Personal Finance

Social Security Is Paying Out $80 Billion a Month in Benefits -- Here's Where It's All Going

An elderly man counting a fanned pile of cash in his hands.

For tens of millions of Americans, there's simply no program more important to their financial well-being than Social Security. According to the January 2018 snapshot from the Social Security Administration (SSA), about 62 million people are receiving a benefits check from the Old-Age, Survivors, and Disability Insurance (OASDI) Trust. Many of these folks, especially retired workers, are reliant on their monthly stipend to make ends meet.

But even more telling is the amount of cash leaving Social Security's coffers each month. SSA data from January 2018 shows that $79,988,000,000 -- or, for the sake of simplicity, $80 billion - was paid to these 62 million beneficiaries. Note, these figures don't take into account those folks who are solely receiving Supplemental Security Income (SSI), or the SSI disbursement for recipients who are dually eligible for a benefit from the OASDI and SSI.

Where's this $80 billion going? Let's take a look.

An elderly man counting a fanned pile of cash in his hands.

Image source: Getty Images.

Retirement benefits: $62.1 billion

Given that the Social Security Act was signed into law in 1935 to provide low-income workers with a financial foundation during their golden years, it should come as no surprise that retirement benefits accounted for 77.6% of all disbursed funds in January.

The bulk of this disbursement rightly goes to retired workers who've earned the prerequisite 40 lifetime work credits to be eligible for benefits. Almost 42.6 million retired workers received $59.9 billion from the OASDI in January, working out to an average monthly payout of $1,406.91. That may not sound like a lot, but an analysis from the Center on Budget and Policy Priorities estimates that 15.1 million seniors are kept out of poverty as a direct result of their guaranteed monthly Social Security payout. With around 4 million baby boomers retiring each year, expect the number of aggregate retired beneficiaries, as well as the nominal monthly disbursement amount, to head steadily higher over the next decade.

The remainder went to the eligible spouses of retired workers, who received $1.7 billion, and the children of retired workers, who netted just shy of $0.5 billion. Believe it or not, around 680,000 children under the age of 18, or high school students under the age of 19, received a payout in January. To qualify, either one or both parents have to be of eligible Social Security claiming age, which is 62 or older.

A smiling elderly couple examining their finances.

Image source: Getty Images.

Survivor benefits: $6.9 billion

Social Security also provides benefits to the immediate family members of deceased workers. In January, nearly 6 million survivors received a check from the SSA that averaged $1,152.22, totaling roughly $6.9 billion in disbursements.

Most survivor benefits are paid to nondisabled widows and widowers, who accounted for $4.9 billion of the $6.9 billion. A survivor benefit can be particularly helpful in instances where a higher-earning spouse precedes a lower-earning spouse in death. If the survivor benefit, which is based on the earning history and claiming age of the higher-earning spouse, is higher than the lower-earning spouse's own work-based retirement benefit, he or she can choose to take the higher survivor benefit. Today, 96% of workers between ages 20 and 49 have survivors insurance protection.

Of the remainder, children of deceased workers were paid $1.6 billion, while the rest was split between widowed mothers and fathers, disabled widows or widowers, and the parents of deceased workers.

A Social Security card wedged in between cash bills.

Image source: Getty Images.

Disability Insurance: $11 billion

Lastly, the SSA disbursed $11 billion in January to the more than 10 million people who are currently disabled over the long term and qualify for disability insurance. On average, disability insurance provides beneficiaries with $1,059.84 a month.

As you might have surmised, disabled workers get the bulk of the benefits in this category: $10.4 billion. There are nearly 8.7 million long-term disabled workers receiving a monthly stipend, and this figure could climb in the years to come. After all, data from the SSA suggests that more than a quarter of today's 20-year-olds will become disabled before they reach their 67th birthday (i.e., full retirement age for those born in or after 1960).

The other $0.6 billion is sent to the spouses and/or children of disabled workers. It's worth noting, though, that the average spouse or child of disabled workers only nets an average respective monthly payout of $335.61 and $367.22.

In the end, benefits are going right where they were originally intended: primarily to seniors, with survivors and the disabled also being buoyed.

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