For every American out there, Social Security is not just a check that they receive from time to time. It is more of a financial lifeline that enables them to make ends meet on a monthly basis. According to The Motley Fool, an analysis from the Center on Budget and Policy Priorities has revealed an interesting truth about Social Security. It is basically providing benefits to over 62 million people – or eligible beneficiaries – and it does this on a monthly basis. Interestingly, this has kept over 22.1 million individuals above what is called the federal poverty line. And out of these 22.1 million, around 68 percent of them are retired workers.
However, as per the report, Social Security is somewhat a disappointment, particularly for those who are currently receiving it. And this is based on new findings courtesy of the Nationwide Retirement Institute. Judging from it, there is every reason for an average American to be disappointed.
The organization conducted an online survey which involved 1,013 persons, and they are between the age of 50 and older. These people are also confirmed to have received either benefits or plan, though some are half of the current retirees in the country who heavily rely on Social Security as a primary source of income. And it is actually a fact that 42 percent of future retirees are expected to do so.
However, as per March 2018 report from Social Security Administration, the average retired worker benefit only managed to reach $1,409.91 a month. This is obviously a difficult figure to manage considering the cost for medical, housing, and other basic needs.
But there is a glaring difference found in the survey. It states that current retirees, in one way or another, are receiving an average monthly benefit of $1,257. But as far as future retirees are concerned, they are expected to receive an amount of $1,628 per month only. According to Tina Ambrozy, the current president of Nationwide’s sales and distribution department, “there’s a major disconnect between what consumers think of their Social Security benefit will be – and cover – compared to reality.” In general, 27 percent retirees from America have said that their Social Security benefit was, contrary to what Ambrozy projected, “less than expected.”
Nationwide said that it is actually not a question of numbers but rather why Americans are disappointed with their payout. It appears that it has something to do with a number of factors. For starters, retired workers have this notion that it is better to file early, and data reports show that they tend to start claiming as soon as they hit the age of 62. Apparently, it also shows that they love to take a cut in their monthly benefits, which is between 25 percent and 30 percent. This is substantially relative to what they would have received if and only if they waited until reaching full retirement age.
Second reason is – which is a hard fact – retirement is not always on a person’s schedule. They simply have a little choice on this one, as it is very possible for them to retire earlier than what they originally expected. So, once they are unemployed, say, for a certain period of time, they have no choice but to find money in order to cover their health bills.
Considering these reasons, there is no doubt that it is a major concern for every average American out there. There is good news however. That is because the Social Security Administration has a 12.4 percent payroll tax, which basically safeguards the program from possible bankruptcy. So as long as an individual keeps working, this payroll tax will do the job of collecting any revenue that will be reimbursed to all eligible beneficiaries.