| Program | Employer and employee, each |
Self-employed |
|---|---|---|
| Total | 7.65 | 15.30 |
| OASI | 5.30 | 10.60 |
| DI | 0.90 | 1.80 |
| HI | 1.45 | 2.90 |
| Year | Dollars | Increase from previous year (in percent) |
|---|---|---|
| 2005 | 36,952.94 | 3.7 |
| 2006 (estimated) | 38,726.37 | 4.8 |
| 2007 (estimated) | 40,461.69 | 4.5 |
| Program | Amount |
|---|---|
| OASDI | 97,500 |
| HI | No limit |
| Type of earner | Total | OASI | DI | HI |
|---|---|---|---|---|
| Average earner | 3,095 | 2,144 | 364 | 587 |
| Maximum earner | 6,045 | 5,168 | 878 | No limit |
| Self-employed maximum earner | 12,090 | 10,335 | 1,755 | No limit |
| NOTE: Totals do not necessarily equal the sum of rounded components. | ||||
| Period | Annually | Monthly |
|---|---|---|
| Ages 62–64 ($1 for $2 withholding rate) | 12,960 | 1,080 |
| Calendar year attaining full retirement age ($1 for $3 withholding rate) a | 34,440 | 2,870 |
| After calendar year attaining full retirement age or older | No limit | No limit |
| a. Test no longer applies beginning in the month in which retirement age is reached. | ||
| Year of birth | Full retirement age |
|---|---|
| 1937 and earlier | 65 |
| 1938 | 65 and 2 months |
| 1939 | 65 and 4 months |
| 1940 | 65 and 6 months |
| 1941 | 65 and 8 months |
| 1942 | 65 and 10 months |
| 1943–1954 | 66 |
| 1955 | 66 and 2 months |
| 1956 | 66 and 4 months |
| 1957 | 66 and 6 months |
| 1958 | 66 and 8 months |
| 1959 | 66 and 10 months |
| 1960 and later | 67 |
Benefit formula bend points (for workers with first eligibility in 2007)
Primary insurance amount (PIA) equals
Disability thresholds, 2006
Substantial gainful activity
Trial work period
| Calendar year and trust fund | Income | Outgo | Fund at end of year |
|---|---|---|---|
| 2006 (actual) | |||
| Total | 744.9 | 555.4 | 2,048.1 |
| OASI | 642.2 | 461.0 | 1,844.3 |
| DI | 102.6 | 94.5 | 203.8 |
| 2007 (estimated) | |||
| Total | 782.8 | 594.3 | 2,236.6 |
| OASI | 675.7 | 492.2 | 2,027.7 |
| DI | 107.2 | 102.1 | 208.9 |
| NOTE: Totals do not necessarily equal the sum of rounded components. | |||
| Calendar year | Total | OASI | DI |
|---|---|---|---|
| 2005 | 4.17 | 3.49 | 0.68 |
| 2006 | 4.12 | 3.43 | 0.69 |
| Type of filing | Number |
|---|---|
| OASI claims | 3.8 |
| DI claims | 2.6 |
| SSI applications | 2.6 |
Supplemental Security Income, January 2007
Federal benefit rate
Resource limits
| Family unit | Amount |
|---|---|
| Aged individual | 9,669 |
| Family of two, aged head | 12,186 |
| Family of four | 20,794 |
| SOURCE: U.S. Census Bureau as of February 2007. | |
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 95% for married couples and 99% 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.
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 43-year period, receipt of private pensions has more than tripled, and receipt of government pensions has increased by approximately 50%. The proportion of couples and nonmarried persons aged 65 or older who had earnings was smaller in 2005 than in 1962.
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 2005. Although private pensions still accounted for only a small proportion of aggregate total income in 2005, they more than tripled their share over this period—from 3% to 10%. Government pensions have also increased, from 6% in 1962 to 9% in 2005. In 2005, the share of aggregate total income from earnings returned to its level in 1962 (28%) after increasing for nearly 2 decades.
In 2005, 89% 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 72% of aged nonmarried beneficiaries. It was 90% or more of income for 22% of aged beneficiary couples and 42% 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.
The aged poor are those with income below the poverty line. The near poor have income greater than or equal to the poverty line and less than 125% of the poverty line. Nonmarried women and minorities have the highest poverty rates, ranging from 18.1% to 23.3%. Married persons have the lowest poverty rates, with 4.4% poor and 3.7% near poor. Overall, 10.1% are poor and 6.6% are near poor.
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 162 million workers with earnings in Social Security–covered employment in 2006, 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 83% of earnings in covered employment were taxable in 2006, compared with 92% in 1937.
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, becomes disabled, or dies. 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).
| Year | Population aged 20 or older | Population aged 20–FRA | |||
|---|---|---|---|---|---|
| Millions | Percentage permanently insured |
Percentage fully insured |
Millions | Percentage insured for disability |
|
| 1970 | 135.2 | 50 | 77 | 113.2 | 62 |
| 1975 | 147.5 | 50 | 80 | 122.9 | 65 |
| 1980 | 162.0 | 53 | 83 | 133.3 | 70 |
| 1985 | 175.1 | 57 | 84 | 144.1 | 73 |
| 1990 | 186.0 | 63 | 86 | 151.9 | 76 |
| 1995 | 194.7 | 66 | 87 | 160.5 | 78 |
| 2000 | 204.7 | 69 | 88 | 169.2 | 79 |
| 2005 | 219.0 | 69 | 87 | 182.0 | 79 |
| 2006 | 221.8 | 69 | 87 | 184.3 | 79 |
| 2007 | 224.0 | 69 | 88 | 185.7 | 80 |
| 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, Northern Mariana Islands, Puerto Rico, and U.S. 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. | |||||
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 91% 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 76% insured for disability.
Benefits were awarded to about 4.6 million persons; of those, 43% were retired workers and 17% were disabled workers. The remaining 40% 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.
| Beneficiary | Number (thousands) |
Percent |
|---|---|---|
| Total | 4,621 | 100 |
| Retired workers and dependents | 2,454 | 53 |
| Workers | 1,999 | 43 |
| Spouses and children | 455 | 10 |
| Disabled workers and dependents | 1,297 | 28 |
| Workers | 799 | 17 |
| Spouses and children | 499 | 11 |
| Survivors of deceased workers | 870 | 19 |
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 nearly 2 million in 2006. 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 to 830,000 in 2005 before decreasing to 799,000 in 2006.
More than 49 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 14% were disabled workers. The remaining 23% were survivors or the spouses and children of retired or disabled workers.
| Beneficiary | Number (thousands) |
Percent |
|---|---|---|
| Total | 49,123 | 100 |
| Retired workers and dependents | 33,945 | 69 |
| Workers | 30,976 | 63 |
| Spouses and children | 2,969 | 6 |
| Disabled workers and dependents | 8,612 | 18 |
| Workers | 6,807 | 14 |
| Spouses and children | 1,805 | 4 |
| Survivors of deceased workers | 6,566 | 13 |
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.
| Beneficiary | New awards | Benefits in current-payment status, December |
|---|---|---|
| All beneficiaries | 848 | 956 |
| Retired workers | 1,054 | 1,044 |
| Spouses | 385 | 518 |
| Children | 481 | 518 |
| Disabled workers | 1,031 | 978 |
| Spouses | 270 | 258 |
| Children | 274 | 290 |
| Survivors of deceased workers | ||
| Nondisabled widow(er)s | 829 | 1,008 |
| Disabled widow(er)s | 622 | 631 |
| Widowed mothers and fathers | 740 | 757 |
| Surviving children | 683 | 684 |
| Parents | 907 | 892 |
| SOURCE: Social Security Administration, Master Beneficiary Record, 100 percent data. | ||
About four-fifths of all OASDI beneficiaries in current-payment status were aged 62 or older, including 25 percent aged 75–84 and 10 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.
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 2006, it had risen to 52.1. In contrast, the average age of retired workers has changed little over time, rising from 72.4 in 1960 to 74.0 in 2006.
Of all adults receiving monthly Social Security benefits, 44% were men and 56% were women. Seventy-nine percent of the men and 59% of the women received retired-worker benefits. About one-fifth of the women received survivor benefits.
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.
| Beneficiary | Men | Women |
|---|---|---|
| All beneficiaries | 1,148 | 867 |
| Workers | ||
| Retired | 1,178 | 905 |
| Disabled | 1,097 | 840 |
| Spouses of— | ||
| Retired workers | 298 | 521 |
| Disabled workers | 208 | 259 |
| Survivors of deceased workers | ||
| Nondisabled widow(er)s | 829 | 1,010 |
| Disabled widow(er)s | 455 | 637 |
| Mothers and fathers | 657 | 763 |
| SOURCE: Social Security Administration, Master Beneficiary Record, 100 percent data. | ||
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 2006. 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 2006.
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 30% in 2006. 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 2006.
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 2006, the number of recipients was 7.2 million. Of this total, 4.2 million were between the ages of 18 and 64, 2 million were aged 65 or older, and 1.1 million were under age 18.
The average monthly federally administered SSI payment was $455. Payments varied by age group, ranging from an average of $542 for recipients under 18 to $375 for those 65 or older. The maximum federal benefit rate in December 2006 was $603 for an individual, $904 for a couple, plus any applicable state supplementation.
A total of 7.2 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.
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, a disabled recipient is still classified as "disabled" after reaching age 65. In the OASDI program, DI beneficiaries are converted to the retirement program when they attain full retirement age.
The proportion of SSI recipients aged 65 or older has declined from 61% in January 1974 to 28% in December 2006. 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.
Overall, 57% of the 7.2 million SSI recipients were women, but that percentage varied greatly by age group. Women accounted for 69% of the 2.0 million recipients aged 65 or older, 56% of the 4.2 million recipients aged 18–64, and 34% of the 1.1 million recipients under age 18.
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.
About 54 million people received a payment from Social Security. Most (46.6 million) received OASDI benefits only, about 4.7 million received SSI only, and 2.5 million received payments from both programs.
| Benefit | Number (thousands) |
|---|---|
| Total (unduplicated) | 53,830 |
| OASDI | 49,123 |
| OASDI only | 46,594 |
| SSI | 7,236 |
| SSI only | 4,707 |
| Both OASDI and SSI | 2,529 |
Benefits were paid to 35.3 million people aged 65 or older. About 1.1 million received both OASDI and SSI.
| Beneficiary | Number (thousands) |
|---|---|
| Total (unduplicated) | 35,331 |
| OASDI | |
| Total | 34,468 |
| Retired workers | 28,136 |
| Disabled workers | 193 |
| Spouses | 2,228 |
| Widow(er)s | 3,841 a |
| Disabled adult children | 70 |
| OASDI only | 33,326 |
| SSI | |
| Total | 2,004 b |
| Receiving SSI only | 863 |
| Receiving both OASDI and SSI | 1,142 |
Payments were made to 10.5 million people aged 18–64 on the basis of their own disability. Sixty percent received disability payments from the OASDI program only, 28% received payments from the SSI program only, and 12% received payments from both programs.
| Beneficiary | Number (thousands) |
|---|---|
| Total (unduplicated) | 10,463 |
| OASDI disability | |
| Total | 7,535 |
| Workers aged 64 or younger | 6,614 |
| Disabled adult children | 707 |
| Widow(er)s | 214 |
| OASDI disability only | 6,311 |
| SSI disability | |
| Total | 4,152 |
| Receiving SSI disability only | 2,928 |
| Receiving both OASDI and SSI disability | 1,224 |
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 $470.
In 1974, when the program began, 70,900 blind and disabled children were receiving SSI. That number increased to 995,000 in 1996, declined to 847,000 in 2000, and is now 1,079,000. 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 2006, blind and disabled children were receiving SSI payments averaging $542.
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 2006, the Old-Age and Survivors Insurance and Disability Insurance Trust Funds collected $744.9 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 14% of income. Assets increased in 2006 because income exceeded expenditures for benefit payments and administrative expenses.
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 2006 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 2041.
Social Security is not sustainable over the long term at current benefit and tax rates. Within 10 years the program will begin paying more in benefits than it collects in taxes (see the chart below). By 2041 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 75% of program costs. As reported in the 2007 Trustees Report, the shortfall over the next 75 years is 1.95% of taxable payroll.
