Social Security is a federal program that pays retired workers a monthly benefit. Benefits may also go to people with disabilities, widows, or the children of Social Security recipients, though 76% of all payments go to retired workers. Social Security benefit payments are funded through the payroll taxes that employers withhold from their workers’ paychecks.
Based on the latest Census Bureau data, almost one third of U.S. households received Social Security benefits in 2019. The exact percentage varied by state, however; West Virginia has the highest percentage of Social Security recipients, with about 42% of households receiving benefits.
In most states, the income from Social Security — $1,656 per household, on average — makes up at least 40% of all retirement income. Losing Social Security either in full or in part would make it significantly more difficult for seniors to pay for daily living expenses in retirement. Based on our previous research into the cost of retirement in each state, the average retirement wouldn’t be affordable in any state if Social Security were defunded.
Unfortunately, the Social Security Administration (SSA) in a 2020 report said that it expects its reserve funds to run out in 2034. At that point, Social Security payroll taxes will be the sole source of money for benefit payments and benefits will be reduced to 76% of their full value.
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That means that if we did nothing at all, nearly every senior would still lose out on thousands of dollars of income that they need to survive in retirement.
In this report, we look at which states rely the most on Social Security, and how much it would cost seniors in these states if Social Security were lost. We conclude that if nothing is done to save and bolster Social Security, then seniors around the country will find it difficult if not impossible to pay for their expenses in retirement.
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How Social Security works
Social Security is a federal program that provides income to retirees, people with disabilities and the families of those individuals. As a refresher, here’s a brief look at how Social Security is funded and who can receive benefits.
Related: Social Security & retirement — what you need to know
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How is Social Security funded?
Social Security is funded through a payroll tax that just about all workers in the U.S. must pay, including resident aliens, most nonresident aliens, and undocumented workers. Some police officers, teachers, judge and other government employees do not have to pay Social Security tax because they pay into separate pension funds.
In most cases, 6.2% of your income comes out of your paycheck and goes into the Social Security Trust Fund, which is administered by the Social Security Administration (SSA). Employers contribute an equal amount so that the final contribution for each worker is equal to 12.4% of that person’s pay. If you’re self employed, you have to pay the full 12.4% yourself, but there’s also a tax deduction that refunds you for the 6.2% that’s normally paid by an employer. (Learn more about self-employment taxes.)
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Who can receive Social Security benefits
Residents and citizens are eligible to receive retirement benefits once they have worked and paid Social Security taxes for at least 10 years. Once they reach age 62, they can begin receiving benefits if they retire. However, full benefits are only available if they wait until their full retirement age, which the SSA calculates based on birth year. Over time, the full retirement age has been increasing, and is currently 67 for people born in 1960 or later. The value of benefits increases for someone who waits until after their full retirement age to claim benefits.
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How long will social security funding last?
The 2020 report from the Social Security Administration states that it only expects to be able to make full Social Security payments until 2034. After 2034, the SSA will only be able to pay 76% of full benefits. Of course, this assumes there is no decrease in the collection of Social Security payroll tax. Any interruption to the collection of payroll taxes could mean benefits are reduced further. In one scenario, in which payroll taxes are cut starting in 2021, the SSA estimated that the trust fund’s reserves would run out in the middle of 2023, about 11 years sooner than anticipated.
While President Trump and Republican leaders have vowed that they will not make any cuts to Social Security, the Trump administration has proposed a couple of changes that could impact Social Security funding. President Trump enacted a payroll tax deferral in August 2020 and he has said that he would like to make that deferral a permanent payroll tax tax cut in 2021.
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Where people rely on Social Security the most for retirement income
Social Security provides vital income for many individuals and families because they do not have much (or any) other retirement income. According to Census Bureau data, only 57.3% of households have money in retirement accounts, including 401(k) plans and IRAs. Even for people who do have retirement income outside of their Social Security benefits, the benefits generally make up more than 40% of their total retirement income each year.
Nationally, 41.2% of a household’s retirement income is their Social Security payments; in 10 states, Social Security benefits make up at least 45% of retirement income.
From least to most reliant on Social Security, here’s a countdown of all 50 states and Washington, D.C..
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51. Washington, D.C.
Average monthly Social Security income: $1,427
Average monthly non Social Security income: $3,633
Social Security income as a percentage of all retirement income: 28.2%
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50. Alaska
Average monthly Social Security income: $1,471
Average monthly non Social Security income: $3,268
Social Security income as a percentage of all retirement income: 31.0%
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49. California
Average monthly Social Security income: $1,617
Average monthly non Social Security income: $2,891
Social Security income as a percentage of all retirement income: 35.9%
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48. Maryland
Average monthly Social Security income: $1,673
Average monthly non Social Security income: $2,922
Social Security income as a percentage of all retirement income: 36.4%
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47. Colorado
Average monthly Social Security income: $1,648
Average monthly non Social Security income: $2,769
Social Security income as a percentage of all retirement income: 37.3%
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46. Virginia
Average monthly Social Security income: $1,697
Average monthly non Social Security income: $2,786
Social Security income as a percentage of all retirement income: 37.9%
Related: Think Social Security will fail? Here’s how to plan for retirement
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45. Nevada
Average monthly Social Security income: $1,612
Average monthly non Social Security income: $2,625
Social Security income as a percentage of all retirement income: 38.1%
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44. Massachusetts
Average monthly Social Security income: $1,655
Average monthly non Social Security income: $2,653
Social Security income as a percentage of all retirement income: 38.4%
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43. New Mexico
Average monthly Social Security income: $1,536
Average monthly non Social Security income: $2,393
Social Security income as a percentage of all retirement income: 39.1%
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42. New York
Average monthly Social Security income: $1,647
Average monthly non Social Security income: $2,570
Social Security income as a percentage of all retirement income: 39.1%
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41. Illinois
Average monthly Social Security income: $1,667
Average monthly non Social Security income: $2,579
Social Security income as a percentage of all retirement income: 39.3%
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40. Hawaii
Average monthly Social Security income: $1,749
Average monthly non Social Security income: $2,676
Social Security income as a percentage of all retirement income: 39.5%
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39. Connecticut
Average monthly Social Security income: $1,798
Average monthly non Social Security income: $2,700
Social Security income as a percentage of all retirement income: 40.0%
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38. Louisiana
Average monthly Social Security income: $1,453
Average monthly non Social Security income: $2,162
Social Security income as a percentage of all retirement income: 40.2%
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37. Georgia
Average monthly Social Security income: $1,610
Average monthly non Social Security income: $2,380
Social Security income as a percentage of all retirement income: 40.3%
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36. Delaware
Average monthly Social Security income: $1,842
Average monthly non Social Security income: $2,691
Social Security income as a percentage of all retirement income: 40.6%
Related: 15 Social Security secrets retirees need to know
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35. Texas
Average monthly Social Security income: $1,588
Average monthly non Social Security income: $2,320
Social Security income as a percentage of all retirement income: 40.6%
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34. Florida
Average monthly Social Security income: $1,697
Average monthly non Social Security income: $2,465
Social Security income as a percentage of all retirement income: 40.8%
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33. New Jersey
Average monthly Social Security income: $1,790
Average monthly non Social Security income: $2,576
Social Security income as a percentage of all retirement income: 41.0%
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32. Washington
Average monthly Social Security income: $1,746
Average monthly non Social Security income: $2,462
Social Security income as a percentage of all retirement income: 41.5%
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31. Rhode Island
Average monthly Social Security income: $1,602
Average monthly non Social Security income: $2,252
Social Security income as a percentage of all retirement income: 41.6%
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30. Oregon
Average monthly Social Security income: $1,707
Average monthly non Social Security income: $2,369
Social Security income as a percentage of all retirement income: 41.9%
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29. Arizona
Average monthly Social Security income: $1,759
Average monthly non Social Security income: $2,395
Social Security income as a percentage of all retirement income: 42.3%
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28. Ohio
Average monthly Social Security income: $1,584
Average monthly non Social Security income: $2,164
Social Security income as a percentage of all retirement income: 42.3%
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27. Montana
Average monthly Social Security income:$1,588
Average monthly non Social Security income: $2,150
Social Security income as a percentage of all retirement income: 42.5%
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26. Wyoming
Average monthly Social Security income: $1,759
Average monthly non Social Security income: $2,367
Social Security income as a percentage of all retirement income: 42.6%
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25. Kentucky
Average monthly Social Security income: $1,538
Average monthly non Social Security income: $2,019
Social Security income as a percentage of all retirement income: 43.2%
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24. South Carolina
Average monthly Social Security income: $1,681
Average monthly non Social Security income: $2,211
Social Security income as a percentage of all retirement income: 43.2%
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23. Utah
Average monthly Social Security income: $1,771
Average monthly non Social Security income: $2,319
Social Security income as a percentage of all retirement income: 43.3%
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22. North Carolina
Average monthly Social Security income: $1,655
Average monthly non Social Security income:$2,148
Social Security income as a percentage of all retirement income: 43.5%
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21. Alabama
Average monthly Social Security income: $1,611
Average monthly non Social Security income: $2,084
Social Security income as a percentage of all retirement income: 43.6%
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20. Maine
Average monthly Social Security income: $1,579
Average monthly non Social Security income: $2,041
Social Security income as a percentage of all retirement income: 43.6%
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19. Minnesota
Average monthly Social Security income: $1,747
Average monthly non Social Security income: $2,257
Social Security income as a percentage of all retirement income: 43.6%
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18. North Dakota
Average monthly Social Security income: $1,599
Average monthly non Social Security income: $2,064
Social Security income as a percentage of all retirement income: 43.6%
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17. Missouri
Average monthly Social Security income: $1,620
Average monthly non Social Security income: $2,027
Social Security income as a percentage of all retirement income: 44.4%
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16. Oklahoma
Average monthly Social Security income: $1,583
Average monthly non Social Security income: $1,983
Social Security income as a percentage of all retirement income: 44.4%
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15. Vermont
Average monthly Social Security income: $1,665
Average monthly non Social Security income: $2,080
Social Security income as a percentage of all retirement income: 44.5%
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14. Mississippi
Average monthly Social Security income: $1,532
Average monthly non Social Security income: $1,904
Social Security income as a percentage of all retirement income: 44.6%
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13. New Hampshire
Average monthly Social Security income: $1,767
Average monthly non Social Security income: $2,198
Social Security income as a percentage of all retirement income: 44.6%
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12. Arkansas
Average monthly Social Security income: $1,555
Average monthly non Social Security income: $1,919
Social Security income as a percentage of all retirement income: 44.8%
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11. Wisconsin
Average monthly Social Security income: $1,711
Average monthly non Social Security income:$2,092
Social Security income as a percentage of all retirement income: 45.0%
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10. South Dakota
Average monthly Social Security income: $1,586
Average monthly non Social Security income: $1,925
Social Security income as a percentage of all retirement income: 45.2%
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9. Idaho
Average monthly Social Security income: $1,701
Average monthly non Social Security income: $2,056
Social Security income as a percentage of all retirement income: 45.3%
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8. Pennsylvania
Average monthly Social Security income: $1,687
Average monthly non Social Security income: $2,021
Social Security income as a percentage of all retirement income: 45.5%
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7. Michigan
Average monthly Social Security income: $1,717
Average monthly non Social Security income: $2,051
Social Security income as a percentage of all retirement income: 45.6%
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6. Tennessee
Average monthly Social Security income: $1,645
Average monthly non Social Security income: $1,921
Social Security income as a percentage of all retirement income: 46.1%
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5. Nebraska
Average monthly Social Security income: $1,689
Average monthly non Social Security income: $1,960
Social Security income as a percentage of all retirement income: 46.3%
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4. West Virginia
Average monthly Social Security income: $1,609
Average monthly non Social Security income: $1,823
Social Security income as a percentage of all retirement income: 46.9%
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3. Kansas
Average monthly Social Security income: $1,719
Average monthly non Social Security income: $1,917
Social Security income as a percentage of all retirement income: 47.3%
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2. Iowa
Average monthly Social Security income: $1,680
Average monthly non Social Security income: $1,850
Social Security income as a percentage of all retirement income: 47.6%
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1. Indiana
Average monthly Social Security income: $1,691
Average monthly non Social Security income: $1,710
Social Security income as a percentage of all retirement income: 49.7%
This article originally appeared on PolicyGenius.com and was syndicated by MediaFeed.org.
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