worker begins receiving regular payment, the benefits only increase to match up to higher inflation levels. This ensures that beneficiaries have inflation factored into their earnings, and they do not face poverty at a later stage of their lives. In stark contrast, most private annuities and pensions are not adjusted for inflation and even if they are, it is only partial and hence insufficient for workers when this is the only source of their income.
Social Security Income Is Only A Third Of The Average Pay Of Working People
One of the drawbacks of social security benefits is that they are more modest than it is made out to be. The February average retirement benefits under the Social Security Administration were around $1,782 a month.
This comes to $21,384 a year. Widows, widowers, and disabled workers received even less on average. Workers who have worked all their lives, and retired at sixty-five in 2022, will get around a third of their past earnings. The replacement range for Social Security has fallen as the full retirement age under the Social Security program rose from 65 in 2000 to 67 in 2022.
The rising cost of health insurance has also taken a chunk out of the Social Security checks. A large percentage of retirees enroll in Medicare (Part B), which is Supplementary Medical Insurance. This causes premiums for Part B to be deducted from their Social Security checks. And with health care costs outpacing inflation by a big margin, these premiums lead to a large chunk of the check being deducted for insurance.
Going by international standards, Social Security benefits are way low for developed countries. America comes in at a poor bottom third in the list for the percentage of earnings for an average worker that has been replaced by their pension system.
Social Security And Children
Social security plays an important role in the life of children. Around 1.1 million children can stay out of poverty thanks to social security. It is next only to the Child Tax Credit and Earned Income Tax Credit for the number of children who are saved from sinking into poverty.
For the EITC and the CTC, the number is 4.4 million for 2021. Over 6.1 million children lived in homes that were receiving social security checks in 2021. That includes 2.7 million children who received the benefits as dependents of disabled, deceased, and retired workers.
The numbers also include others who lived with parents or relatives who benefitted from the social security payments.
Around 1.1 million children stayed above the poverty line thanks to the Social Security checks.
As with every other month, the July 2023 Social Security payments will typically happen on the third of each month. It will also occur on the second, third, and fourth Wednesday of the month. As usual, your birthdate will determine the particular day of your payment.
The Supplemental Security Income (SSI) check comes in on the first of each month.
If your benefits are based on the work record of someone other than you (survivor or spousal benefits), you will get your payment based on the birth date of the primary beneficiary of the Social Security payments.
For those whose birthdate is between the first and the tenth of the month, the payment is on July 12. For those whose birthday is between the eleventh and the twentieth of the month, the payment date this month is on July 19. For the rest, the payment date is on July 26.
