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9 Facts About Social Security

By March 1, 2024No Comments

9 Facts About Social Security

Social Security has been an element of retirement life ever since it was established in 1935. We all think we know how it works, but how much do you really know? Here are nine things that might surprise you.

1. The Social Security trust fund is huge. It was $2.8 trillion at the end of 2022.1

2. Most workers are eligible for Social Security benefits, but not all. For example, until 1984, federal government employees were part of the Civil Service Retirement System and were not
covered by Social Security.2

3. You don’t have to work long to be eligible. If you were born in 1929 or later, you need to work for 10 or more years to be eligible for benefits.3

4. Benefits are based on an individual’s average earnings during a lifetime of work under the Social Security system. The calculation is based on the 35 highest years of earnings. If an
individual has years of low or no earnings, Social Security may count those years to bring the total years to 35.4

5. There haven’t always been cost-of-living adjustments (COLA) in Social Security benefits. Before 1975, increasing benefits required an act of Congress; now, increases happen
automatically, based on the Consumer Price Index. There was a COLA increase of 3.2% for 2024, but there was an increase of 8.7% in 2023.5

6. Social Security is a major source of retirement income for 67% of current retirees.6

7. Social Security benefits are subject to federal income taxes – but it wasn’t always that way. In 1983, Amendments to the Social Security Act made benefits taxable, starting with the
1984 tax year.7

8. Social Security recipients received a single lump-sum payment from 1937 until 1940. One-time payments were considered “payback” to those people who contributed to the program. Social
Security administrators believed these people would not participate long enough to be vested for monthly benefits.8

9. In January 1937, Earnest Ackerman became the first person in the U.S. to receive a Social Security benefit – a lump sum of 17 cents.8

Conclusion

For generations of savers, Social Security has been a foundation for a retiree’s income strategy. However, through the years, adjustments to the program have been made by the Social Security administration. Will there be a cost-of-living adjustment? What are the years of service requirements? When is my full retirement age? These questions are critical to answer when planning your retirement picture and it is important to note that the administration will likely continue to make adjustments to the program periodically for the benefit of qualified recipients’ long term success.

At SHJ Wealth Advisors, we have helped clients navigate retirement for over 30 years. We are happy to guide you in maximizing Social Security and keeping you up to date on adjustments as we are notified Please reach out to Info@shjwealthadvisors.com if you would like to find a time to meet with one of our CFP® Professionals and thanks for reading!

1. SSA.gov, 2023
2. Investopedia.com, September 18, 2023
3. SSA.gov, 2023
4. SSA.gov, 2023
5. SSA.gov, 2023
6. EBRI.org, 2023
7. SSA.gov, 2023
8. SSA.gov, 2023

Disclosure:
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

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