Social Security has been around since 1935 and it provides income to around 63 million Americans, 42.5 million of whom are receiving retirement benefits.
The program is largely credited with keeping generations of seniors out of poverty -- but while millions of Americans rely on Social Security to provide at least half their income, most of us don't really understand much about the program.
To give you a little more insight into Social Security, check out these 22 stats -- many of which are likely to shock you.
Americans don't have much confidence in Social Security
The majority of Americans have serious doubts about the future of Social Security, even though the program receives broad support and will be able to pay out most benefits for the foreseeable future -- even if no changes are made.
- 75% of Americans believe Social Security won't be available when they retire. Specifically, almost one-quarter of all Americans think it's not at all likely they'll get a dime of the benefits they've earned, while 51% think it's only somewhat likely Social Security will provide monthly income.
- 77% of Americans don't think the government will do the right thing to ensure they'll be able to have financial security in retirement. Only 23% are somewhat or very confident they'll be able to count on Uncle Sam.
- 64% of current workers don't believe Social Security is likely to be a major source of income in retirement; a surprisingly low number given that around 1 in 5 American workers have no retirement savings at all.
- 73% of seniors responding to a 2017 poll supported increasing Social Security taxes, while less than a quarter expressed support for raising the retirement age.
- 75% of current benefits will still be payable in 2034, when the Social Security trust fund is projected to run short. Retirees should expect to receive at least three-quarters of current benefits through 2092.
Politicians don't generally cut programs with such broad support, especially when much of that support comes from seniors, who are one of the most reliable voting blocks. In short, Social Security is probably safer than you think.
But we're overconfident in how long we'll be able to work
While underestimating the longevity of Social Security, Americans are overestimating the length of their working life.
- 70% of current workers think they'll claim Social Security benefits at age 65 or later.
- 61% of Americans think they'll need to work past 65 because Social Security won't pay enough to take care of their needs. They're correct that you can't live on Social Security alone, but are overly optimistic on how long they'll be able to put off claiming benefits.
- 43% of current retirees claimed benefits at 65 or later. But the median age at which workers claimed benefits was 62 in 2017 and 63 in 2018.
- 30% is the amount by which your monthly Social Security benefit will be reduced if you claim at 62 when you're supposed to retire at 67.
- 24% is the amount by which your monthly benefits will increase if you claim at 70 when you're supposed to claim at 67.
Working longer and delaying your claim for benefits results in higher monthly income. If you're forced out of the workforce early, it's best to have savings to support you so you aren't forced into claiming Social Security. You should also look into whether you could potentially qualify for Social Security Disability rather than claiming retirement benefits right away.
And overconfident in how much benefits cover
Americans also think Social Security will provide more of their income than it will -- and they're significantly underestimating how much of their benefit is likely to go to healthcare expenditures.
- 53% of future retirees think Social Security will pay for a least half their retirement expenses. An even larger share of recent retirees -- 6 in 10 -- think at least half their necessary costs will be covered by Social Security.
- 40% of pre-retirement income is the amount of income Social Security benefits are actually designed to replace.
- 64% of the average monthly benefit for a senior claiming Social Security at 62 could be spent on healthcare costs.
- 20% is the amount of their benefits future retirees expect will go toward paying for healthcare.
- 5.5% is the expected annual increase in healthcare costs from 2017 to 2027. Social Security cost-of-living increases are projected to be just 2.6% annually -- and may be lower, as there were COLAs under 2% in four out of five years between 2012 and 2016.
It's important to have money set aside for healthcare, as married couples may need as much as $370,000 to cover the costs of care as a senior. You also need to supplement Social Security with savings.
We're also not sure how benefits work
Although Social Security is an important source of income, most people close to retirement age don't understand how it works or have plans to maximize their benefits.
- 67% of pre-retirees claim to know how Social Security works. But actual data shows big gaps in their knowledge.
- 91% of Americans 50 and older don't know what factors determine the maximum amount of Social Security benefits they'll be able to receive.
- 86% of pre-retirees aged 55 to 61 don't know how much they'll personally receive in Social Security benefits. Among pre-retirees, 26% had no idea at all how much monthly benefits would be -- compared with just 14% who were aware of the amount they'd receive.
- 74% of pre-retirees don't know their full retirement age, or the age at which they can retire to receive their standard benefits.
- 65% of pre-retirees don't realize you need to apply for Social Security benefits around three to four months before you want benefits to begin. Almost 1 in 10 pre-retirees actually think the Social Security Administration will contact them -- which won't happen.
- 38% of workers think that if they claim benefits early, their benefits will go up automatically when reaching full retirement age. This does not occur, and any reduction in benefits from filing early lasts throughout retirement.
- 23% of workers say they've focused on maximizing Social Security benefits when deciding when to claim their retirement income from the SSA. That means nearly 8 in 10 of us don't make strategic choices about a primary source of retirement income.
Social Security benefits are almost assuredly going to be around, at least in some form, when you retire -- no matter how old you are when reading this. Now's the time to start learning how to maximize them.
Now you know much more about Social Security
Now you know a lot more than most Americans about Social Security benefits.
Hopefully, these stats will inspire you to save more and be smarter about how you claim Social Security so you can maximize benefits without relying too much on this income to fund your retirement.