Fast Facts & Figures About Social Security, 2004

Did You Know That...

• SSA paid benefits to more than 50 million people in 2003.
• Social Security benefits were awarded to over 4 million people.
• Social Security provided at least half the income for 66% of the aged.
• Women accounted for 57% of adult Social Security beneficiaries.
• The average age of disabled worker beneficiaries was 51.
• Disability and blindness were the reasons for paying 82% of SSI beneficiaries.

Abbreviations

AIME

Average Indexed Monthly Earnings

DI

Disability Insurance

FRA

Full Retirement Age

HI

Hospital Insurance

OASDI

Old-Age, Survivors, and Disability Insurance

OASI

Old-Age and Survivors Insurance

PIA

Primary Insurance Amount

SSA

Social Security Administration

SSI

Supplemental Security Income

General Information, 2004

Income of the Aged Population

Size of Income, 1962 and 2002

Median annual income for married couples and nonmarried persons (aged 65 or older) has increased markedly since 1962 (the earliest year for which data are available). Even after adjusting for inflation, median income has risen 90% for married couples and 96% for nonmarried persons.

Receipt of Income, 1962 and 2002

Social Security benefits—the most common source of income in 1962—are now almost universal. The proportion of the aged population with asset income—the next most common source—is similar to that in 1962. Over the 40-year period, receipt of private pensions has tripled, and receipt of government pensions has increased by over 50%. The proportion of couples and nonmarried persons aged 65 or older who received earnings was smaller in 2002 than in 1962.

Shares of Aggregate Income, 1962 and 2002

In 1962, Social Security, private and government employee pensions, income from assets, and earnings made up only 84% of the total income of the aged, compared with 97% in 2002. Although private pensions still accounted for only a small proportion of total income in 2002, they more than tripled their share over this period—from 3% to 10%. The share from earnings declined from 28% to 25%.

Reliance on Social Security, 2002

In 2002, 90% of married couples and nonmarried persons (aged 65 or older) received Social Security benefits. Social Security was the major source of income (providing at least 50% of total income) for 66% of aged beneficiaries, and it was the only source of income for 22%.

Poverty Status Based on Family Income, 2002

The aged poor are those with income below the poverty line. The near poor have income between the poverty line and 125% of the poverty line. Nonmarried women and minorities have the highest poverty rates, ranging from 18% to 24%. Married persons have the lowest poverty rates, with 5% poor and 3% near poor. Overall, 10% are poor and 7% near poor.

OASDI Program

Covered Earnings, 1937–2003

People contribute to Social Security through payroll taxes or self-employment taxes (FICA and SECA), as required by the Federal Insurance Contributions Act. The maximum taxable amount is updated annually based on increases in the average wage. Of the 154 million workers with Social Security taxable earnings in 2003, 5% had earnings that equaled or exceeded the maximum amount subject to taxes, compared with 3% when the program began and a peak of 36% in 1965. About 86% of earnings in covered employment were taxable in 2003, compared with 92% in 1937.

Insured Status, 1970–2004

The percentage of persons aged 20 or older who are insured for benefits has steadily increased over time. The percentage permanently insured (with enough covered work experience to qualify for retired-worker benefits at retirement age) rose from 50% in 1970 to 69% in 2004. The percentage fully insured increased from 77% to 87% in 2004. To be fully insured, a worker must have at least one quarter of coverage for each year elapsed after age 21 (but no earlier than 1950) and before the year in which he or she attains age 62 or becomes disabled. To be currently insured for disability at age 20 to full retirement age (FRA), the worker must be fully insured and have at least 20 quarters of coverage during the last 40 quarters. (Requirements for currently insured status are somewhat different for persons younger than age 31.)

Insured Status, by Sex, 1970 and 2004

Although men are more likely than women to be insured, the gender gap is shrinking. The proportion of men who are insured has remained essentially stable, with 92% fully insured and 84% insured for disability. By contrast, the proportion of women who are insured has increased dramatically—from 63% to 82% fully insured and from 41% to 73% insured for disability.

New Benefit Awards, 2003

Benefits were awarded to 4.3 million persons: of those, 41% were retired workers and 18% were disabled workers. The remaining 41% were spouses, children, survivors, or dependents of workers who received benefits based on the worker's earnings record. These awards represent not only new entrants to the benefit rolls but also persons already on the rolls who become entitled to a different benefit, particularly conversions of disabled-worker benefits to retired-worker benefits at age 65 and 2 months.

New Awards to Workers, 1960–2003

Awards to retired workers have increased considerably since 1960 but proportionately much less than awards to disabled workers. The patterns of growth have also differed. The number of awards to retired workers climbed steadily—from 1 million in 1960 to 1.7 million in 1985. Over the next 10 years, it tapered off slightly, rose to almost 2 million in 2000, then declined to 1.8 million in 2003. Disabled-worker awards increased gradually—from 208,000 in 1960 to 592,000 in the mid-1970s—before falling to 377,000 in 1985. The number then rose, reaching 777,000 in 2003.

Beneficiaries in Current-Payment Status, December 2003

About 47 million beneficiaries were in current-payment status, that is, they were being paid a benefit. The majority of those beneficiaries (63%) were retired workers, and 12% were disabled workers. The remaining 25% were spouses, children, survivors, or dependents of retired or disabled workers.

Average Benefit Amounts, 2003

Benefits payable to workers who retire at the full retirement age and to disabled workers are equal to 100% of the PIA (subject to any applicable deductions). At the full retirement age, widows' benefits are also payable at 100% of the insured worker's PIA. Nondisabled widow(er)s can receive reduced benefits at age 60. Disabled widow(er)s can receive benefits at age 50. Spouses, children, and parents receive a smaller proportion of the worker's PIA than widow(er)s do.

Hypothetical Benefit Amounts, 2004

A covered worker who had worked continuously at low wages (45% of the national average wage) and who claimed benefits at age 62 and 1 month in January 2003 would receive a monthly benefit of $575. One who had earnings at or above the maximum amount subject to Social Security taxes and who claimed benefits at age 65 would receive $1,784. Someone who claimed benefits at age 70, which maximizes the effect of the delayed retirement credit, would receive $2,111.

Beneficiaries, by Age, December 2003

Of all OASI beneficiaries with benefits in current-payment status, 93% were aged 62 or older. Among DI beneficiaries (disabled workers and their spouses and children), 88% were under age 62.

Disabled-Worker Beneficiaries, by Age, 1960–2003

The average age of disabled-worker beneficiaries in current-payment status has declined substantially since 1960, when DI benefits first became available to persons younger than age 50. In that year, the average age of a disabled worker was 57.2 years. The rapid drop in average age in the following years reflects a growing number of awards to workers under 50. By 1995, the average age had fallen to a low of 49.8, and by 2003, it had risen slightly, to 51.3.

Beneficiaries, by Sex, December 2003

Of all adults receiving monthly Social Security benefits, 43% were men and 57% were women. Eighty percent of the men and 57% of the women received retired-worker benefits. About one-fifth of the women received survivors benefits.

Average Monthly Benefit, by Sex, December 2003

Among retired and disabled workers who collected benefits based on their own work records, men received a higher average monthly benefit than did women. For those with benefits based on another person's work record (spouses and survivors), women had higher average benefits.

Women Beneficiaries, 1940–2003

The proportion of women among retired-worker beneficiaries has quadrupled since 1960. The percentage climbed steadily from 12% in 1940 to 47% in 1980, leveling off at 48% in 1990. The proportion of women among disabled-worker beneficiaries has more than doubled since 1957, when DI benefits first became payable. The percentage rose steadily from 20% in 1957 to 35% in 1990 and 45% in 2003.

Women with Dual Entitlement, 1960–2003

The proportion of women aged 62 or older who are receiving benefits as dependents (that is, on the basis of their husband's earnings record only) has been declining—from 57% in 1960 to 32% in 2003. At the same time, the proportion of women with dual entitlement (that is, paid on the basis of both their own earnings record and that of their husbands) has been increasing—from 5% in 1960 to 28% in 2003.

SSI Program

Beneficiaries, 1974–2003

Shortly after the SSI program began in 1974, the number of persons receiving federally administered SSI payments rose to 4 million. It remained at about that level until the mid-1980s, then rose through the mid-1990s. In 2003, it stood at just over 6.9 million.

Payment Amounts, by Age, December 2003

The average federally administered SSI payment was $417. Payments varied by age group, ranging from an average of $491 for beneficiaries under 18 to $344 for those 65 or older.

Federally Administered Payments, December 2003

Over 6.9 million persons received federally administered SSI payments. The majority received federal SSI only. States have the option of supplementing the federal benefit rate and are required to do so if that rate is less than the income the beneficiary would have had under the former state program.

Basis for Eligibility and Age of Beneficiaries, December 2003

Eighteen percent of SSI beneficiaries received benefits on the basis of age, the rest on the basis of disability. Twenty-nine percent of the beneficiaries were aged 65 or older. In the SSI program—unlike the OASDI program—a disabled beneficiary is still classified as "disabled" after reaching age 65. DI beneficiaries are converted to the retirement program when they attain age 65.

Beneficiaries Aged 65 or Older, 1974–2003

The proportion of SSI beneficiaries aged 65 or older has declined from 61% in January 1974 to 29% in December 2003. The overall long-term growth of the SSI program has occurred because of an increase in the number of disabled beneficiaries, most of whom are under age 65.

Beneficiaries, by Sex and Age, December 2003

Overall, 58% of the 6.9 million SSI beneficiaries were women, but that percentage varied greatly by age group. Women accounted for 70% of the 2 million beneficiaries aged 65 or older, 57% of the 4 million beneficiaries aged 18–64, and 35% of the 1 million beneficiaries under age 18.

Other Income, December 2003

Fifty-seven percent of SSI beneficiaries aged 65 or older received OASDI benefits, as did about 31% of those aged 18–64 and 7% of those under age 18. Other types of unearned income, such as veterans' pensions or income from assets, were reported most frequently among those under age 18 (19%) and those aged 65 or older (15%). Earned income was most prevalent (6%) among those aged 18–64.

OASDI, SSI, or Both

All Beneficiaries, December 2003

About 51.5 million people received a payment from Social Security. Most (44.6 million) received OASDI benefits only, about 4.5 million received SSI only, and 2.4 million received payments from both programs.

Aged Beneficiaries, 65 or Older, December 2003

Aged or survivors benefits were paid to 34.2 million people aged 65 or older. About 1.1 million received both OASI and SSI.

Disabled Beneficiaries Aged 18–64, December 2003

Payments based on the beneficiary's own disability were made to 9.5 million people aged 18–64. Fifty-eight percent received disability payments under the OASDI program only, 29% received payments from the SSI program only, and 13% received payments from both programs.

Children and Social Security

OASDI Beneficiaries, December 2003

Over 3 million children under age 18 and students aged 18–19 received OASDI benefits. Children of deceased workers had the highest average payments, in part because they are eligible to receive monthly benefits equal to 75% of the worker's PIA, compared with 50% for children of retired or disabled workers. Overall, the average monthly benefit amount for children was $417.

SSI Beneficiaries, 1974–2003

In 1974, when the program began, there were 70,900 blind and disabled children receiving SSI. That number increased to 955,000 in 1996, declined to 847,000 in 2000, and is now 959,400. The relatively high average payment to children (compared with payments made to blind and disabled adults) is due in part to a limited amount of other countable income. The spike in average monthly benefits in 1992 is due to retroactive payments resulting from the Sullivan v. Zebley decision.

Social Security Financing

How Social Security Is Financed

Social Security is largely a pay-as-you-go program. Most of the payroll taxes collected from today's workers are used to pay benefits to today's recipients. In 2003, the Old-Age and Survivors Insurance and Disability Insurance Trust Funds collected $632 billion in revenues. Of that amount, 84% was derived from payroll taxes and 2% from income taxes on Social Security benefits. Interest earned on the government bonds held by the trust funds provided the remaining 13% of income. Assets increased in 2003 because income exceeded expenditures for benefit payments and administrative expenses.

Social Security's Demographic Challenge

The number of retired workers is projected to grow rapidly starting in 2008, when the members of the post–World War II baby boom begin to reach early retirement age, and will double in less than 30 years. People are also living longer, and the birth rate is low. As a result, the ratio of workers paying Social Security taxes to people collecting benefits will fall from 3.3 to 1 today to 2.1 to 1 by 2031. At that ratio there will not be enough workers to pay scheduled benefits at current tax rates.

The Long-Run Financial Outlook

Social Security is not sustainable over the long term at present benefit and tax rates. Within 14 years the program will begin paying more in benefits than it collects in taxes. By 2042 the trust funds will be exhausted. At that point, payroll taxes and other income will flow into the fund but will be sufficient to pay only 73% of program costs. One way to illustrate the financial shortfall of the Social Security system is to examine the cumulative value of taxes less costs, assuming currently scheduled benefits and tax rates. In present-value terms, the shortfall over the next 75 years is $3.7 trillion, which is roughly equal to the total U.S. government debt held by the public today.

The Cost of Delay

Each year, Social Security's trustees provide an estimate of the financial status of the program for the next 75 years. In changing from the valuation period of one year's Trustees Report to the next, an additional year with a large imbalance between taxes and benefits is added to the projection. As a result, the estimated cost of meeting Social Security's financial shortfall tends to go up every year.