Fast Facts & Figures About Social Security, 2006

Did You Know That...

• SSA paid benefits to more than 53 million people in 2005
• About 16 percent of the total U.S. population and 91 percent of the population aged 65 or older received Social Security benefits in 2004
• Social Security provided at least half the income for 66 percent of the aged in 2004
• Social Security benefits were awarded to nearly 4.7 million people in 2005
• Women accounted for 56 percent of adult Social Security beneficiaries in 2005
• The average age of disabled-worker beneficiaries was 51.8 in 2005
• Eighty-three percent of SSI recipients received payments because of disability or blindness in 2005

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, 2006

Income of the Aged Population

Size of Income, 1962 and 2004

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 94% for married couples and 98% for nonmarried persons. A married couple is aged 65 or older if the husband is aged 65 or older or if the husband is aged 54 or younger and the wife is 65 or older.

Median income of aged units, by marital status (in 2004 dollars)

SOURCES: Social Security Administration, Income of the Population 55 or Older, 2004; The Aged Population of the United States: The 1963 Social Security Survey of the Aged.

NOTE: An aged unit is a married couple living together or a nonmarried person, which also includes persons who are separated or married but not living together.

Receipt of Income, 1962 and 2004

Social Security benefits—the most common source of income for married couples and nonmarried persons aged 65 or older 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 42-year period, receipt of private pensions has tripled, and receipt of government pensions has increased by almost 50%. The proportion of couples and nonmarried persons aged 65 or older who received earnings was smaller in 2004 than in 1962.

Percentage of aged units receiving income, by source

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Table equivalent for chart. Percentage of aged units receiving income, by source

Source of income	1962	2004
Social Security	69	89
Asset income	54	55
Private pensions	9	29
Government employee pensions	9	14
Earnings	36	24

SOURCES: Social Security Administration, Income of the Population 55 or Older, 2004; The Aged Population of the United States: The 1963 Social Security Survey of the Aged.

NOTE: An aged unit is a married couple living together or a nonmarried person, which also includes persons who are separated or married but not living together.

Shares of Aggregate Income, 1962 and 2004

In 1962, Social Security, private and government employee pensions, income from assets, and earnings made up only 84% of the aggregate total income of couples and nonmarried persons aged 65 or older, compared with 97% in 2004. Although private pensions still accounted for only a small proportion of aggregate total income in 2004, they more than tripled their share over this period—from 3% to 10%. The share of aggregate total income from earnings declined from 28% to 26% during this time.

Aggregate income, by source, 2004

SOURCES: Social Security Administration, Income of the Population 55 or Older, 2004; The Aged Population of the United States: The 1963 Social Security Survey of the Aged.

NOTE: The unit of analysis is the aged unit, defined as a married couple living together or a nonmarried person, which also includes persons who are separated or married but not living together.

Relative Importance of Social Security, 2004

In 2004, 90% of married couples and 88% of 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 54% of aged beneficiary couples and 74% of aged nonmarried beneficiaries. It was 90% or more of income for 21% of aged beneficiary couples and 43% of aged nonmarried beneficiaries. Total income excludes withdrawals from savings and nonannuitized IRAs or 401(k) plans; it also excludes in-kind support, such as food stamps and housing and energy assistance.

Percentage of aged units receiving Social Security benefits, by relative importance of benefits to total income

SOURCE: Social Security Administration, Income of the Population 55 or Older, 2004.

NOTE: An aged unit is a married couple living together or a nonmarried person, which also includes persons who are separated or married but not living together.

Poverty Status Based on Family Income, 2004

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 17.4% to 23.9%. Married persons have the lowest poverty rates, with 4.5% poor and 3.6% near poor. Overall, 9.8% are poor and 6.7% near poor.

Poverty status, by marital status, sex of nonmarried persons, race, and Hispanic origin

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Table equivalent for chart. Poverty status, by marital status, sex of nonmarried persons, race, and Hispanic origin, 2004

Characteristic	Percent poor	Percent near poor
All persons	9.8	6.7
By marital status
Married	4.5	3.6
Nonmarried men	13.1	9.6
Nonmarried women	17.4	10.8
By race and Hispanic origin
White alone	8.3	6.1
Black alone	23.9	11.2
Hispanic	18.7	11.3

SOURCE: Social Security Administration, Income of the Population 55 or Older, 2004.

OASDI Program

Earnings in Covered Employment, 1937–2005

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 on the basis of increases in the average wage. Of the 159 million workers with earnings in Social Security–covered employment in 2005, 6% 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 84% of earnings in covered employment were taxable in 2005, compared with 92% in 1937.

Taxable earnings as a percentage of earnings in covered employment and percentage of workers with maximum taxable earnings, selected years

SOURCE: Social Security Administration, Office of the Chief Actuary.

Insured Status, 1970–2006

The percentage of persons aged 20 or older who are insured for benefits has increased over time. To be fully insured, a worker must have at least one work credit (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. The maximum number of work credits needed to be fully insured is 40. An individual is said to be permanently insured if he or she has earned 40 work credits. To be insured for disability, the worker must be fully insured and have at least 20 work credits during the last 40 calendar quarters. (Requirements for disability-insured status are somewhat different for persons younger than age 31.) Disability benefits are available up to full retirement age (FRA).

Insured Status, by Sex, 1970 and 2006

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 83% insured for disability. By contrast, the proportion of women who are insured has increased dramatically—from 63% to 84% fully insured and from 41% to 75% insured for disability.

Percentage of population in the Social Security area fully insured and insured for disability benefits, by sex

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Table equivalent for chart. Percentage of population in the Social Security area fully insured and insured for disability benefits, by sex

Sex	1970	2006
Fully insured
Men	92	92
Women	63	84
Insured for disability
Men	85	83
Women	41	75

SOURCE: Social Security Administration, Office of the Chief Actuary.

NOTE: The population in the Social Security area includes residents of the 50 states and the District of Columbia adjusted for net census undercount; civilian residents of American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, and the Virgin Islands; federal civilian employees and persons in the armed forces abroad and their dependents; crew members of merchant vessels; and all other U.S. citizens abroad.

New Benefit Awards, 2005

Benefits were awarded to nearly 4.7 million persons: of those, 43% were retired workers and 18% were disabled workers. The remaining 39% were survivors or the spouses and children of retired or disabled workers. 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 full retirement age.

New awards, 2005

SOURCE: Social Security Administration, Master Beneficiary Record, 100 percent data.

New Awards to Workers, 1960–2005

Awards to retired workers have increased considerably since 1960 but proportionately much less than awards to disabled workers. Following the implementation of Medicare in 1965, the number of awards to retired workers rose from 1.2 million in 1967 to 2 million in 2005. Disabled-worker awards increased—from 208,000 in 1960 to 592,000 in the mid-1970s—before falling to 297,000 in 1982. The number then rose, reaching 830,000 in 2005.

New awards to retired and disabled workers

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Table equivalent for chart. New awards to retired and disabled workers (in thousands)

Year	Retired workers	Disabled workers
1968	1200.00	323.00
1969	1272.78	344.74
1970	1338.11	350.38
1971	1391.40	415.90
1972	1461.40	455.44
1973	1493.19	491.62
1974	1413.15	535.98
1975	1505.75	592.05
1976	1475.77	551.46
1977	1593.63	568.87
1978	1472.79	464.42
1979	1590.85	416.71
1980	1612.67	396.56
1981	1578.99	351.85
1982	1618.41	297.13
1983	1669.74	311.55
1984	1607.37	362.00
1985	1690.49	377.37
1986	1734.25	416.87
1987	1681.72	415.85
1988	1654.07	409.49
1989	1656.74	425.58
1990	1664.75	467.98
1991	1695.35	536.43
1992	1707.95	636.64
1993	1661.28	635.24
1994	1625.35	631.87
1995	1609.17	645.83
1996	1581.45	624.34
1997	1718.62	587.42
1998	1631.51	608.13
1999	1690.02	620.49
2000	1960.65	621.65
2001	1779.23	691.31
2002	1812.55	750.00
2003	1791.32	777.46
2004	1883.06	795.78
2005	2000.00	830.00

SOURCE: Social Security Administration, Master Beneficiary Record, 100 percent data.

NOTE: Beginning in 2006, this chart displays data for all years rather than selected years.

Beneficiaries in Current-Payment Status, December 2005

More than 48 million beneficiaries were in current-payment status, that is, they were being paid a benefit. Sixty-three percent of those beneficiaries were retired workers and 13% were disabled workers. The remaining 24% were survivors or the spouses and children of retired or disabled workers.

Beneficiaries, by type

SOURCE: Social Security Administration, Master Beneficiary Record, 100 percent data.

Average Benefit Amounts, 2005

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, widow(er)s' 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 reduced benefits at age 50. Spouses, children, and parents receive a smaller proportion of the worker's PIA than do widow(er)s.

Beneficiaries, by Age, December 2005

About four-fifths of all OASDI beneficiaries in current-payment status were aged 62 or older, including 25 percent aged 75–84 and 9 percent aged 85 or older. About 14 percent were persons aged 18–61 receiving benefits as disabled workers, survivors, or dependents. Another 6 percent were children under age 18.

Beneficiaries, by age

SOURCE: Social Security Administration, Master Beneficiary Record, 10 percent sample.

NOTE: Percentages may not add to 100 because of rounding.

Disabled and Retired Workers, by Age, 1960–2005

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 2005, it had risen slightly, to 51.8. In contrast, the average age of retired workers has changed little over time, rising from 72.4 in 1960 to 73.9 in 2005.

Average age of disabled and retired workers, selected years

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Table equivalent for chart. Average age of disabled and retired workers, selected years

Year	Disabled workers	Retired workers
1960	57.2	72.4
1965	54.7	72.5
1970	54.2	72.3
1975	53.8	72.3
1980	53.2	72.4
1985	52.1	72.8
1990	50.5	73.1
1995	49.8	73.6
2000	50.8	73.9
2005	51.8	73.9

SOURCE: Social Security Administration, Master Beneficiary Record, 10 percent sample.

Beneficiaries, by Sex, December 2005

Of all adults receiving monthly Social Security benefits, 44% were men and 56% were women. Seventy-nine percent of the men and 58% of the women received retired-worker benefits. About one-fifth of the women received survivor benefits.

Adult beneficiaries, by type of beneficiary and sex

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Table equivalent for chart. Percentage distribution of adult beneficiaries by type of beneficiary, by sex, December 2005

Type of beneficiary	Men	Women
Retired workers	79	58
Disabled workers	18	12
Spouses of retired or disabled workers	a	10
Widows and mothers	a	18
Disabled adult children	2	1
a. Less than 0.5 percent.

SOURCE: Social Security Administration, Master Beneficiary Record, 10 percent sample.

NOTE: Percentages may not add to 100 because of rounding.

Average Monthly Benefit, by Sex, December 2005

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, 1940–2005

The proportion of women among retired-worker beneficiaries has quadrupled since 1960. The percentage climbed steadily from 12% in 1940 to 47% in 1980, 48% in 1990, and 49% in 2005. 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 19% in 1957 to 35% in 1990 and 46% in 2005.

Women beneficiaries as a percentage of retired workers and disabled workers, selected years

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Table equivalent for chart. Women as a percentage of retired worker and disabled worker beneficiaries, selected years

Year	Retired workers	Disabled workers
1940	11.6	--
1950	17.1	--
1957	--	19.1
1960	35.3	21.8
1970	42.4	28.4
1980	46.5	32.6
1990	47.7	34.7
2000	48.2	43.3
2005	48.6	46.0
NOTE: -- = not available.

SOURCE: Social Security Administration, Master Beneficiary Record, 10 percent sample.

Women with Dual Entitlement, 1960–2005

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 31% in 2005. 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 husband) has been increasing—from 5% in 1960 to 28% in 2005.

Women aged 62 or older, by basis of entitlement, selected years

SOURCE: Social Security Administration, Master Beneficiary Record, 10 percent sample.

SSI Program

Number of Recipients, 1974–2005

The Supplemental Security Income (SSI) program provides income support to needy persons aged 65 or older, blind or disabled adults, and blind or disabled children. Eligibility requirements and federal payment standards are nationally uniform. SSI replaced the former federal/state adult assistance programs in the 50 states and the District of Columbia.

Payments under SSI began in January 1974, with 3.2 million persons receiving federally administered payments. By December 1974, this number had risen to nearly 4 million and remained at about that level until the mid-1980s, then rose steadily, reaching nearly 6 million in 1993 and 7 million by the end of 2004. As of December 2005, the number of recipients stood at 7.1 million. Of this total, 4.1 million were between the ages of 18 and 64, 2 million were aged 65 or older, and 1 million were under age 18.

Persons receiving federally administered SSI payments

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Table equivalent for chart. Persons receiving federally administered SSI payments, December 1974–2005 (in millions)

Year	Total	Under 18	18–64	65 or older
1974	4.0	0.1	1.5	2.4
1975	4.3	0.1	1.7	2.5
1976	4.2	0.1	1.7	2.4
1977	4.2	0.1	1.7	2.4
1978	4.2	0.2	1.7	2.3
1979	4.1	0.2	1.7	2.2
1980	4.1	0.2	1.7	2.2
1981	4.0	0.2	1.7	2.1
1982	3.9	0.2	1.7	2.0
1983	3.9	0.2	1.7	2.0
1984	4.0	0.2	1.8	2.0
1985	4.1	0.2	1.9	2.0
1986	4.3	0.2	2.0	2.0
1987	4.4	0.3	2.1	2.0
1988	4.5	0.3	2.2	2.0
1989	4.6	0.3	2.3	2.0
1990	4.8	0.3	2.4	2.1
1991	5.1	0.4	2.6	2.1
1992	5.6	0.6	2.9	2.1
1993	6.0	0.7	3.1	2.1
1994	6.3	0.8	3.3	2.1
1995	6.5	0.9	3.5	2.1
1996	6.6	1.0	3.6	2.1
1997	6.5	0.9	3.6	2.1
1998	6.6	0.9	3.6	2.0
1999	6.6	0.8	3.7	2.0
2000	6.6	0.8	3.7	2.0
2001	6.7	0.9	3.8	2.0
2002	6.8	0.9	3.9	2.0
2003	6.9	1.0	4.0	2.0
2004	7.0	1.0	4.0	2.0
2005	7.1	1.0	4.1	2.0

SOURCE: Social Security Administration, Supplemental Security Record (Characteristic Record Extract format), 100 percent data.

NOTE: Beginning in 2006, this chart displays data for all years rather than selected years.

Payment Amounts, by Age, December 2005

The average federally administered SSI payment was $439. Payments varied by age group, ranging from an average of $523 for recipients under 18 to $362 for those 65 or older. The maximum federal benefit rate in December 2005 was $579 for an individual, $869 for a couple, plus any applicable state supplementation.

Average monthly federally administered SSI payment

SOURCE: Social Security Administration, Supplemental Security Record (Characteristic Record Extract format), 100 percent data.

NOTE: Amounts exclude retroactive payments.

Federally Administered Payments, December 2005

A total of 7.1 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 recipient would have had under the former state program.

Type of SSI payment

SOURCE: Social Security Administration, Supplemental Security Record (Characteristic Record Extract format), 100 percent data.

a. Excludes state-administered state supplementation. SSA administers state supplementation for 25 states.

Basis for Eligibility and Age of Recipients, December 2005

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

SSI recipients, by basis for eligibility and age

SOURCE: Social Security Administration, Supplemental Security Record (Characteristic Record Extract format), 100 percent data.

Percentage Distribution of Recipients, by Age, 1974–2005

The proportion of SSI recipients aged 65 or older has declined from 61% in January 1974 to 28% in December 2005. The overall long-term growth of the SSI program has occurred because of an increase in the number of disabled recipients, most of whom are under age 65.

Percentage distribution of SSI recipients, by age

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Table equivalent for chart. Percentage distribution of SSI recipients, by age, December

Year	Under 18	18–64	65 or older
1974	1.8	37.6	60.6
1975	2.5	39.4	58.1
1976	3.0	40.5	56.6
1977	3.5	41.0	55.5
1978	3.9	41.4	54.6
1979	4.3	41.6	54.1
1980	4.6	41.8	53.6
1981	4.8	42.4	52.8
1982	5.0	42.9	52.1
1983	5.1	43.6	51.3
1984	5.3	44.2	50.6
1985	5.5	45.4	49.1
1986	5.6	47.1	47.3
1987	5.7	48.3	46.0
1988	5.7	49.3	44.9
1989	5.8	50.1	44.1
1990	6.4	50.9	42.7
1991	7.8	51.6	40.6
1992	10.0	52.3	37.7
1993	12.1	52.6	35.3
1994	13.4	53.0	33.7
1995	14.1	53.5	32.5
1996	14.4	54.0	31.6
1997	13.5	54.8	31.6
1998	13.5	55.5	31.0
1999	12.9	56.3	30.8
2000	12.8	56.7	30.5
2001	13.2	57.0	29.8
2002	13.5	57.1	29.4
2003	13.9	57.3	28.8
2004	14.2	57.5	28.3
2005	14.6	57.4	28.0

SOURCE: Social Security Administration, Supplemental Security Record (Characteristic Record Extract format), 100 percent data.

NOTE: Beginning in 2006, this chart displays data for all years rather than selected years.

Recipients, by Sex and Age, December 2005

Overall, 57% of the 7.1 million SSI recipients were women, but that percentage varied greatly by age group. Women accounted for 70% of the 2 million beneficiaries aged 65 or older, 56% of the 4.1 million recipients aged 18–64, and 35% of the 1 million recipients under age 18.

SSI recipients, by sex and age

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Table equivalent for chart. Percentage distribution of SSI recipients by sex, by age, December 2005

Age	Men	Women
All ages	43	57
Under 18	65	35
18–64	44	56
65 or older	30	70

SOURCE: Social Security Administration, Supplemental Security Record (Characteristic Record Extract format), 100 percent data.

Other Income, December 2005

Fifty-seven percent of SSI recipients aged 65 or older received OASDI benefits, as did 32% of those aged 18–64 and 7% of those under age 18. Other types of unearned income, such as 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.

Other income of SSI recipients, by source and age

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Table equivalent for chart. Percentage of SSI recipients with other income, by source and age, December 2005

Age	OASDI	Other unearned income	Earnings
All ages	35.2	11.5	3.8
Under 18	7.2	19.1	0.3
18–64	31.5	8.0	5.9
65 or older	57.1	14.8	1.4

SOURCE: Social Security Administration, Supplemental Security Record (Characteristic Record Extract format), 100 percent data.

OASDI, SSI, or Both

All Beneficiaries, December 2005

About 53 million people received a payment from Social Security. Most (45.9 million) received OASDI benefits only, about 4.6 million received SSI only, and 2.5 million received payments from both programs.

Distribution of all beneficiaries

SOURCE: Social Security Administration, Master Beneficiary Record, 10 percent sample; Supplemental Security Record (Characteristic Record Extract format), 100 percent data.

Beneficiaries Aged 65 or Older, December 2005

Benefits were paid to 34.9 million people aged 65 or older. About 1.1 million received both OASDI and SSI.

Distribution of beneficiaries aged 65 or older,
by program

SOURCE: Social Security Administration, Master Beneficiary Record, 10 percent sample; Supplemental Security Record (Characteristic Record Extract format), 100 percent data.

NOTE: Percentages may not add to 100 because of rounding.

Disabled Beneficiaries Aged 18–64, December 2005

Payments were made to 10.1 million people aged 18–64 on the basis of their own disability. Fifty-nine percent received disability payments from the OASDI program only, 28% received payments from the SSI program only, and 13% received payments from both programs.

Distribution of disabled beneficiaries aged 18–64

SOURCE: Social Security Administration, Master Beneficiary Record, 10 percent sample; Supplemental Security Record (Characteristic Record Extract format), 100 percent data.

Children

OASDI Beneficiaries, December 2005

More than 3.2 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 based on 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 $452.

Number of children of—

Average monthly benefit for children of—

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Table equivalent for chart. Number and average monthly benefit for children receiving OASDI, by type of beneficiary, December 2005

Type of beneficiary	Number (thousands)	Average monthly benefit (dollars)
Children of retired workers	296	470
Children of disabled workers	1,564	274
Children of deceased workers	1,396	648

SOURCE: Social Security Administration, Master Beneficiary Record, 100 percent data.

SSI Recipients, 1974–2005

In 1974, when the program began, 70,900 blind and disabled children were receiving SSI. That number increased to 955,000 in 1996, declined to 847,000 in 2000, and is now 1,036,500. 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. As of December 2005, blind and disabled children were receiving SSI payments averaging $523.

Number of children under age 18 receiving SSI

Average monthly SSI payment to children ^a

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Table equivalent for chart. Number of children under age 18 receiving SSI, and average monthly SSI payment to children under age 18

Year	Number of children receiving SSI (in thousands)	Average monthly SSI payment (in percent) a
1974	70.90	109.15
1975	107.03	141.09
1976	125.41	154.24
1977	147.36	170.03
1978	165.90	171.72
1979	177.31	193.26
1980	190.39	219.08
1981	194.89	240.84
1982	191.57	263.22
1983	198.32	280.96
1984	211.59	292.86
1985	227.38	301.26
1986	241.20	321.34
1987	250.90	327.27
1988	255.14	343.24
1989	264.89	357.64
1990	308.59	403.72
1991	397.16	446.05
1992	556.47	610.98
1993	722.68	460.54
1994	841.47	448.07
1995	917.05	447.57
1996	955.17	442.01
1997	879.83	433.83
1998	887.07	441.75
1999	847.06	450.13
2000	846.78	463.05
2001	881.84	476.09
2002	914.82	487.73
2003	959.38	490.63
2004	993.13	505.98
2005	1036.50	522.80

SOURCE: Social Security Administration, Supplemental Security Record (Characteristic Record Extract format), 100 percent data.

NOTE: Beginning in 2006, this chart displays data for all years rather than selected years.

a. As of 1998, these figures exclude retroactive payments.

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 2005, the Old-Age and Survivors Insurance and Disability Insurance Trust Funds collected $702 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 2005 because income exceeded expenditures for benefit payments and administrative expenses.

Source and uses of Social Security revenues in 2005

SOURCES: 2006 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds, Table II.B1.

NOTE: Percentages may not add to 100 because of rounding.

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 in 2005 to 2.1 to 1 by 2032. The Trustees Report projects that in 2017, when the ratio will be 2.7, there will not be enough workers to pay scheduled benefits at current tax rates. The Trustees Report also projects that redemption of trust fund assets will be sufficient to allow for full payment of scheduled benefits until 2040.

Ratio of covered workers to Social Security beneficiaries

SOURCE: 2006 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds, Table IV.B2.

The Long-Run Financial Outlook

Social Security is not sustainable over the long term at current benefit and tax rates. Within 11 years the program will begin paying more in benefits than it collects in taxes (see the chart below). By 2040 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 74% of program costs. Another way to illustrate the financial shortfall of the Social Security system is to examine the cumulative value of taxes minus costs, assuming currently scheduled benefits and tax rates. In present-value terms, the shortfall over the next 75 years is $4.6 trillion, which is roughly equal to the total U.S. government debt held by the public today.

Social Security income minus costs as a percentage of taxable payroll

SOURCE: 2006 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds, Figure II.D6.

The Growth of Unfunded Obligations

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 long-range financial shortfall tends to go up every year. For 2006, the unfunded obligation over the 75-year period is $4.6 trillion.

Long-range (75-year) projections of Social Security's unfunded obligation

Show as table

Table equivalent for chart. Long-range (75-year) projections of Social Security's unfunded obligation (Trillions of dollars)

Year	Unfunded obligation
2000	2.9
2001	3.2
2002	3.3
2003	3.5
2004	3.7
2005	4.0
2006	4.6

SOURCE: Social Security Administration, Office of the Chief Actuary.

NOTE: Present value as of January 1 of each year.