Touching Social Security benefits is often considered the third rail of American politics. Politicians supposedly recognize the danger of even approaching tinkering with it.
This is understandable, with well over $1 trillion being paid out in Social Security benefits for the 2023 fiscal year. That is a massive part of the federal budget, but one that millions of Americans use to care for living expenses.
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With such a big pillar among U.S. social programs, it makes one wonder how much the federal government spends on Social Security each year. GOBankingRates dug through data to answer that question.
Keep in mind these five things about Social Security, as well, if you plan on retiring in 2025.
How Much Does the United States Spend on Social Security Annually?
Social Security benefits comprise a significant portion of the federal budget. The federal government spent roughly $1.4 trillion, or 21% of the budget, on the program in 2023, according to the Center on Budget and Policy Procedures.
That is obviously a considerable amount of government expenditures, but large numbers of people rely on Social Security benefits to make ends meet each month.
The Social Security Administration (SSA) reports over 71 million people received monthly benefits in 2023, representing an increase of roughly 180% since 1970. Furthermore, the average monthly benefit was $1,905 to retired workers, with disabled workers receiving $1,537 and survivors receiving $1,501.
As more Americans enter retirement years, it’s logical to expect Social Security spending to increase year over year.
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Who Receives Social Security Benefits?
It’s easy to assume that only retired workers receive Social Security benefits. Retirees do compose the largest recipient base of benefits, with the group getting 75% of the spending.
In order to receive money from Social Security, you must be at least 62 years or older and have worked and paid Social Security taxes for a minimum of ten years.
While largely insignificant to the overall total, there are other individuals who receive money from Social Security. Those can include:
- Disabled workers and their dependents
- Surviving spouses
- Dependent parents of a deceased worker
Roughly 90% of eligible retirees were enrolled in 2023, according to the SSA. Moreover, funds consist of 30% of income for people over 65.
Will Social Security Run Out?
A growing concern for many Americans is that Social Security isn’t sustainable. More people are retiring, leaving fewer workers per beneficiary. As our population ages, this concern may understandably increase.
Numbers reveal that this trend is going to continue in the near future, with over four million Americans reaching retirement age annually through 2027, according to the Alliance for Lifetime Income.
The Social Security is on record as saying funds will deplete by 2035. There are some possible solutions to provide relief, but they may prove painful for some. Possible remedies could include:
- Changing eligibility or benefit amounts
- Increasing payroll taxes to grow revenues
- Using resources outside of the current revenue base
- Give benefits to state and local government workers
- Increasing benefits for some people based on responding to certain societal changes
It’s clear that some form of intercession will be necessary. Doing nothing will result in the depletion of resources in just over a decade. Saving Social Security benefits is possible but may involve some pain.
Social Security is a substantial part of our federal budget. Tens of millions of Americans rely on the monthly income to manage their finances. The governmental program is funded entirely via payroll taxes.
Changes are necessary to ensure the program will continue to be there as a safety net for retired Americans.
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This article originally appeared on GOBankingRates.com: See How Much the US Spends on Social Security Every Year
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