Seniors and their family members are likely fairly familiar with Social Security. But when you're moving into an assisted living community or making any other changes in your lifestyle or living situation, it pays to be fully aware of your income and anything that can affect it. And seniors who rely partly or fully on Social Security as an income source may also have questions or be curious about this program. Here are 10 facts about Social Security to consider.
According to data published by the Social Security Administration, only around 90% of people in the U.S. who are older than age 65 receive benefits. In fact, Social Security benefits actually only make up around 33% of the total income for older Americans.
Around 70% of single older adults look to Social Security for 50% or more of their income, and 45% rely on the government check for 90% or more of their income. Married couples tend to rely on Social Security at a slightly lower rate. Around 50% of married older couples get half their income from Social Security; only around 21% rely on Social Security for 90% of their income.
Around 20% of Social Security recipients are younger than 65. They receive income benefits via a program called Social Security Disability Insurance or through a young survivor benefit. The SSDI program provides income to those who are disabled and unable to work a full-time job. People can qualify for these benefits if they can work part-time, but their non-SSDI income must be limited to a certain amount.
Young survivor benefits are paid to children of people who passed away and had earned Social Security life insurance benefits. These individuals make up only 3% of all Social Security benefit recipients.
Most seniors are fairly aware of what Social Security benefits look like. Everyone's benefit is different, and it does depend on how much you earned (or your spouse earned) before retiring. But the average Social Security benefit for retirees was $1,470 per month as of June 2019. That's just over $17,600 a year.
If you take Social Security benefits out of the equation, almost 40% of all adults over age 65 would have an income at or below the poverty level. When you add Social Security benefits into the equation along with other income that seniors have, less than 10% of seniors live at the poverty level.
MassMutual Financial Group asked 1,500 people 10 questions about Social Security. Only one of those people could answer all 10 questions correctly, and more than 70% failed the test. "Passing" involved getting at least seven of the questions correct.
This is one of the facts that many people in the quiz referenced above didn't understand. Many people — especially those that aren't yet retired — mistakenly believe they'll be automatically entitled to Social Security benefits. In reality, you must earn enough work credits through the years to earn these benefits. Seniors and older adults who haven't started drawing Social Security should ensure they know what they qualify for prior to making long-term financial plans — including moving into an assisted living community.
The age you have to be to receive full retirement benefits depends on when you were born. Those born between 1943 and 1954, for example, receive full retirement benefits at age 66. From 1955 through 1959, you add two months for each year. Those born in 1956, for example, must wait until age 66 and 2 months for full benefits. Those born in 1960 and later reach full retirement at age 67.
If you begin receiving Social Security retirement benefits at your full retirement age, you receive 100% of your benefits. You can choose to receive your benefits as early as age 62. However, for every month you receive benefits prior to your full retirement date, your monthly amount is reduced slightly. This is to make up for the fact that you will receive benefits for a theoretically longer period of time.
Likewise, you can delay your Social Security benefits until after your retirement age. If you do so, you might be able to get a credit on your benefits, which means you would receive more money per month.
These are two different programs, and you must apply for and manage them separately. You become eligible for Medicare as a senior at age 65. The Social Security Administration advises seniors to apply for Medicare within three months of their 65th birthday to avoid potentially more costly prescription and medical insurance benefits.
Posted on Thu, April 9, 2020
by Shawn Deane