By Sarah Albracht | August 20, 2015
The Social Security Act turned 80 on August 14, 2015. Here are some interesting facts, provided by the Social Security Administration, that even the most experienced financial planner might not know about the program:
1) When it was originally enacted for the fiscal year ended June 30, 1936, with an initial appropriation of $49,750,000.
2) In 1935, 77.5% of people aged 60 lived at or below the federal poverty level. In 2013, the rate of poverty for senior citizens was under 15%.
3) There were approximately 63.2 million recipients of Social Security aid in 2013.
4) Benefit payment are funded 85.5% by payroll tax, and comprise 4.86% of the GDP.
5) There is currently enough money in the program to fully fund recipients until at least 2033.
6) Worries of insolvency might stem from inaccurate population tallies. According to Pew Research Center, there are currently 76 million Baby Boomers (people born between 1946 and 1964) living in the United States. However, birth rates show that there are only 55 million people comprising the next generation, Generation X (people born between 1965-1980). It is important to note that Generation X is three years shorter. Also, members of the Millennial generation are even more populous than Baby Boomers, with 75.3 million members born between 1981-1997. When both birth rates and legalized immigration rates are factored, there are nearly 70 million members of Generation X and a projected 79 million Millennials.
7) Still, in 1955 there were 8 workers paying into the system for every recipient of Social Security benefits. In 2013 that number dropped to 3:1, largely due to longer life span. There are six generations alive today, for the first time in history. Worries of reduced payouts for future generations might have validity.
Members of the younger generations are already starting to plan for their retirement, and this is good news for financial planners. For the first time in history, there are four generations in the workforce. Even though there is the potential for financial trouble on the horizon for future retirees, savvy financial planners can help retirees weather possible storms on the horizon.