9 Social Security Facts You Should Know

Social Security has been a cornerstone of retirement planning since its inception in 1935. While many of us are familiar with the basics, there are aspects of the program that may surprise you. At Skyla, we believe in empowering our members with knowledge to make informed financial decisions.

WHAT IS SOCIAL SECURITY?

Social Security is a vital program designed to provide financial assistance to retirees, disabled individuals, and families of deceased workers. It plays a crucial role in ensuring economic security for millions of Americans.

Here are nine facts about Social Security that might give you a new perspective:

1. the size of the trust fund

The Social Security trust fund is substantial, holding about $2.8 trillion at the end of 2022. This significant amount underscores the program's scale and its importance to American retirees. Learn more about the trust fund.

2. eligibility variance among workers

While most workers qualify for Social Security benefits, certain groups, such as federal government employees before 1984, do not due to their coverage by different retirement systems. Check your eligibility.

3. minimum work requirement

You might be surprised to learn that you need only 10 years of work to be eligible for benefits if you were born in 1929 or later. This makes Social Security accessible to a wide range of individuals. Understanding eligibility requirements

4. benefit calculation

Benefits are calculated based on your 35 highest-earning years under the Social Security system. This method aims to reflect your lifetime earnings accurately. How benefits are calculated.

5. cost-of-living adjustments (cola)

Automatic cost-of-living adjustments, based on the Consumer Price Index, were not always part of Social Security. Before 1975, benefit increases required an act of Congress. The COLA for 2024 is 3.2%, following an 8.7% increase in 2023. COLA explained.

6. a major source of income

For 67% of current retirees, Social Security represents a major portion of their retirement income, highlighting its critical role in supporting older Americans. Income sources for retirees.

7. taxable benefits

Social Security benefits became subject to federal income taxes starting in 1984, following Amendments to the Social Security Act in 1983. This was a significant change from the program's original tax-exempt status. Taxation of benefits.

8. lump-sum payments 

From 1937 until 1940, Social Security beneficiaries received a single lump-sum payment. This initial approach was based on the belief that participants would not live long enough to need monthly benefits. History of payments.

9. first social security payment

The first-ever Social Security payment was a one-time lump sum of 17 cents, paid to Earnest Ackerman in January 1937. This initial payment method underlines the program's historic beginnings and its evolution over decades to provide monthly benefits, adapting to the changing needs of American retirees. For more detailed insights into the history and significance of Social Security payments, explore here

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