Last week I posted information from the recently released booklet, Fast Fact & Figures About Social Security, 2012, an annual SSA publication highlighting interesting aspects of the Social Security and Supplemental Security Income (SSI) programs. Concentrating on income of the aged population, more from this booklet is being shared today.
Note: Chart links bring you to the correct chapter. From there, find the chart desired.
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 96% in 2010. The shares from Social Security, private pensions, and government employee pensions have increased since 1962. The share from earnings in 2010 is about the same as it was in 1962, while the share from asset income is lower.
The following charts compare 1962 and 2010 income. Income sources for 2010 were 37% Social Security, 30 percent earnings, 11% asset income, 9% private pensions, 9% government employee pensions and 4% other.
Relative Importance of Social Security, 2010
In 2010, 88% of married couples and 85% 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 53% of aged beneficiary couples and 74% of aged nonmarried beneficiaries. It was 90% or more of income for 23% of aged beneficiary couples and 46% 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.
Look at the above chart and consider again the percentage of income provided by Social Security in 2010. Social Security was the major source of income (providing at least 50% of total income) for 53% of aged beneficiary couples and 74% of aged nonmarried beneficiaries. It was 90% or more of income for 23% of aged beneficiary couples and 46% of aged nonmarried beneficiaries. It is good that Social Security was there to help support all of these people, but Social Security benefits were never intended to provide such a large part of a person’s retirement income.
Social Security benefits are intended to replace only a percentage of a worker’s pre-retirement earnings. The way Social Security benefit amounts are figured, lower-paid workers get a higher return than highly paid workers. For example, lower-paid workers could get a Social Security benefit that equals about 55 percent of their pre-retirement earnings. The average replacement rate for highly paid workers is about 25 percent.
At the beginning of 2012, the average monthly Social Security benefit for a retired worker was about $1,230. This amount changes monthly based upon the total amount of all benefits paid and number of people receiving benefits.
The maximum monthly benefit for a worker retiring at age 66 in 2012 is $2,513. This amount changes each year. It depends on the age a worker chooses to retire and earnings at the maximum taxable amount for every year after age 21.
How much will you need for a comfortable retirement?