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| © Donald Higgs/Getty Images Social Security check. Donald Higgs/Getty Images |
By John Egan, MoneyWise
If you dare, look closely at the section of your pay stub where your hard-earned money has been deducted. Do you see abbreviations like FICA, OASDI or SS? They refer to the piece going to Social Security.
In 2019, American workers will hand over as much as 6.2% of their pay to support the Social Security system. If you’re self-employed, you'll pay up to 12.4% of what you earn.
It's all of the bargain for receiving money from Social Security in retirement.
1. Social Security benefits = Mexican economy
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| © Provided by Cheapism Grigorev Mikhail / Shutterstock The amount paid out by Social Security each year is close to the size of the Mexican economy. |
The amount of money doled out by Social Security in a single year is almost equivalent to the size of Mexico’s economy. You don't believe it?
In 2019, the gross domestic product of Mexico is forecast to exceed $1.2 trillion, according to the International Monetary Fund.
Social Security's trustees say about 64 million Americans will collect more than $1 trillion in benefits from the U.S. retirement program this year.
2. Social Security isn't broke (yet)
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| © Provided by Cheapism I MAKE PHOTO 17 / Shutterstock Social Security isn't broke but is running out of money. |
You may have heard that Social Security is broke. Not quite: The program was running a $2.89 trillion surplus in 2018, the trustees report.
However, those reserves are expected to dwindle so that by 2034, benefits will have to be cut by about 25%.
Democrats want to address that by raising Social Security taxes on higher earners. Republicans want to make seniors wait longer to receive higher benefit amounts and face deep cuts if they claim benefits early.
3. Social Security isn’t just for Grandma
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| © Provided by Cheapism Robert Kneschke / Shutterstock Kids can get Social Security, too. |
In 2017, 4.2 million children 18 and under got their own Social Security payments as dependents of deceased, disabled or retired workers, the federal Social Security Administration says.
The average monthly benefit? Around $620.
Social Security says the money helps provide for the family so the kids can finish high school.
4. The 20-something who made Social Security history
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| © Provided by Cheapism Everett Historical / Shutterstock Clerks sent the first recorded Social Security card to a young man named John David Sweeney Jr. in 1936. |
A guy named John David Sweeney Jr. is the first American recorded as having a Social Security card.
He was 23 when he received his card with number 055-09-0001 from the Social Security Administration in 1936.
However, the agency today has no idea who got the very first Social Security card. That would have had the lowest possible number: 001-01-0001.
5. Uncle Sam 'borrows' from Social Security
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| © Provided by Cheapism Kim Reinick / Shutterstock The government uses Social Security money through the trust fund's investments in Treasury bonds. |
Another rumor that makes the rounds is that the government "raids" your Social Security money to pay its bills.
That's a little extreme, though Uncle Sam does borrow from the trust fund, in a way.
Here's how it works: The rules require that Social Security surpluses be invested in Treasury bonds — in other words, government debt used to pay for other things.
6. 'Aunt Ida' got the first regular Social Security check
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| © Provided by Cheapism NotarYES / Shutterstock A retiree known as "Aunt Ida" got less than $25 in the first monthly Social Security check ever issued. |
The first monthly Social Security check was for $22.54.
That's the same as about $414 today — still a paltry sum.
Ida May Fuller of Brattleboro, Vermont, called “Aunt Ida” by friends and relatives, received the check in early 1940, several weeks after she retired as a legal secretary.
7. It doesn’t necessarily mean financial security
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| © Provided by Cheapism wavebreakmedia / Shutterstock It's very difficult to live on Social Security. |
Social Security won’t make you rich. In fact, don't expect to live off of it, though many people try.
If you had toiled your entire life and scraped by on average earnings, then left the workforce in 2018 at age 65, Social Security would now be replacing just a measly 39% of your previous pay, according to the nonpartisan Center on Budget and Policy Priorities.
To get by, you'll need money from a 401(k) or IRA — and other savings and investments.
8. Social Security numbers aren’t recycled
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| © Provided by Cheapism romeovip_md / Shutterstock The Social Security system will eventually run out of number combinations. |
When you die, your Social Security number goes to the grave with you. It’s never reused.
Since 1936, the federal government has cranked out more than 453 million of the nine-figure identifiers. Most of us will be in our graves by the time Social Security runs out of numbers and needs to come up with a Plan B.
You'll want to have a backup plan, too, because Social Security only goes so far in retirement. You might start by opening a savings account.
