No one who achieves success does so without the help of others. The wise and confident acknowledge this help with gratitude.
-- Alfred North Whitehead
The quotation above, from English mathematician and philosopher Alfred North Whitehead, applies very aptly to Social Security in several ways. For one thing, most of us who have successful retirements, free from financial distress, do so only with the help of Social Security. Also, the whole Social Security system involves each generation helping the next: We pay into the system with part of our earnings, which support current retirees. And when it's time for us to collect our benefits, they come largely from the contributed earnings of younger workers.
Here are more reasons to be thankful for Social Security.
Reason No. 1: It keeps millions out of poverty
Social Security is more than just very helpful and handy -- it's rather essential to many of us. The Center on Budget and Policy Priorities (CBPP) has estimated, based on 2018 data, that without Social Security, America would have 22.1 million more people living in poverty, including more than a million children. The CBPP adds that "Without Social Security benefits, 39.2% of elderly Americans would have incomes below the official poverty line."
Reason No. 2: It makes up much of our retirement income
Reason No. 1 makes sense when you realize how underprepared for retirement millions of Americans are; about a quarter of those aged 55 and older have saved less than $25,000, per the 2019 Retirement Confidence Survey. Unsurprisingly, then, Social Security benefits make up about a third of the income of elderly Americans. The Social Security Administration reports that 21% of married elderly Social Security beneficiaries and 45% of unmarried ones get a whopping 90% or more of their income from the program. Plenty get 50% or more from it, too -- 48% of married elderly beneficiaries and 70% of unmarried ones.
Reason No. 3: Qualifying for Social Security is simple
We can also be thankful that we don't have to jump through hoops to qualify for Social Security benefits. All you have to do is accumulate 40 credits. You collect a credit by earning a minimum sum over the course of a year, and you can amass up to four credits per year. The minimum is adjusted over time, and for 2019, it's $1,360. Earning at least that much per quarter, or $5,440 over a year, would get you four credits. So most of us can qualify for Social Security just by working for 10 years.
Reason No. 4: It's available as early as age 62 for most of us
Many people imagine retiring at 65 or later but would like to do so earlier. Social Security can help with that, because retiree benefits may be claimed as early as age 62 (and as late as age 70). Our "full" benefits are only available at our "full retirement age," though, which is 66 or 67 for most of us. If you start receiving your benefits earlier, they will be somewhat reduced. Still, given that most Americans these days retire in their early 60s, it's helpful for Social Security to be available then.
Reason No. 5: We can influence how much we receive to some degree
While starting to collect your benefits earlier than your full retirement age will make them smaller, delaying starting to collect them beyond your full retirement age will make them bigger -- by about 8% per year -- until age 70. So if you delay from age 67 to 70, you can enjoy checks that are about 24% heftier. And that's just one way to increase your Social Security benefits. You might also get more out of the program by coordinating with your spouse when each of you will start collecting or by working a little longer if you're earning a lot these days.
Reason No. 6: The Social Security system is surprisingly fair
The larger checks you'd receive by waiting may seem far preferable to smaller ones collected early, but think about it some more: If you start collecting early, you'll receive many more checks than if you start collecting late. The system is actually designed to pay you about the same no matter when you start receiving your benefits if you live an average-length life. Many of us won't live average-length lives, though, and there are other considerations to ponder when deciding when to start collecting. If your family is known for living well into their 90s, delaying could be worth it. And for many people, retiring and claiming Social Security will have to happen early because of job losses or health setbacks.
Reason No. 7: Social Security lets you change your mind
One more nice thing to be thankful for regarding Social Security is that the program lets you change your mind about when to start collecting your benefits. Once you decide and start collecting those checks, you can file Form SSA-521 within 12 months of starting to collect in order to choose a later starting date. You'll have to pay back the benefits you've received so far, though.
Reason No. 8: The disabled and survivors benefit from Social Security, too
It's not only retirees who should be thankful for Social Security -- disabled workers can collect vital benefits from the program, too, as can their dependents sometimes. Survivors of workers can collect benefits as well. In that latter case, Social Security benefits can serve as a kind of life insurance benefit, with the CBPP having noted that "For a young worker with average earnings, a spouse, and two children, that's equivalent to a life insurance policy with a face value of over $725,000 in 2018, according to Social Security's actuaries."
Reason No. 9: Social Security has your employer chipping in, too
If you're paid by salary and you think you've got it bad because you have to cough up 6.2% of your paycheck in Social Security deductions every payday, be thankful that you're not self-employed. You might not realize it, but the Social Security tax is actually 12.4%, and employers pay half of it on your behalf. Self-employed folks, though, pay the whole 12.4% themselves.
Reason No. 10: Social Security adjusts for inflation
A big reason to be thankful for Social Security and the way it's designed is this: It takes inflation into account. Your benefits are based on your earnings in the 35 years in which you earned the most -- and those earnings are adjusted for inflation. So while your $20,000 salary may have been respectable back in 1985 but it pales next to your current $80,000 salary, the Social Security Administration will be putting all your incomes on a level playing field, taking the effect of inflation into account. Once you start collecting benefits, those will also enjoy a cost-of-living adjustment (COLA). The last one, for 2020, is 1.6%. It's not a huge amount, but over time, these increases will help preserve the buying power of your benefits.
Reason No. 11: There are simple ways to strengthen Social Security
When you hear that Social Security is going to be bankrupt very soon, don't believe it. The program has been running surpluses for many years, taking in more from our salaries than it's been paying out to retirees. As more people are retiring, that surplus will be phasing out soon, but there are still Social Security reserves to draw from. In a worst-case scenario, if no changes are made to Social Security, retirees may end up collecting only 77% of their benefits. (Still, that's far better than the 100% reduction some suggest.)
Fortunately, there are lots of ways that the program can be strengthened, should Congress choose to do so. For starters, understand that in 2019, we're only taxed for Social Security on the first $132,900 we earn. (In 2020, it will be $137,700.) So if you earn $1,132,900, a full million dollars of your income will not be taxed for Social Security. If that cap is raised -- or eliminated -- it can make up much of the impending Social Security shortfall. Other fixes exist, too, such as increasing the tax from 12.6% to, perhaps, 13.6% or 15%.
Reason No. 12: Social Security is amazingly efficient
Finally, you can be thankful for Social Security because it's a great example of how government programs can be very efficient. Remember that the program pays out about a trillion dollars per year to around 64 million Americans. And it does all that while spending only 0.7% of its budget on administrative expenses. That's pretty impressive!
So take a few moments to be thankful for Social Security and the difference it's making in millions of people's lives -- including, probably, yours.
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