Retirement

A Teachable Moment about Social Security Benefits

June 25, 2015 • By

Reading Time: 2 Minutes

Last Updated: November 6, 2023

Three young workers surround a computerIt appears we have a knowledge gap among younger workers when it comes to Social Security. Recent analysis from the nonpartisan Employee Benefit Research Institute (EBRI) shows a quarter of younger workers believe that Social Security will not be part of their income in retirement. This compares with 13% of those over 45 who believe the same thing.

Younger men are more likely (29%) than younger women (21%) to say Social Security will not be an income source in retirement. And 41% of the nonbelievers have talked with a professional financial advisor about retirement planning, suggesting there are advisors out there who are discounting Social Security, too.

Younger workers who have estimated their Social Security benefit are more likely to believe it will be a source of income in retirement (28%) than those who haven’t (20%).

It appears we have a ‘teachable moment.’ For the average worker, Social Security may replace about 40% of preretirement income. It’s important to factor this benefit into their retirement planning. Think about how much of an impact 40% can have. If you’re training for a marathon, would you want to run 36.5 miles? Or stick with 26.2, which is 40% less of a trek. When you’re figuring out how much you need to save for retirement, isn’t it good to know that about 40% of your goal is automatically covered?

An easy way for workers to understand the role Social Security will play in their retirement is to go online to create a free my Social Security account today and get an estimate of future benefits.

Some of the knowledge gap may instead be a confidence gap. Under the intermediate assumptions of the 2014 Trustees Report, Social Security will be unable to pay full retirement benefits starting in 2033. If nothing is done by our lawmakers, benefits will be cut by about a quarter after 2033. Closing the funding gap would also likely help close the confidence gap.

Kathy Stokes is a communications consultant. She is the director of the American Savings Education Council, a national coalition of private and public sector institutions committed to making retirement planning and saving a priority for all Americans. ASEC is a program of the EBRI Education and Research Fund.

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About the Author

Kathy Stokes, Director, American Savings Education Council

Director, American Savings Education Council

Comments

  1. Barbara M.

    My sister has an adult son (37 yrs. old), who is mentally challenged. He held a job for 14 years, then in the down economy 7 yrs. ago the company moved back to TN. After unemployment ran out, he has had no income and has to pay his own health insurance. Can you please tell me if he is eligible for any SS benefits.
    Thank you.

  2. Roger A.

    When I started drawing S.S. 12 years ago the amount was lessened because I was a state employee the prior 18 years, even though I had all the required Quarters prior to that. Has anything happened to change that inequity?

    • Lorenzo D.

      Roger, if you receive a pension based on work that is not covered by Social Security (for example, Federal civil service and some State or local government agencies, such as police officers and some teachers), your benefit can be reduced based on one of two provisions: The Windfall Elimination Provision and the Government Pension Offset. No changes have been made to these two provisions.

    • Gabby

      Well put, sir, well put. I’ll cenriatly make note of that.

  3. bob J.

    I did a change of address on the phone but I need a document to confirm my address here in Az in order to be put on the access program. Being handicapped would or could I make an appointment to receive an change of address document at the SSA office.
    Bob

    • Lorenzo D.

      Bob, if you already reported the change to us, you should be able to get a benefit verification letter online that reflects your new address by using your my Social Security account. You can view, print, and save your benefit verification letter. Go to Sign In or Create an Account to access your account or create a new account if you don’t already have one. If you can’t or don’t want to use your online account, you can get a benefit verification letter by contacting your local Social Security office.

  4. shirley

    I agree with you Livingston why is it that the people that make the law get’s all of their money when they retire live petty good and go on nice trips, all they do set and come up with crazy laws that they don’t go by why people like us work hard for the money and at the end we get screw, they say people living longer so why not wait until you turn 77 yrs old to pull down your SS, who said you living that long man said it not God but hope that I can enjoy life after 77th sometimes I look at the homeless people some of them living better that we that is working don’t have to worry about paying taxes anyway I pray that we all can living good and have fun in our old age, pray to God we do.

    • HunterSThompson

      Please don’t pull anything down, this is a family website.
      And “homeless live better” take a pole next time you’re out walking past them and ask them how much better their life is than yours. No money, no ownership . Fear of robbery, ra*e, murder, every night. Freezing to death. SUCH A BETTER LIFE THAN *GASP* PAYING TAXES!! I’m going to pick up my cardboard box tonight!!! You opened my eyes Shirley!
      Source: Was homeless for 4 years. Not fun. Turned MY life around and LOVE the roof over my head.

  5. Joe W.

    over the years politicians of every stripe have used SS as a slush fund to barrow from and pay back with inflation ravaged government bonds then their friends in the banking and investment game screw us out of our retirement

  6. Richard

    SS has over 2.3 Trillion dollars in assets, primarily US Treasury notes, which pays interest back to the SS.
    Why is this a secret? No one wants to talk about it.
    If SS sold all it’s notes, the US Government would go bankrupt. So this will not happen. This money will fund SS for many years.
    SS will be around for a long time.

    • Tangela

      – oh my goodness. i watched the portrait video and then looked at this set of wedding photos, and i am genuinely touched. i’ve ever seen a set from a wedding that’s made me want to cry. and my sister is married! haha.i can tell that this is what you’re meant to do. you captured so many great moments and the photos are so achingly beautiful. not to mention, everyone in them is gorgeous! that must help! thanks for thhes!raceael

    • Sukey

  7. Geraldine L.

    A person works all there adult life and expects to
    receive SS. Why then, does the government keep
    punishing us if we take SS at 62 or 66 out of
    necessity. The government cuts the amount we
    receive and it stays at that amount for the rest of
    the time you receive SS. Why?? It should be that
    after full retirement age it goes back to the higher
    amount so that people can afford to live not just
    survive. Not everyone is fortunate enough to have
    been able to save extra money to supplement SS.
    When SS was first put into place it was meant to
    be that everyone that paid into SS was eligible to
    receive full benefits, got full benefits. Just because
    financial institutes came into the picture shouldn’t
    make any difference. The government should quit
    using our money, it was suppose to be keep safe in
    a pension plan that no one else could use or touch. Then the corrupt politicians found a way around the
    the original policy/law to use it to their benefit not ours. SS IS OUR MONEY, NO ONE ELSES, WE WORKED DAMN HARD FOR IT AND SHOULD GET EVERY PENNY!!!!

    • Julia

      The problem with SS is that too many other people can use it.
      Example, work hard all you life, total SS contributions around 150 000 (it is a % based on the total limited SS earnings, your employer would have to pay the same amount.
      So your SS account contributed roughly 300 000 in to the system at the 66 retirement age you begin withdrawals, at the current benefit amount it would take approx. 8-9 years to deplete the whole amount. So the taxes levied on working (and on some SS) paying the benefits for the rest of the years.

      Second portion, your spouse can draw up to 1/2 of your benefit amount (against your SSN), your ex-spouse of 10 years married can draw up to 1/2 of your benefit amount. (not even counting disability, survivors benefits and so on), that still use same bucket that 300 000 went it)
      So if you have a spouse, 2 ex-spouses and you all retired, your initial contribution of 150 000 (and 150 000 of your employer) feeding all these people.

      This is why it is not enough.
      It is all about numbers, how much was put in and how much is taken out.

      • Judy

        Excellent comment. Too many people are unaware of this. They (our government) keeps opening the “doors” to the fund for people who never paid into it or contributed very little. A divorce settlement should not include SSA benefits – but be part of any alimony agreement. I have a friend whose been divorced twice (each marriage lasted at least 10 years so his ex-spouses can claim SSA) and has a current eligible spouse. They each receive ~$1300 a month in spousal benefits! That comes out to $2600 for him and $3900 for his current spouses and 2 ex-spouses for a total of $6500 a month from SSA! Oh, and just wait until those here illegally become eligible for more benefits.

    • HunterSThompson

      Because raising the amount back up like you suggest would only serve to deplete the Trust Fund faster. There are ways to increase ones SS benefit, part time work, full time work etc.

    • MikeB

      “Not everyone is fortunate enough to have
      been able to save extra money to supplement SS.”

      Fortunate??? Winning the lottery is good fortune. Saving money for retirement is GOOD PLANNING, no matter what your income.

  8. Sue

  9. Cherbruz

    SS wasn’t meant to be syphoned off and not be replenished/paid back. SS should only be for the people who have worked and contributed to it.
    Barbara (question above my comment) that is a good question that deserves an answer. I would like to know the answer also.

    • HunterSThompson

      Time machines will fix that. They are closer than you know.

    • James L.

      In order to qualify for any type of Social Security benefit, a person generally needs 40 credits, or at least 10 years of work paying Social Security taxes. For a complete explanation of credits needed for the different types of benefits, read our Benefits Planner: Social Security Credits. For information on how your Social Security benefit is calculated, please read our publication, Your Retirement Benefit: How It’s Figured.

      As far as funding, the Social Security trust funds hold money not needed in the current year to pay benefits and administrative costs and, by law, is invested in special Treasury bonds that are guaranteed by the U.S. Government. A market rate of interest is paid to the trust funds on the bonds they hold, and when those bonds reach maturity or are needed to pay benefits, the Treasury redeems them. Please read our Trust Fund Frequently Asked Questions if you are interested in additional information.

  10. Thomas M.

    Social Security was initially started for those with no other
    resources upon retirement or disability.
    Later companies provided retirement plans and now of course there are 401’s , etc. to act as your main source of retirement with social security as the supplement.
    People are living longer, putting a strain on the ss plan. The retirement age for full benefits needs to be raised again.

    • Crabbylou

      There are a lot of people also wanting the higher payments of Disability Soc security $, so they apply for disability after they retire. I know someone who plans on it, even though she really isnt anymore disabled than the average boomer with aging achey joints. Better surveillance and Threat of prosecution for faking it would definitely help keep Soc security running if the loads of fakes were off this form of welfare.

      • HunterSThompson

        A person can only get Disability from SS up until the age of 65 when it becomes retirement anyway. So your friend lies. AND if a person is not working, they would most likely not qualify for disability anyway because the disability MUST prevent them from working … thus if retired … not working … cant get Disability.

      • Kiana

        Plinesag to find someone who can think like that

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