Who Receives SSA Benefits?

By Jennifer Scherf

Social Security was created by FDR in 1935 as a part of the New Deal plan. This program was created to assist aging workers in the post-depression-era economy. After many revisions, the original act has been expanded to include not only just retirement, but also survivors of beneficiaries, disability insurance benefits, Supplemental Security Income (SSI), unemployment benefits, temporary assistance for needy families (TANF), Medicare, state Medicaid programs, children’s health insurance (CHIP) and the Patient Protection and Affordable Care Act.

All of these programs are funded from Federal Insurance Contributions Act tax (FICA) taxes taken out of your paycheck. Some groups do not pay into this general fund but have opted to fund private pension plans for their members. Some teacher’s unions and state or railroad employees unions fall into this group. Even if FICA taxes are not taken, Medicaid and Medicare taxes are still taken out, even from these groups.

The 2011 annual report by the Social Security Administration’s (SSA) board of trustees shows that in 2010, 54 million people were receiving Social Security benefits while 157 million people were paying into the fund.

Of the 54 million receiving benefits:

-44 million were receiving retirement benefits, and
-10 million were receiving one of the two types of disability benefits.

In order to make sure the program remains solvent, the SSA has made two major changes to how retirement benefits are paid:

-The age you must reach to receive your full retirement benefit has and will continue to increase in order to compensate for longer life spans, and
-The percentage of your earnings that you will realize in retirement benefits has decreased.*

Throughout a worker’s career, the Social Security Administration keeps track of his or her earnings. The amount of the monthly benefits to which the worker is entitled once he or she reaches retirement age depends upon that earnings record and upon the age at which the retiree chooses to begin receiving benefits.

People have been murmuring that SSA is bankrupt for many years now. To the contrary, in 2010 alone the SSA had a $2.6 trillion budget surplus. It’s estimated that there will be a net increase of nearly $69 billion more in 2011. SSA has taken many measures to prevent, or at least delay, the program going bankrupt because so many Americans rely on it.

It is estimated that around 2017, payroll tax revenue will finally be insufficient to cover Social Security benefits. At this point, the system will begin to withdraw money from the Social Security Trust Fund (surplus from all the prior years). The existence and economic significance of the Social Security Trust Fund is a subject of considerable dispute because its assets are special Treasury bonds (i.e., the money in the trust fund has been lent back to the federal government to pay for other expenses). Recently the value of these bonds is even more in question. But at least for now, the program is operating in the black.

Totals paid out by SSA by year:

Year – Beneficiaries – Dollars

1940 – 222,488 – $35,000,000
1950 – 3,477,243 – $961,000,000
1960 – 14,844,589 – $11,245,000,000
1970 – 26,228,629 – $31,863,000,000
1980 – 35,584,955 – $120,511,000,000
1990 – 39,832,125 – $247,796,000,000
2000 – 45,414,794 – $407,644,000,000
2008 – 50,898,244 – $615,344,000,000

* A worker’s retirement income benefit is based on his/her Primary Insurance Amount, or PIA. The PIA is the average of the highest 35 years of the worker’s covered earnings (before deductions for FICA). If the worker has fewer than 35 years of covered earnings, zeros are used to bring the total number of years of earnings up to 35.

** Additional information can be found at www.socialsecurityjustice.com