By Fred Hymans, CFP® | Financial Advisor
Social Security has been a cornerstone of retirement since its inception in 1935. While most people think they understand it, how much do you really know? Here are nine things that might surprise you:
The Social Security trust fund is enormous. It was valued at $2.8 trillion at the end of 2022.
Most workers qualify 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.
You don’t have to work long to qualify. If you were born in 1929 or later, you need to work for 10 or more years to become eligible for benefits.
Benefits are based on an individual’s average lifetime earnings under the Social Security system. The calculation is determined by your 35 highest-earning years. If you have years with low or no earnings, those may be included to bring the total number of years to 35.
Cost-of-living adjustments (COLA) haven’t always been automatic. Before 1975, Congress had to pass legislation to increase benefits. Now, COLA increases happen automatically, based on the Consumer Price Index. In 2024, there was a 3.2% increase, while 2023 saw an 8.7% increase.
Social Security is a primary source of retirement income for 67% of current retirees.Social Security benefits are subject to federal income tax, but this wasn’t always the case. Amendments to the Social Security Act in 1983 made benefits taxable, starting with the 1984 tax year.
In the early days of Social Security, recipients received a single lump-sum payment. Between 1937 and 1940, one-time payments were given to those who contributed to the program, as it was believed they wouldn’t live long enough to qualify for monthly benefits.
The first person to receive a Social Security benefit was Earnest Ackerman. In January 1937, he received a lump sum of 17 cents.
Sources:
- SSA.gov, 2023
- Investopedia.com, September 18, 2023
- SSA.gov, 2023
- SSA.gov, 2023
- SSA.gov, 2023
- EBRI.org, 2023
- SSA.gov, 2023
- SSA.gov, 2023
For more information or to discuss your financial questions, contact Fred Hymans, CFP® at (916) 333-2086 or [email protected].
Securities and advisory services offered through Osaic Wealth, Inc. Osaic and Essential Financial Strategies are separate entities. Calif. Insurance Lic. #0D55562.
The content has been developed from sources believed to provide accurate information. This material is not intended as tax or legal advice and cannot be used to avoid federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation.
Contributed by Fred Hymans, CFP® Financial Advisor Essential Financial Strategies
- CA Insurance Lic. #0D55562
- (916) 333 2086 %20333%202086)
- [email protected]
- EFSplanning.com
