Social Security: Now and Then

The Social Security Administration recently came out with a report on Social Security that compared aspects of the program from 1962 to 2012.  The report’s findings exposed the many ways in which Social Security has transformed the retirement landscape. 

First, the SSA report looked closely at the sources of income that Americans relied on at age 65 and older.  In 1962, more than two-thirds of Americans of retirement age received Social Security income, establishing it as a key aspect in financial planning for retirement.  By 2012, Social Security had become an even more important source of retirement income with 86 percent of all Americans over 65 receiving some benefit from the program. 

Social Security has had an even more notable impact on worker expectations.  In 1962, one out of every eleven Americans received money from private pensions from their employers, and the same number got retirement from governmental sponsored pension plans.  As Social Security became more popular, Americans realized the value of dependable monthly income after they stopped working and consequently, the percentage of those receiving private pensions has tripled in the past half-century.  Pensions for government employees have also grown more popular, indicating the value workers place in financial security in retirement. 

While retirees accumulate income from a variety of sources, they rely on those different sources to broadly varying degrees. When looking at actual aggregate income received, Social Security, work income, and pensions have all increased in influence, while the proportion of income from investments has sharply fallen.  This illustrates that most Americans have not done much in the realm of retirement planning and more Americans have continued to work beyond age 65 in order to make ends meet. 

See Dan Caplinger, 50 Years of Social Security: How It’s Transformed America’s Retirement, The Motley Fool, Oct. 12, 2014.