A few days ago, I wrote an article discussing Social Security and its finances. In the comments, one of TAH’s regular readers (ex-OS2) asked two questions – one of which stumped me royally.
So I got curious, and decided to poke around a bit and see if I could find an answer.
While I didn’t find the precise answer, I did find the answer to a couple of similar and related questions. And the questions seemed to be ones that might be of general interest, so I decided to post the answers here.
The question I couldn’t answer was, “What fraction of Disability payments are made to those who never contributed?” That in turn raises a bigger question: “What fraction of Social Security recipients overall (Disability, Old Age, Survivors) fall into the ‘never contributed’ category?”
Yes, that’s indeed possible. Social Security pays benefits to spouses, survivors, and dependents under many circumstances. Sometimes those beneficiaries in fact never have paid FICA taxes themselves. But they still qualify based on the worker’s earnings history.
As I surmised might be the case, Social Security doesn’t make it particularly easy to find this information, and I can’t say with that I found the precise answer to either the question concerning disability or the larger question for Social Security overall. But I do think I found enough information to answer a closely-related question: “How many people are receiving benefits based on someone else’s earnings history, and how much do those benefits total?”
It turns out that Social Security does publish one report monthly that gives useable data here: their monthly “snapshot” report. The latest one I could find was for July 2016. Apparently it takes a bit of time to get the necessary data, because August’s report doesn’t yet seem ready.
Here are the pertinent numbers in table form. The snapshot for July 2016 can be downloaded, in PDF format, here.
| July 2016 – Social Security Benefits Paid, Summary |
Number of Beneficiaries (x 1,000) |
Percent of Beneficiaries |
Benefits Paid (x $1M) |
Percent of Benefits Paid |
Average Monthly Benefit |
|
|
|
|
|
|
| Grand Total |
60,505 |
100.0% |
$74,854 |
100.0% |
$1,237 |
|
|
|
|
|
|
| Old Age/Survivors – Total |
49,841 |
82.4% |
$63,890 |
85.4% |
$1,282 |
|
|
|
|
|
|
| Retirement Benefits – Total |
43,831 |
72.4% |
$57,167 |
76.4% |
$1,304 |
| Paid to |
|
|
|
|
|
| Retired Workers |
40,817 |
67.5% |
$55,086 |
73.6% |
$1,350 |
| Spouses of Retired Workers |
2,369 |
3.9% |
$1,660 |
2.2% |
$701 |
| Children of Retired Workers |
645 |
1.1% |
$421 |
0.6% |
$652 |
|
|
|
|
|
|
| Survivor Benefits – Total |
6,010 |
9.9% |
$6,722 |
9.0% |
$1,119 |
| Paid to |
|
|
|
|
|
| Children of deceased workers |
1,852 |
3.1% |
$1,542 |
2.1% |
$833 |
| Widowed mothers/fathers |
134 |
0.2% |
$126 |
0.2% |
$943 |
| Nondisabled widow(er)s |
3,763 |
6.2% |
$4,866 |
6.5% |
$1,293 |
| Disabled widow(er)s |
260 |
0.4% |
$186 |
0.2% |
$717 |
| Parents of deceased workers |
1 |
<0.002% |
$1 |
0.0% |
$1,142 |
|
|
|
|
|
|
| Disability Benefits – Total |
10,664 |
17.6% |
$10,965 |
14.6% |
$1,028 |
| Paid to |
|
|
|
|
|
| Disabled workers |
8,861 |
14.6% |
$10,335 |
13.8% |
$1,166 |
| Spouses of deceased workers |
138 |
0.2% |
$44 |
0.1% |
$323 |
| Children of deceased workers |
1,666 |
2.8% |
$585 |
0.8% |
$351 |
In looking at the table above, it’s pretty apparent that some of those individuals receiving benefits are receiving those benefits based on another individual’s Social Security record. For disability, that is benefits paid to spouses and children. For Old age And Survivors, that would be those benefits paid to spouses and children of retired workers. By definition, it also includes all forms of survivor’s benefits that Social Security pays regarding deceased retirees. All of these categories of persons are eligible to receive benefits from Social Security based on the worker’s earnings history under the proper circumstances.
Doing the math, I came up with an approximate answer to the question for disability. Social Security paid disability benefits to roughly 10,664,000 persons in July 2016. Of those, 1,804,000 – or a bit more than 1 in 6 – were NOT disabled workers; the vast majority of that number (1,666,000) were children. It’s a virtual certainly that they never paid a dime in FICA taxes. The remaining 138,000 were disability benefits paid by Social Security to selected spouses of disabled workers; these are paid based on the worker’s qualification to receive disability benefits, and thus were due to the disabled worker’s earnings record. However, it’s possible that some of these spouses indeed worked and paid FICA taxes at some point in their lives – so I can’t say with certainty that they “never paid into” Social Security.
In dollar terms, these disability payments to spouses and children appear quite modest. They represent only about 5.7% of Social Security’s total disability outlays.
The situation is somewhat different for Social Security retirement and survivor benefits. These payments are both more numerous and proportionally more costly than payments made to children and spouses of disabled workers.
Spouses and children of retired workers receiving benefits from Social Security on the basis of the retired workers earnings histories totaled 3,041,000; benefits were also paid to 6,010,000 survivors of deceased workers. The total of these categories – 9,024,000 – represents 20.6% of those receiving Old Age and Survivor’s benefits from Social Security – or just over 1 in 5. These payments constitute approximately 15.4% of all Social Security Old Age and Survivors benefits paid.
Summing both categories (Disability and Old Age/Survivors), it turns out that a bit less than 18% (17.9%) of those receiving benefits from Social Security are receiving benefits on the basis of another individual’s work history. Those benefits represent 12.6% of all Social Security benefits paid.
A caveat: many of these spouses receiving benefits on the basis of a spousal work history indeed may have paid FICA taxes themselves. A person can qualify for Social Security based on both their own work history and that of their spouse. They’re allowed to choose to receive whichever benefit that is more advantageous financially. So in many cases, the individuals would be entitled to a benefit – but a smaller one – based on their own work history.
I hope someone besides me finds this information interesting or of use.