Why Does Ss Withhold Money For Drugs When I Have Private Insurance?
Retirement income in the U.s.a. has been described every bit a three-legged stool equanimous of Social Security benefits, personal savings, and employer-based retirement plans. For the latter, today's workers normally take a divers contribution plan in which the worker and employer contribute to the plan and the worker bears the risk for account functioning. At retirement, the worker has the option of purchasing an annuity, which is like to Social Security benefits and traditional defined benefit pension plans insofar as they provide a steady income stream for life. This result paper examines the similarities and differences between Social Security retirement benefits and annuities, and the factors that determine how much lifetime retirement income an private would receive.
Dale Kintzel is an economist with the Part of Policy Research, Part of Retirement Policy, Office of Retirement and Disability Policy, Social Security Assistants.
Acknowledgments: The author would like to thank Anya Olsen, David Rajnes, Patrick Purcell, and Joni Lavery for their helpful comments.
The findings and conclusions presented in this paper are those of the authors and exercise not necessarily correspond the views of the Social Security Administration.
Summary
| CPI | consumer price index |
| DB | defined do good |
| DC | divers contribution |
| FRA | total retirement age |
| IRA | individual retirement account |
| JS | joint and survivor |
| SPIA | single premium income annuity |
| SSA | Social Security Assistants |
Retirement income in the The states has been described as a three-legged stool composed of Social Security benefits, personal savings, and employer pensions (DeWitt 1996). The showtime leg, Social Security, is a social insurance program that pays retirement benefits to workers and their family members. Workers are eligible for lifetime benefits if they have worked long enough in covered employment to qualify.1 For the 2d leg, personal savings, individuals tin invest for retirement independently, usually through an private retirement account (IRA).ii The tertiary leg, employer pensions, has changed significantly over the past 30 years (Employee Benefit Enquiry Constitute, n.d.).3 Historically, a worker'due south pension income came from a divers benefit (DB) plan, which mostly is employer-funded and provides prepare monthly payments based on the worker's salary, years of service, and historic period at retirement. DB plans typically provide retirees with lifetime pension income and offer survivor benefits for spouses. Today, workers with employer-sponsored pensions are more likely to be covered under defined contribution (DC) plans, typically 401(thousand) plans. In DC plans, employees contribute a portion of their wages, often matched in full or in part by their employers, and earn investment returns over time to accrue retirement savings.
Because of the shift from DB to DC plans, workers bear greater responsibility for managing their income and avails to ensure they last throughout retirement. While Social Security and DB plans provide monthly lifetime payments, at retirement a worker must determine how to spend the retirement savings accumulated in DC plans, IRAs, or other personal savings accounts. A worker can choose to take the money as a lump sum, depict it down through disbursements as needed, or use some or all of it to purchase an annuity. In general, an annuity is an insurance product that pays a monthly corporeality for the residuum of the person's life in exchange for a one-time upfront payment called a premium. Although privately purchased annuities seem similar to Social Security benefits because both offer a steady income stream, individuals may not empathize the inherent differences between them. In addition, many may non sympathise the role of interest rates and life expectancy in determining annuity payments or how much coin they should annuitize.
This effect paper explains some key features of Social Security retirement benefits, focusing on plan funding; benefit payments to retired workers, their spouses, and survivors; and benefit taxation. It then discusses cardinal features of private annuities, including funding and payments, types and features, and taxation. In addition, this paper gives examples of the premiums needed to replicate Social Security retirement benefits and discusses the variables that touch on the corporeality of annuity income. Lastly, this upshot paper explains some of the risks of both the Social Security plan and the individual annuity industry. Equally more people reach retirement with a nest egg of savings, it is of import that they empathize the complexities involved in purchasing an annuity and how this type of income compares with other retirement income sources.
Social Security Retirement Benefits: Fundamental Features
This section discusses key features of Social Security retirement benefits, including funding, payments, and taxation.
Benefit Funding
Both employees and employers pay Social Security payroll taxes—each pay six.two percent of an employee's covered earnings up to the taxable maximum ($127,200 in 2017),4 with v.three percentage allocated to the Old-Historic period and Survivors Insurance (OASI) Trust Fund and 0.ix percentage allocated to the Disability Insurance (DI) Trust Fund (collectively referred to as the OASDI Trust Fund). Self-employed individuals pay both the employee and employer shares, or 12.4 percent. Social Security payroll revenue enhancement revenues pay current beneficiaries; any excess revenues go into the OASDI Trust Fund to pay future benefits should revenues autumn brusque of outlays. Currently, the Social Security program covers about 96 percent of U.S. workers, which ways that nearly workers are discipline to the payroll tax (SSA 2017). Considering well-nigh all U.Southward. workers are covered by the programme, Social Security is able to pool mortality risk—the doubtfulness about how long ane will alive—over a large and heterogeneous population.
Benefit Payments
An individual needs at to the lowest degree ten years (40 credits) of covered earnings to qualify for Social Security retirement benefits. Social Security bases benefits on an individual's highest 35 years of earnings, indexed to changes in the national boilerplate wage.v With this information, the Social Security Administration (SSA) calculates a worker's average indexed monthly earnings (AIME). The AIME is then used to calculate the main insurance amount (PIA), or the monthly benefit payable at the worker'southward total retirement age (FRA).6 The FRA is 65 to 67, depending on the worker's yr of nascence.7 Permanently reduced retirement benefits tin can be claimed as early as age 62, the early eligibility age (EEA). For those who choose to delay claiming benefits by their FRA, their monthly benefit increases through delayed retirement credits, up to historic period 70. Once claimed, monthly benefits last every bit long as a person lives and are fully indexed annually to the consumer cost alphabetize (CPI) to protect against aggrandizement.8 At the stop of 2014, about 39 one thousand thousand beneficiaries received retired-worker benefits and the average monthly do good for a 65-year-one-time was $1,317 for a man and $1,033 for a woman (SSA 2016, Tabular array 5.A1.1).
In addition to retired-worker benefits, eligible family unit members can claim benefits based on the worker'southward earnings record. Spouses are eligible for Social Security benefits, even if they never worked in covered employment on their own. The spouse (or unmarried ex-spouse, if the marriage lasted at least 10 years) of a retired worker can receive retirement benefits equal to 50 percent of the worker's PIA if the spouse (or ex-spouse) claims at FRA, or reduced benefits starting at the EEA. Survivor benefits are bachelor to nondisabled widow(er)south starting at historic period 60, or as early as age l if the widow(er) is disabled. Monthly benefits are higher if a survivor waits until FRA to merits them. Widow(er)s receiving survivor benefits, who qualify for retired-worker benefits that are greater than their survivor benefits can switch to their ain retirement benefit every bit early every bit historic period 62 or as belatedly as historic period 70.9 Social Security besides pays benefits to modest and disabled children of retired, disabled, and deceased workers.
Do good Taxation
Some beneficiaries may have to pay federal income tax on a portion of their Social Security retirement benefits depending on their combined income. For an private with combined income between $25,000 and $34,000 (or for a couple, betwixt $32,000 and $44,000), up to 50 pct of Social Security benefits are subject to taxation. For an individual with income greater than $34,000 (or greater than $44,000 for a couple), up to 85 percentage of Social Security benefits are subject field to taxation.10
Individual Annuities: Cardinal Features
This section discusses the cardinal features of private annuities, including funding and payments, types and features, and taxation.
Annuity Funding and Payments
Many individuals save for retirement past contributing to employer-sponsored DC plans, typically 401(k)due south. Employers sometimes offer a matching contribution, upwardly to a certain percentage of employee contributions. Individuals can also save independently for retirement, normally through IRAsouth. All the same, in retirement, individuals must decide how to manage their retirement accounts for income, whether past withdrawing funds as needed,11 purchasing an annuity, or some combination of the 2. Annuities insure retirees against the risks of outliving their retirement savings (longevity take a chance) or losing savings due to low or negative investment returns (investment take chances).
In general, an annuity pays a monthly amount for the remainder of the annuitant'south life in commutation for a 1-time upfront payment called a premium. The monthly annuity payment depends on the premium, the purchaser'due south age and sexual activity, interest rates at the time of purchase, and the annuity's specific features. In full general, for any given premium, annuity income rises with the historic period of the purchaser because the income will be paid out for fewer years, on average. An annuity tin exist purchased at retirement or later to increment monthly payments. Income volition as well be greater for an annuity purchased when interest rates are relatively high because the insurer will earn more by investing the premium at the higher rates. Finally, for annuities purchased by individuals, women will receive a smaller monthly income than men the aforementioned age receive for the same premium considering of their longer life expectancy.
Annuities pool mortality chance across many individuals, which allows an private to accept a predictable income stream and insures against outliving one's retirement savings. When a big number of individuals share mortality take chances, some volition alive shorter than boilerplate lives and some will live longer than average. Annuities use the remaining monies from those who dice early on to pay benefits to those who live longer than the boilerplate life expectancy. Although, the benefits for the longer-lived annuitants in the risk pool are substantial, the disadvantage for shorter-lived annuitants too can be substantial as they forfeit unused premiums.
Individual annuity markets are voluntary markets, which ways that individuals self-select to purchase annuities. This introduces adverse option into the annuitant pool considering those who voluntarily purchase annuities tend to live longer on average than the general population. Those individuals may accept knowledge about their expected future health and predictable longevity and insure against outliving their financial resource. This agin option leads to private annuities being priced at relatively loftier rates, as insurers use life tables to account for longer life expectancy.12
Previous research has examined whether individuals should purchase annuities and how many people actually do and so. Yaari (1965) showed that in the absence of a heritance motive, individuals should annuitize all of their wealth. However, few individuals annuitize even part of their retirement savings. Yakoboski (2010) reported that among retirees with DC and IRA balances in excess of $200,000 (and pension income of less than $200 per month), merely 19 percentage annuitized. Sabelhaus, Bogdan, and Holden (2008) found that 22 percentage of DC plan account holders annuitized all or function of their retirement business relationship balances. Among those who annuitized, lxxx percent annuitized the full residuum, while 20 percent elected a fractional annuity.
Annuity Types and Features
Annuities can take many forms and have optional features, but such features either cost more or reduce monthly payouts. The ii virtually basic annuities—single premium income and deferred income—crave a prepaid premium and, in render, the annuitant receives a fixed nominal monthly income for life. Upon death, the annuitant usually forfeits any unused premium and the insurer uses the balance to pay the longer-living annuitants in the hazard pool.
Single premium income annuity (SPIA). The well-nigh basic annuity, SPIA, pays a lifetime income in exchange for an initial lump-sum premium. The income for any given premium depends mainly on the market interest rates at the time of purchase and the purchaser's historic period and sex. Women receive lower monthly payouts because of their longer life expectancy. For case, with a market interest charge per unit of 3.9 percent and a $100,000 premium, a 65-yr-erstwhile homo would receive about $545 per month from an SPIA, while a adult female would receive around $511 per calendar month.13
Deferred income annuity (DIA). The DIA besides pays an annuitant a fixed monthly income for life, but the annuitant pays the premium in accelerate with the payouts starting at a later historic period. The DIA premium is significantly lower than if the annuity payments started immediately because the insurer invests the premium during the deferral period. A DIA grows tax-free in the preretirement stage with a guaranteed involvement rate for a specified time. One time payouts begin, an annuitant receives payments for life. Under a variant called an Avant-garde Life Delayed Annuity, the monthly payment starts much later (typically afterward age fourscore). This allows those living significantly beyond their retirement starting age to enhance their monthly payments. For example, if the same man and adult female in the prior SPIA example expect until age lxxx to begin their annuity payouts, their monthly payouts increase to $910 and $830 per month, respectively. The higher payments are due to the retirees' decreased life expectancy and tin can aid minimize the chance of having as well little income late in life.
In addition to a basic monthly payment in return for a premium, some annuities offering optional features for additional upfront costs.
Term certain annuity. A term sure annuity guarantees payouts for a specified time, fifty-fifty in the issue of the annuitant'southward death. For example, if an annuitant purchases a 10-year term certain annuity and dies after 6 years, the monthly payments continue to the designated casher for iv years. Payments stop afterwards x years, so a term sure annuity does not insure the annuitant confronting living longer than the term.
Joint and survivor (JS) annuity. Under a JS annuity, monthly payments continue to the spouse, if the spouse survives the annuitant. JS annuities pay income for the longest life of either spouse. Nether a typical 50 percent JS annuity, the insurer reduces payments by 50 percent when one spouse dies, but pays the surviving spouse for life. As the percent paid to the surviving spouse increases, and then does the premium. For example, if a couple purchases a 50 per centum JS annuity that pays $ane,000 a calendar month while both annuitants are living, upon the death of one spouse, the lifetime payouts drop to $500 per month for the surviving spouse. A 100 percent JS annuity would continue to pay the full $1,000 per calendar month to the survivor. Naturally, the college the survivor'southward do good, the greater the premium.
Graded annuity. Private-sector insurers are not unremarkably able to blot the gamble of fully protecting annuitants against inflation. Instead, they typically offer an option called a graded annuity. In substitution for a higher premium (or a lower initial payout for the same premium), insurers volition increase the nominal monthly annuity payment past a stock-still percentage each twelvemonth. The typical annual increase provided by this annuity rider is iii percent. For example, if the 65-year-one-time man and woman from the SPIA instance each purchased an annuity with a iii percent almanac increase, their monthly payout would be $394 and $363, respectively, in the get-go yr, then increment at iii percent per year on the annuity's anniversary date. Under a graded annuity, the annuity payouts increase by the set per centum regardless of whether aggrandizement is higher or lower than the ready amount. If aggrandizement every bit measured by the CPI is lower than the set corporeality, the annuitant's purchasing power increases; still, if inflation is higher, the annuitant's purchasing power declines.
Refund annuity. A refund annuity pays to a beneficiary at the annuitant's death the difference between the premium and the amount already paid to the annuitant. For example, if an annuity costs $100,000 upfront and at the time of death the annuitant had received $40,000 in payouts, the beneficiary would receive a refund of $60,000. Because this option offers a refund, the monthly payouts are lower. For example, if the 65-year-old human being and woman in the SPIA instance selected a refund annuity, their monthly payouts at an interest rate of 3.92 percent would be $493 and $476, respectively.
Annuity Taxation
If pretax monies from a qualified retirement plan, such as a 401(thou) or IRA, are used to purchase an annuity, then all payouts are taxable just like other withdrawals from DC plans. If later-revenue enhancement dollars, such as those from a Roth IRA, are used to purchase an annuity, so the portion of the payout that represents return of principal is not taxed.
Examples of Private Annuity Premiums to Replicate Social Security Benefits
Purchasing additional features for a individual annuity results in either a college premium or a lower monthly payout. Table 1 shows the individual annuity premiums needed to equal the average monthly Social Security retirement benefit at age 65 for men and women. In addition, it shows the increased premiums needed to buy inflation protection and survivor benefits. Because the average monthly benefit is lower for women, the corresponding premium needed to purchase the monthly benefit ($1,033) is lower than the premium for men. If a 65-twelvemonth-onetime woman purchased an annuity with a monthly payment equal to the boilerplate Social Security benefit for a 65-year-old man ($i,317), she would pay a higher premium. This comparison does non account for other benefits that the Social Security program automatically includes, such equally payments for spouses, ex-spouses, and children, which the private annuity market place does not offer. In addition, it is important to note that Social Security adjusts benefits for inflation each year based on changes to the CPI, while a graded annuity is based on a fixed inflation aligning.
| Sex | Average monthly Social Security benefit at historic period 65 | SPIA premiums | 100 percent JS annuity premiums | ||
|---|---|---|---|---|---|
| For a nominal fixed monthly payment | With 3 percent inflation protection | For a nominal stock-still monthly payment | With iii percent aggrandizement protection | ||
| Men | 1,317 | 263,043 | 359,045 | 359,045 | 471,066 |
| Women | 1,033 | 229,262 | 321,954 | 321,594 | 367,338 |
| SOURCES: SSA 2016, Table 5.A1.1; Firsthand Annuities (2016). | |||||
| NOTES: While Social Security benefits are gender-neutral, annuity premiums and monthly payments are based on the differences in life expectancy between men and women. Equivalent annuity amounts were imputed from these information. | |||||
As a purchaser adds features to a basic annuity, the price to buy a monthly payment equal to the average Social Security benefit increases dramatically. Table 1 shows that for a basic annuity equal to the average monthly Social Security benefit at age 65, an individual would need over $200,000, or over $300,000 with inflation and survivor protections. Still, according to the Survey of Consumer Finances, the median household account balance from workplace retirement savings plans was about $111,000 in 2013 (Munnell 2014). Table ii shows the monthly annuity payment that a 65-year-old could purchase with that corporeality of savings.
| Annuity blazon | Monthly annuity payment |
|---|---|
| SPIA, men | 623 |
| SPIA, women | 488 |
| 100 pct JS annuity, men | 347 |
| SOURCE: Immediate Annuities (2016). | |
| Note: The monthly annuity payments are estimates. | |
The current U.S. median account balance is only enough to purchase an SPIA with a monthly payment that is about half the average monthly Social Security benefit. The annuity would not include the additional features of aggrandizement protection and survivor benefits.
Annuity Income Variables
An insurer primarily bases a monthly annuity payment on the premium, involvement rates at the time of purchase, and the age and sex of the purchaser. Insurers typically invest premiums in fixed-income assets, such as U.Southward. Treasury securities, highly rated corporate bonds, and other safer stock-still-income assets to increase capital, which helps insurers pay annuitants. These assets typically pay fixed or periodic payments, which insurers pass along to the surviving risk pool of annuitants. Similar any interest-sensitive financial product, its price, or value, is inversely related to involvement rates. Market interest rates at the fourth dimension an individual purchases an annuity (commonly at retirement) bear upon the monthly payment. Annuities purchased when interest rates are college have higher monthly payouts, all else being equal. Likewise, annuities purchased when interest rates are lower take lower monthly payouts.
In addition to interest rates, the life expectancy differences betwixt men and women can affect their monthly payouts. A man reaching age 65 today can expect to alive, on boilerplate, until age 84.3, while a woman turning 65 today can expect to live, on boilerplate, until historic period 86.6 (SSA, n.d. a). This life expectancy difference explains how given the same premium and age, a woman receives a lower monthly annuity payment than a homo.
Nautical chart 1 shows how monthly annuity payouts for men and women have varied over time with changes in interest rates. For example, if a 65-year-old bought a $100,000 SPIA in 2005, the annuitant's monthly payment would be about $642 for a man and $592 for a woman. In contrast, if a 65-year-old purchased that aforementioned annuity during the lower involvement charge per unit catamenia of 2015, the monthly payment would have been $535 for a man and $500 for a woman, nearly a 17 percent and 16 per centum reduction in monthly payments, respectively.14
Chart ane.
Nominal monthly payments from a $100,000 SPIA purchased at age 65, by sex; and interest charge per unit at purchase; various dates 2004–2015
SOURCE: Federal Reserve Bank of St. Louis (n.d.).
NOTES: The interest rate is the average AAA corporate bond yield obtained from Federal Reserve data.
Data for are for January and July2004–2012; January, July, and October 2013; January, April, and October 2014; and April 2015.
Age when payments begin, life expectancy, involvement rates at purchase, and the premium paid determine annuity income in the private marketplace. In dissimilarity, Social Security bases retirement benefits on a worker's highest 35 years of indexed earnings and the age at which he or she claims benefits. Different annuity payments, Social Security benefits are gender-neutral and are not afflicted by market interest rates.
Risks
Insurance companies sell annuities and are regulated by us in which they sell their products. State regulators crave insurance companies to exist financially solvent and maintain cash reserves sufficient to meet their obligations. Though it is unusual, insurance companies can become insolvent. The National Organization of Life and Health Guaranty Clan (NOLHGA) and National Conference of Insurance Guaranty Funds (NCIGF) jointly reported 74 insurance company insolvencies among member insurers over the period 1988–2009, with average recoveries on annuities of 94 pct (NOLHGA/NCIGF 2011). In contrast, 465 banks failed from 2008 to 2012, with 157 alone in 2010. Annuitants' premiums are typically protected upwardly to a maximum amount, which is set by each state'south insurance guaranty fund.fifteen
As previously noted, Social Security payroll tax revenues pay current beneficiaries with the backlog funds allocated to the OASDI Trust Fund. As the ratio of workers to retirees has decreased over the years, from well-nigh five:1 in 1960 to less than 3:1 in 2013,16 the trust fund is expected to be depleted by 2034. However, the Social Security Trustees projection incoming payroll revenue enhancement revenues to be plenty to pay near 75 percent of the promised (or scheduled) benefits (SSA, northward.d. b). Congress is responsible for acting to address the Social Security trust fund shortfall.
Conclusion
This issue newspaper provides an overview of Social Security retirement benefits and the private annuity market place, past comparison and contrasting the 2 sources of retirement income. Private annuities share some similarities with Social Security benefits. Both provide a stream of lifetime income that tin can help maintain a person's standard of living throughout retirement. The touch of having a relatively modest amount of retirement income afterward in life can exist significant. VanDerhei (2014) reported that the number of households in the everyman income quartile projected to run brusque of money within 20 years of retirement is considerably larger than those households in the other three income quartiles combined.17 Nevertheless, there are substantial differences between them. While Social Security provides benefits for survivors and fully indexes benefits each twelvemonth to inflation, private annuities accuse a college upfront premium for like protections. In improver, Social Security provides benefits that are not available in the private annuity marketplace, such as benefits for ex-spouses and minor children. Unlike individual annuities, Social Security does not pay unlike benefit amounts to men and women considering of their differing life expectancies. Lastly, the interest rate at the fourth dimension of the annuity purchase affects the annuitant's monthly payment. In comparing, Social Security bases the retirement do good on an individual'south earnings and the historic period at which the individual claims benefits. The benefit can be calculated based on those factors lonely.eighteen As employer-sponsored retirement plans continue to shift from DB to DC plans, it is important for individuals and policymakers to empathize both the significance of a steady income stream throughout retirement and the pros and cons of the diverse sources of retirement income.
Notes
1 To be fully insured for Social Security retirement benefits, a worker must have at to the lowest degree 10 years (or 40 credits) of earnings.
2 IRAs are tax-advantaged retirement savings plans. Individuals tin contribute to traditional IRAs with pretax earnings (discipline to taxation at the time of withdrawal) or to Roth IRAsouth with after-revenue enhancement earnings (mostly non taxed at the time of withdrawal). For more than data on IRAs, run into https://world wide web.irs.gov/retirement-plans/private-retirement-arrangements-iras-1.
3 "From 1980 through 2008, the proportion of individual wage and salary workers participating in DB pension plans fell from 38 percentage to 20 percent" (Butrica and others 2009). In 2015, just 15 percentage of workers in private industry participated in a DB program (Bureau of Labor Statistics 2015, Table 2).
four The taxable maximum increases each year by the national boilerplate wage index. For more information on the taxable maximum, run across https://www.socialsecurity.gov/planners/maxtax.html.
5 For more information on the national average wage index, run across https://www.socialsecurity.gov/oact/cola/AWI.html.
6 For more information on how Social Security benefits are calculated, run across https://www.socialsecurity.gov/oact/cola/Benefits.html.
7 For more data on the FRA, encounter https://www.socialsecurity.gov/planners/retire/retirechart.html.
eight The almanac Social Security price-of-living adjustment (COLA) is based on changes in the CPI for Urban Wage Earners and Clerical Workers. For more information on the COLA, encounter https://world wide web.socialsecurity.gov/OACT/COLA/latestCOLA.html.
9 The FRA for survivor benefits differs from the FRA for retired-worker benefits. Spousal and survivor benefits do non accrue delayed retirement credits past the FRA. For more information, encounter https://www.socialsecurity.gov/planners/survivors/survivorchartred.html.
10 For more information on combined income and tax of Social Security benefits, meet https://www.socialsecurity.gov/planners/taxes.html.
11 Retirees who elect to draw down their IRAs or retirement accounts tin outset every bit early as age 59½, but must starting time taking the almanac required minimum distribution (RMD) at age 70½. The Internal Revenue Service sets the RMD past taking the residuum in the business relationship and dividing it by the individual'southward life expectancy (or articulation life expectancy, if married). For more data, see https://world wide web.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-distributions-rmds.
12 Many factors can account for these higher prices, including adverse pick, mortality charges, and other fees.
13 All annuity payment examples in this newspaper are from online calculators provided by https://www.immediateannuities.com/annuity-shopper/ starting in December 2015 and assume an interest charge per unit of 3.9 pct. This interest rate is the boilerplate AAA corporate bond yield obtained from Federal Reserve data.
14 A discussion of sales charges and other fees (which an insurer typically builds into the annuity quote) and how need for immediate annuities has changed with payout/interest rate changes is beyond the scope of this event newspaper.
15 For more information on state guarantees of annuities, see https://www.annuityadvantage.com/stateguarantee.htm or http://www.nolhga.com/.
16 For more information on covered workers to beneficiaries ratios, run into https://www.socialsecurity.gov/history/ratios.html.
17 Individuals who deplete all of their fiscal resource in retirement would likely rely on family unit members or public assistance programs, such as Supplemental Security Income (https://www.socialsecurity.gov/pubs/EN-05-11000.pdf), Supplemental Nutrition Assistance Program (formerly known as food stamps) (https://world wide web.fns.usda.gov/snap/supplemental-diet-assist-program-snap), and/or Medicaid (https://world wide web.medicaid.gov).
18 Individuals can meet their future estimated Social Security benefit on their Social Security Statement. For more information, see https://www.socialsecurity.gov/myaccount/statement.html and https://www.socialsecurity.gov/myaccount/.
References
Bureau of Labor Statistics. 2015. National Compensation Survey: Employee Benefits in the United states of america, March 2015. Bulletin 2782. Washington, DC: Agency of Labor Statistics. https://world wide web.bls.gov/ncs/ebs/benefits/2015/.
Butrica, Barbara, Howard G. Iams, Karen East. Smith, and Eric J. Toder. 2009. "The Disappearing Defined Benefit Alimony and Its Potential Touch on on the Retirement Incomes of Baby Boomers." Social Security Bulletin 69(3): 1–27. https://www.socialsecurity.gov/policy/docs/ssb/v69n3/v69n3p1.html.
DeWitt, Larry. 1996. "Origins of the Three-Legged Stool Metaphor for Social Security." Research Note No. ane. Research Notes & Special Studies by the Historian's Office, Social Security Administration History. https://www.socialsecurity.gov/history/stool.html.
Employee Do good Enquiry Institute. n.d. "FAQsouthward Well-nigh Benefits—Retirement Bug. What Are the Trends in U.Southward. Retirement Plans?" https://www.ebri.org/publications/benfaq/index.cfm?fa=retfaq14.
Federal Reserve Bank of St. Louis. n.d. "Economic Research." https://fred.stlouisfed.org.
Firsthand Annuities. 2016. "Get Your Best Annuity Quotes Instantly Online!" https://www.immediateannuities.com.
Munnell, Alicia H. 2014. "401(k)/IRA Holdings in 2013: An Update from the SCF." Issue in Brief No.14-15. Anecdote Hill, MA: Center for Retirement Research at Boston Higher. http://crr.bc.edu/wp-content/uploads/2014/09/IB_14-151.pdf.
[NOLHGA/NCIGF] National Organization of Life and Health Guaranty Association and National Briefing of Insurance Guaranty Funds. 2011. "Joint Comments of NOLHGA and NCIGF in Response to FIO'south Request for Public Input." (December sixteen) https://www.nolhga.com/pressroom/articles/NOLHGA-NCIGF%20FIO%20SUBMISSION.PDF.
Sabelhaus, John, Michael Bogdan, and Sarah Holden. 2008. Divers Contribution Plan Distribution Choices at Retirement: A Survey of Employees Retiring between 2002 and 2007. Research Serial. Washington, DC: Investment Company Institute. https://www.ici.org/pdf/rpt_08_dcdd.pdf.
[SSA] Social Security Administration. 2016. Annual Statistical Supplement to the Social Security Bulletin, 2015. SSA Publication No.13-11700. Washington, DC: SSA.https://www.socialsecurity.gov/policy/docs/statcomps/supplement/2015/index.html.
———. 2017. Retirement Benefits. SSA Publication No.05-10035. Washington, DC: SSA. https://world wide web.socialsecurity.gov/pubs/EN-05-10035.pdf.
———. due north.d. a. "Calculators: Life Expectancy." https://www.socialsecurity.gov/planners/lifeexpectancy.html.
———. due north.d. b. "Status of the Social Security and Medicare Programs: A Summary of the 2016 Annual Reports." https://www.socialsecurity.gov/OACT/TRSUM/index.html.
VanDerhei, Jack. 2014. "'Short' Falls: Who'southward Almost Likely to Come up upwards Short in Retirement, and When?" EBRI Notes 35(6): ii–xviii. Washington, DC: Employee Do good Research Institute. https://world wide web.ebri.org/publications/notes/index.cfm?fa=notesDisp&content_id=5411.
Yaari, Menahem East. 1965. "Uncertain Lifetime, Life Insurance, and the Theory of the Consumer." Review of Economical Studies 32(2): 137–l.
Yakoboski, Paul J. 2010. "Retirees, Annuitization and Defined Contribution Plans." Trends and Issues (April). TIAA-CREF Institute. https://origin-world wide web.tiaainstitute.org/sites/default/files/presentations/2017-02/ti_definedcontribution0410.pdf.
Source: https://www.ssa.gov/policy/docs/issuepapers/ip2017-01.html
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