Written By : Elaine Silvestrini
Edited By : Kim Borwick
Financially Reviewed By : Rubina K. Hossain, CFP®
This page features 17 Cited Research Articles

Annuity.org partners with outside experts to ensure we are providing accurate financial content.

These reviewers are industry leaders and professional writers who regularly contribute to reputable publications such as the Wall Street Journal and The New York Times.

Our expert reviewers review our articles and recommend changes to ensure we are upholding our high standards for accuracy and professionalism.

Our expert reviewers hold advanced degrees and certifications and have years of experience with personal finances, retirement planning and investments.

How to Cite Annuity.org's Article

APA Silvestrini, E. (2021, May 3). Social Security Retirement Benefits. Annuity.org. Retrieved January 3, 2022, from https://www.annuity.org/retirement/social-security/

MLA Silvestrini, Elaine. "Social Security Retirement Benefits." Annuity.org, 3 May 2021, https://www.annuity.org/retirement/social-security/.

Chicago Silvestrini, Elaine. "Social Security Retirement Benefits." Annuity.org. Last modified May 3, 2021. https://www.annuity.org/retirement/social-security/.

Why You Can Trust Annuity.org

Annuity.org has been providing reliable, accurate financial information to consumers since 2013. We adhere to ethical journalism practices, including presenting honest, unbiased information that follows Associated Press style guidelines and reporting facts from reliable, attributed sources. Our objective is to deliver the most comprehensive explanation of annuities and financial literacy topics using plain, straightforward language.

Our Partnerships, Vision and Goals

We partner with Senior Market Sales (SMS), a market leader with over 30 years of experience in the insurance industry, to offer personalized retirement solutions for consumers across the country. Our relationship with SMS (and Insuractive, the company’s consumer-facing branch) allows us to facilitate the sale of annuities and other retirement-oriented financial products to consumers who are looking to purchase a safe, reliable solution to fill gaps in their retirement income. Readers are in no way obligated to use our partners’ services to access Annuity.org resources for free. If a reader chooses to buy an annuity as a result of our research, analysis, interviews and factual information, our work is supported through compensation from our partners when the reader makes the purchase. Our business model is centered on readers getting the help they're seeking. When we produce legitimate inquiries, we get compensated, in turn, making Annuity.org stronger for our audience.

SMS and Annuity.org share a common goal of educating consumers and helping them select the most appropriate product for their unique financial and lifestyle goals. Our network of advisors will never recommend products that are not right for the consumer nor will Annuity.org. Additionally, Annuity.org operates independently of its partners and has complete editorial control over the information we publish.

Our vision is to provide users with the highest quality information possible about their financial options and empower them to make informed decisions based on their unique needs.

Social Security makes up a total of 33 percent of income for people aged 65 and older in the United States.

Social Security benefits lift more Americans above the poverty line than any other program, according to the Center on Budget and Policy Priorities. Without them, more than 15 million Americans aged 65 and older would be poor.

As important as the program is, it’s modest by the standards of the rest of the developed world. In fact, according to the Organisation for Economic Cooperation and Development, the United States is in the bottom third of the developed world in the percentage of workers’ earnings replaced by a public pension.

In this context “public pension” refers to public pension funds — which, in the United States, include Social Security and various state programs — as opposed to private pension plans.

Additionally, Social Security is running out of money. The security net for American retirees is fraying and in need of repair.

The program was created in 1935 as one of a number of laws to help the country get out of the Great Depression.

Before Social Security, life was bleak for a lot of seniors in the United States. In the years after the stock market crash of 1929, half of American seniors died in poverty. Just 3 percent of elderly Americans were still receiving pensions by 1935.

In the 19th Century, it was not uncommon for elderly people to be sent to vermin-infested poor houses. In some instances, they were auctioned off as farm labor when their families couldn’t care for them.

Social Security Facts and Statistics

Numbers tell much of the story and show the importance of Social Security to America’s seniors. Nearly every American is eligible to receive benefits under the retirement program, which is not means tested. This means there are no minimum or maximum income requirements to receive benefits.

The program is crucial in the lives of retirees. But it has its own limitations and will require some kind of legal fix in the coming years.

Data from the Social Security Administration and the Center on Budget and Policy Priorities show:
  • At the end of 2018, the retirement program was providing benefits to about 47 million retirees and 6 million survivors of deceased workers.
  • An estimated 176 million workers paid payroll taxes toward Social Security in 2018.
  • Nearly 90 percent of Americans aged 65 and older receive benefits from the program.
  • In general, Social Security retirement benefits replace about 40 percent of pre-retirement income.
  • Among elderly Social Security beneficiaries, 50 percent of married couples and 70 percent of unmarried people receive half or more of their income from Social Security.
  • 21 percent of married couples and roughly 45 percent of unmarried persons rely on Social Security for 90 percent or more of their income.
  • $1 trillion was the total cost of the program in 2018.
  • The program brought in $920 billion in non-interest income and $83 billion in interest in 2018.
  • This was $3 billion more income than the program cost in 2018.
  • The program’s income is expected to fall short of costs by $1 billion in 2019 and then continue to fall short each year after that.
  • 39.2 percent of elderly Americans would have incomes below the official poverty line without Social Security.
  • $132,900 is the maximum amount of individual earnings taxed for Social Security.
  • Administrative costs for the program are only 0.7 percent of benefits.

For context, the second most important source of income for seniors is income earned from working, which accounts for 29 percent. This is followed by private and public pensions, at 17 percent, followed by 401(k)s and IRAs at less than 3 percent of seniors’ total income, according to the Economic Policy Institute.

Those pension and savings percentages are likely to change as workers with jobs that don’t provide private pensions fill the ranks of retirees, replacing those who had that benefit.

Looking for guaranteed income in retirement?
Annuities can provide you with income for life, ensuring you won't run out of money in retirement. Find out if an annuity is right for you.

How Much Does Social Security Pay?

The maximum monthly Social Security benefit for workers retiring at full retirement age in 2018 was $2,788, which amounts to less than $34,000 a year. The average monthly benefit for retirees in June of 2019 was $1,471 or less than $18,000 a year.

In addition to your yearly income prior to retiring, your benefit amount is determined by the age at which you begin collecting. In general, the older you are when you start receiving Social Security, the higher your monthly benefit will be.

Social Security is even more important for low-income retirees and those with low levels of education.

People with lower income have a greater percentage of their pre-retirement income replaced by Social Security, as compared with high-income earners.

You can estimate your benefits using this calculator from Social Security.

Social Security Benefits and Inflation

Under the law, Social Security benefits increase each year to keep up with inflation. These increases are known as COLAs, or cost-of-living adjustments.

Research has found, however, that benefits do a poor job of compensating for seniors’ increasing costs, especially as health care and housing make them more vulnerable to inflation risk.

The Senior Citizens League says program benefits have lost 33 percent of buying power since 2000, citing the 2019 Loss of Buying Power Study, which found that January 2000 through January 2019 “COLAs increased Social Security benefits by 50 percent, but the cost of goods and services purchased by typical retirees rose more than twice as fast — 100.3 percent.”

The study, which compares the price increases of goods and services used by retirees to the increase in Social Security benefits since 2000, notes the rapid inflation of fresh fruits and vegetables and prescription drugs.

According to the 2019 Loss of Buying Power Study
COLAs increased Social Security benefits by 50 percent, but the cost of goods and services purchased by typical retirees rose more than twice as fast — 100.3 percent.

When to Apply for Social Security

The decision of when to begin claiming Social Security benefits is extremely important because it determines the amount you will receive from the program every month.

There are several free online calculators designed to help you make this decision. The Social Security Administration has a guide describing each of these calculators, as well as each one’s advantages and limitations.

Social Security Eligibility Factors: Birth Year, Full Retirement Age & Lifetime Income

Everyone can begin receiving Social Security at age 62, but doing so reduces monthly benefits by about 30 percent of the amount dispersed when claiming is deferred until you reach full retirement age.

Full retirement age differs, depending on the year in which you were born. People born in 1937 or earlier reached full retirement age at 65. Anyone born in 1960 or later will not reach full retirement age until 67.

Full Retirement Age:
Year of BirthFull Social Security Retirement Age
1937 or earlier 65
193865 and 2 months
193965 and 4 months
194065 and 6 months
194165 and 8 months
194265 and 10 months
1943 - 195466
195566 and 2 months
195666 and 4 months
195766 and 6 months
195866 and 8 months
195966 and 10 months
1960 and later67

The older you are when you begin receiving benefits, the higher the monthly payments will be. For people born in 1943 and later, that amounts to an 8 percent increase in payments for each year you delay benefits after your full retirement age.

If you start receiving benefits before you reach your full retirement age and you continue to work, the amount of your benefits may be further reduced, depending on your earnings. However, you will be compensated for that loss after you reach full retirement age.

And if you can wait until you turn 70 to claim, you will receive the maximum monthly benefits. You won’t receive any further increase in benefits for waiting past 70.

If you want to know how much you will earn in Social Security benefits when you retire at different ages, you can sign up for an account with the Social Security Administration. And you can find more information to help you decide when to start receiving retirement benefits by using benefits planners at www.socialsecurity.gov/planners.

If you have another source of income, it may make sense to stop working and still wait to begin claiming Social Security. This could be the case if you have a pension, an annuity or a spouse’s income.

Social Security for Married Couples

Married couples have different calculations to make regarding Social Security.

The key difference is for couples in which one person earns less than the other and wants to base his or her benefits on the higher-earning spouse. In such cases, the limit on the lesser-earning spouse’s benefits is 50 percent of the higher-earning spouse’s benefit amount.

This holds true even if the lesser-earning spouse didn’t hold a job outside the home.

This option makes sense if the difference between the couple’s income — and subsequently their benefits — is significant. If the lesser-earning spouse’s benefits equate to more than half of the higher-earning spouse’s benefits, he or she can claim based on their own income.

In other words, the lesser-earning spouse can claim the greater of these two possibilities.

Social Security Benefits for Surviving Spouses

A surviving spouse may receive a one-time payment of $255 from Social Security if the couple were living together or if the surviving spouse was receiving Social Security benefits on the late spouse’s record at the time of death. Any benefits received in the name of the late spouse during the month of death or later must be returned to the government as soon as possible.

Did you know?
To report the death of a spouse, you must call Social Security at 1-800-772-1213 between 7 a.m. and 7 p.m. on weekdays. Or visit your local Social Security office in person.

A widow or widower aged 60 or older or disabled and 50 or older may be eligible to receive monthly benefits from Social Security if the deceased worked long enough under Social Security. The amount of the benefit is based on a percentage of the late spouse’s Social Security benefit, as well as the surviving spouse’s age and the type of benefit he or she is eligible for.

For example, a widow or widower who is full retirement age or older is eligible for 100 percent of the late spouse’s basic benefit amount. If the widow receives Social Security from her own work history, she can apply to receive whichever monthly amount is greater, the benefit she would receive on her own or the benefit as a survivor.

Survivor benefits must be applied for in person. You can call Social Security at 1-800-772-1213 to request an appointment.

When Will Social Security Run Out of Money?

The Old-Age and Survivors Insurance Trust Fund, which is the retirement benefits funding account managed by the Social Security Administration, is on track to run out of money in 2034.

The cost of the program is projected to exceed income in 2020. In 2034, the program’s income will be enough to pay about 77 percent of scheduled benefits.

Congress is considering various proposals to shore up Social Security, including increasing the amount of income that the program taxes, hiking payroll taxes and cutting benefits.

Please seek the advice of a qualified professional before making financial decisions.
Last Modified: May 3, 2021

17 Cited Research Articles

Annuity.org writers adhere to strict sourcing guidelines and use only credible sources of information, including authoritative financial publications, academic organizations, peer-reviewed journals, highly regarded nonprofit organizations, government reports, court records and interviews with qualified experts. You can read more about our commitment to accuracy, fairness and transparency in our editorial guidelines.

  1. Center on Budget and Policy Priorities. (2019, August 14). Policy Basics: Top Ten Facts about Social Security. Retrieved from https://www.cbpp.org/research/social-security/policy-basics-top-ten-facts-about-social-security
  2. Johnson, M. (2019, May). 2019 Loss of Buying Power Study Social Security Benefits Lose 33 Percent of Buying Power Since 2000. Retrieved from https://seniorsleague.org/assets/Report51419-LOBP-FINAL.pdf
  3. Morrissey, M. (2016, March 3). The State of American Retirement. Retrieved from https://www.epi.org/publication/retirement-in-america/
  4. O’Connor, A. (2018, April 11). How Did Older Americans Get By Before Social Security? Retrieved from https://www.aarp.org/money/investing/info-2018/seniors-before-social-security.html
  5. OECD. (2017, December 5). Pensions at a Glance2017: OECD and G20 Indicators. Retrieved from https://read.oecd-ilibrary.org/social-issues-migration-health/pensions-at-a-glance-2017/allocation-of-private-pension-assets-and-of-assets-in-public-pension-reserve-funds_pension_glance-2017-36-en#page1
  6. Romig, K. (2019, July 19). Social Security Lifts More Americans Above Poverty Than Any Other Program. Retrieved from https://www.cbpp.org/research/social-security/social-security-lifts-more-americans-above-poverty-than-any-other-program
  7. The Senior Citizens League. (2019, May 13). Social Security Benefits Lose 33% of Buying Power Since 2000. Retrieved from https://seniorsleague.org/loss-of-buying-power-2/
  8. United States Social Security Administration. (2019, April 22). The 2019 Annual Report of The Board of Trustees of The Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds. Retrieved from https://www.ssa.gov/OACT/TR/2019/tr2019.pdf
  9. United States Social Security Administration. (2015, May.) Thinking of retiring? Retrieved from https://www.ssa.gov/osss/prd/pdf/en/55-plus-insert.pdf
  10. United States Social Security Administration. (2019). When to Start Receiving Retirement Benefits. Retrieved from https://www.ssa.gov/pubs/EN-05-10147.pdf
  11. United States Social Security Administration. (n.d.). Benefits Planner: Retirement. Retrieved from https://www.ssa.gov/planners/retire/retirechart.html
  12. United States Social Security Administration. (n.d.). Full Retirement Age. Retrieved from https://www.ssa.gov/planners/retire/retirechart.html
  13. United States Social Security Administration. (n.d.). Benefits Planner: Survivors: If You Are The Survivor. Retrieved from https://www.ssa.gov/planners/survivors/ifyou.html#h7
  14. United States Social Security Administration. (2019). Your Retirement Benefit: How It’s Figured. Retrieved from https://www.ssa.gov/pubs/EN-05-10070.pdf
  15. United States Social Security Administration. (n.d.). Getting Benefits While Working. Retrieved from https://www.ssa.gov/planners/retire/whileworking.html
  16. United States Social Security Administration. (2019, June). Fact Sheet. Retrieved from https://www.ssa.gov/news/press/factsheets/basicfact-alt.pdf
  17. Thorne, D. et al. (2018, November 8). Graying of U.S. Bankruptcy: Fallout from Life in a Risk Society. Retrieved from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3226574