In a world where Social Security benefits are a lifeline for many, around 3.3% of people aged 62 to 84 confront unique issues since they will never get these benefits. This insight, obtained from the 2023 Trustees Report, focuses on a subset of the population that has higher poverty rates than those who receive Social Security.
For millions of Americans, Social Security is critical to financial stability. This year, almost 68 million people will get a monthly Social Security payment. Approximately 75% of these are retired workers, with an average monthly payment of $1,918 in June.
Who are the individuals who will never receive Social Security benefits?
Based on data from May 2024, this diverse group comprises higher proportions of the following demographics:
- Women (63%)
- Hispanics (28%)
- Immigrants (49%)
- Never-married individuals (21%)
- Widows (20%)
- Those with less than a high school education (36%)
When looking at the landscape of Social Security and its recipients, some trends and figures stand out, notably among those aged 50 and up. Understanding them can shed light on the difficulties encountered by various groups.
Understanding the Different Types of Workers
- Infrequent Workers (38.9%): This group includes individuals who have not amassed sufficient work credits, which are necessary to qualify for Social Security benefits.
- Noncovered Workers (10.8%): Mainly comprised of state and local government employees, these individuals are not covered under the Social Security system.
- Die Before Receiving Benefits (1.3%): A small percentage of individuals pass away before they have the opportunity to receive their benefits.
Poverty Rates Among Never-Beneficiaries
The statistics highlight a significant disparity in poverty rates:
- Overall Never-Beneficiary Poverty Rate: A staggering 54.3% of those who never receive benefits live in poverty.
- Current and Future Beneficiary Poverty Rate: In contrast, only 5.8% of those who are current or future beneficiaries experience poverty.
Income Sources for Never-Beneficiaries
Unlike Social Security recipients, never-beneficiaries depend heavily on alternative income sources:
- Late-Arriving Immigrants: Often depend significantly on coresident income, which constitutes 36.5% of their household income.
- Infrequent Workers: This group is more likely to receive Supplemental Security Income (SSI), with 31.2% relying on it.
- Both Groups: While asset income is a common source for both, it is generally at lower levels compared to those who receive Social Security benefits.
A Decline in Never-Beneficiaries Expected
Encouragingly, the percentage of never-beneficiaries is expected to fall modestly in the future years. This pattern implies potential system reforms, with the goal of reducing the number of people who are left without benefits.
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