Dec 14, 2018 3 min read

We speak several times a year about what an important retirement asset Social Security is. Now we are going to discuss what a great value it is to Americans.

A study by the Center on Budget and Policy Priorities says no other social program does more for the American public than Social Security. More than 62 million people receive a check each month, and these checks keep an estimated 22.1 million people out of poverty – 15.3 million of whom are retired.

In September, recipients were bringing home an average of $1,417.22 per month. This is a little more than $17,000 per year. Is this a good deal for retired workers? For most, the answer is yes.

The Urban Institute analyzes payroll contributions and expected lifetime income for different income levels. It has looked at the program every five years since 1960, and will do so through 2060. The institute uses constant dollars to illustrate inflation.

It concluded that lower- and medium-income-earning men get a good return on their investment. They say these groups “make out like a bandit.” Higher-income people comprise the only group that does not receive as good of a deal. They sometimes pay in more than they get out. This is because the SS system is designed to help lower-income people more.

Women do even better because they have a longer life expectancy, meaning they are likely to collect benefits for more years. For couples with only one spouse working outside of the house, the returns are even better. A spouse who has no earning record can collect half of a partner’s benefit at full retirement age.

This is 66 for anyone born between 1943 and 1954, and 67 for anyone born after 1960. Every year in between goes up two months per year. This means that a couple could be collecting 150 percent of the earned benefit. You must have been married at least nine months to qualify for this benefit.

You may even be able to collect the benefit of an ex-spouse. You had to be married at least 10 years and could not have remarried. Upon the death of one spouse, there may be survivor benefits available. During this time, you collect whichever benefit was the highest.

Remember, SS is one of the few retirement income sources that has a cost-of-living adjustment. This helps you keep up with inflation and protect your purchasing power.

Receiving Social Security benefits is enhanced further by their preferred tax treatment. For a couple who file a joint married return if their provisional income is less than $32,000, they do not pay any tax on SS benefits. If their income is between $32,000 and $44,000 half of their SS is taxable; and over $44,000, then 85 percent is taxable.

The income limits for single taxpayers are about half. Provisional income includes only half of your family’s total SS income. This is a nice tax break.

Social Security is very important and you need to make good decisions when deciding when to begin benefits. Anyone born before 1954 who is not currently collecting SS should talk to an adviser who understands SS.

Gary Boatman is a Monessen-based certified financial planner and author of “Your Financial Compass: Safe passage through the turbulent waters of taxes, income planning and market volatility.”

To submit columns on financial planning or investing, email Rick Shrum at rshrum@observer-reporter.com.