Retirement

Relying on Social Security for retirement income?

Scan the Internet and you will find any number of dire reports of seniors living only on their Social Security, living in poverty, benefit check to benefit check. Frequently these data are used to lobby for higher Social Security benefits (before we even make it sustainable for future generations). But is all this angst based on correct data?

Perhaps not‼️ Take a look at this article which raises some interesting questions about the figures we have come to accept.

https://www.forbes.com/sites/andrewbiggs/2018/03/28/how-much-do-retirees-really-depend-on-social-security-far-less-than-youd-think/#7a063108152c

Let’s start at the beginning. The Social Security Administration, at which I in the past worked, has long published figures purporting to show how much retirees depend upon Social Security as part of their total income. According to the latest SSA figures I could find, SSA states that 34% of retirees receive 90% or more of their income from Social Security. These figures are used by outside groups to argue that Social Security’s funding shortfall should be resolved by raising taxes rather than reducing benefits for retirees. But, as we’ll see, the true figure isn’t 34% but closer to one-third that amount.

No need to jump for joy, however. Saving for retirement is still essential. Social Security is designed to replace only 40% of pre-retirement income and for most people it doesn’t even do that.

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1 reply »

  1. There is nothing wrong with the SS system that cannot be fixed by small increases in the SS tax over the next 15 years. Increase the SS tax rate by the same as the COLA each year until the SS tax rate is 10% for employer and employee. In 2018 the SS tax would of increased from 12.4% to 12.648%, .124% for employer and employee. The 20% SS tax would be more in line with lifetime benefits received and no one would have to take a cut in benefits in 2033.

    It is not really important to me what percentage of retirees receive 90% or more of their income from SS. What is important is that SS benefits do help retirees of all income levels live better in retirement.

    SS income percentages for my family –

    Mom – SS provides 95% of income
    Sister #1 – SS provides 84% of income
    Sister #2 – SS provides 66% of income
    Myself – SS provides 42% of income

    The SS program must be fixed, when are the politicians going to do their job and fix it?

    I wonder if Congress will ever fix the SS program or are they just going to reduce all benefits in 2033 by 25%.

    Like

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