Editor’s Note:  If you want links to core data on Social Security finance, this post by UnionWatch contributor Mike Shedlock is a good place to start. Shedlock correctly notes that during the most recent 12 months the Social Security program ran a deficit for the first time in history. The 2013 resumption of full 6.25% employee payroll withholding for Social Security will defer the occasion of another deficit for at least several more years. But if you want to fix the Social Security program, the solution is simple:  Put every public sector worker onto Social Security, and merge the assets of the Social Security Fund with those currently held by public sector pension funds. And let them all purchase risk-free Treasury Bills to hedge the funds against inflation and finance government deficits. Why not? Shouldn’t every worker in the United States earn their taxpayer funded retirement security according to a common formula?

*   *   *

Inquiring minds are digging into social security trends including the numbers of beneficiaries, average costs, total costs, number of workers, and the ratio of workers to beneficiaries.

First, let’s take a look at the CNS News report Social Security Ran $47.8 Billion Deficit in Fiscal Year 2012.

The Social Security program ran a $47.8 billion deficit in fiscal 2012 as the program brought in $725.429 billion in cash and paid $773.247 for benefits and overhead expenses, according to official data published by Social Security Administration.

The Social Security Administration also released new data revealing that the number of workers collecting disability benefits hit a record 8,827,795 in December–up from 8,805,353 in November.

With that backdrop, let’s look at the actual data to see the underlying trends.

Data Notes

Social Security Beneficiaries December 2012

OASI Trust Fund
Retired Workers & Dependents Retired Worker 36,719,288
Spouse 2,280,332
Child 612,087
Subtotal 39,611,707
Survivors Child 1,907,097
Aged Widow(er) 3,937,958
Young Widow(er) 153,628
Disabled Widow(er) 255,472
Parent 1,427
Subtotal 6,255,582
Total OASI 45,867,289
DI Trust Fund
Disabled Worker 8,827,795
Spouse 162,881
Child 1,900,220
Total DI 10,890,896
Total OSASI + DI 56,758,158

Social Security Beneficiaries, Costs, Employment

Year Beneficiaries Average Monthly Benefit Total Annual Cost Employment E/B Ratio
Dec-67 22,979 $73.92 $20,383,201,682 66,900 2.9114
Dec-68 23,886 $85.24 $24,432,839,002 69,245 2.8989
Dec-69 24,709 $86.47 $25,638,687,737 71,240 2.8832
Dec-70 25,701 $101.35 $31,257,463,769 70,790 2.7544
Dec-71 26,817 $113.22 $36,435,282,006 72,108 2.6888
Dec-72 28,066 $138.70 $46,712,482,840 75,270 2.6819
Dec-73 29,514 $143.99 $50,996,092,215 78,035 2.6440
Dec-74 30,576 $163.02 $59,813,483,661 77,657 2.5398
Dec-75 31,862 $179.29 $68,549,741,469 78,017 2.4486
Dec-76 32,835 $194.95 $76,815,361,682 80,448 2.4500
Dec-77 33,923 $211.16 $85,958,416,484 84,408 2.4882
Dec-78 34,453 $229.86 $95,032,473,435 88,674 2.5738
Dec-79 35,013 $258.37 $108,555,575,502 90,669 2.5896
Dec-80 35,526 $300.75 $128,213,644,374 90,936 2.5597
Dec-81 35,930 $340.84 $146,956,770,724 90,884 2.5295
Dec-82 35,778 $372.10 $159,755,010,234 88,756 2.4808
Dec-83 36,034 $393.15 $170,001,091,973 92,210 2.5590
Dec-84 36,439 $412.21 $180,244,135,062 96,087 2.6370
Dec-85 37,027 $429.35 $190,768,953,436 98,587 2.6626
Dec-86 37,683 $438.76 $198,407,802,022 100,484 2.6665
Dec-87 38,171 $461.35 $211,323,314,397 103,634 2.7150
Dec-88 38,613 $484.01 $224,268,374,172 106,871 2.7678
Dec-89 39,141 $511.89 $240,431,129,294 108,809 2.7799
Dec-90 39,825 $544.52 $260,224,095,454 109,120 2.7400
Dec-91 40,587 $568.55 $276,908,006,552 108,262 2.6674
Dec-92 41,504 $588.90 $293,296,976,201 109,416 2.6363
Dec-93 42,243 $607.48 $307,943,241,597 112,204 2.6561
Dec-94 42,882 $628.14 $323,229,663,108 116,055 2.7064
Dec-95 43,386 $648.77 $337,772,228,816 118,208 2.7246
Dec-96 43,736 $672.81 $353,113,695,411 121,002 2.7666
Dec-97 43,971 $692.82 $365,565,297,977 124,357 2.8282
Dec-98 44,246 $707.39 $375,585,941,872 127,359 2.8785
Dec-99 44,595 $730.53 $390,940,040,819 130,533 2.9270
Dec-00 45,415 $767.35 $418,187,686,581 132,481 2.9171
Dec-01 45,877 $795.69 $438,050,881,510 130,720 2.8493
Dec-02 46,444 $815.05 $454,253,081,458 130,175 2.8028
Dec-03 47,038 $840.62 $474,497,794,254 130,259 2.7692
Dec-04 47,688 $871.80 $498,889,778,321 132,316 2.7746
Dec-05 48,434 $915.71 $532,222,768,675 134,814 2.7834
Dec-06 49,123 $955.53 $563,260,007,133 136,882 2.7865
Dec-07 49,865 $987.03 $590,618,750,824 137,982 2.7671
Dec-08 50,898 $1,054.38 $643,995,009,294 134,379 2.6401
Dec-09 52,523 $1,064.41 $670,869,765,261 129,319 2.4621
Dec-10 54,032 $1,074.33 $696,579,633,240 130,346 2.4124
Dec-11 55,404 $1,122.89 $746,557,638,566 132,186 2.3858
Dec-12 56,758 $1,152.79 $785,163,217,034 134,021 2.3613

Notes for Above Table
Employment and beneficiary numbers are in thousands.
I computed the total annual cost as monthly benefit * 12 * number of beneficiaries. That method will tend to overstate annual costs slightly vs. totaling every month individually. Thus, the total cost may vary slightly from other published figures.

Average Monthly Social Security Benefit

Total Annual Cost of Social Security 1967-Present

Social Security Beneficiaries vs. Total Non-Farm Employment

Ratio of Workers to Social Security Beneficiaries

Social Security Benefits Analysis

  • The ratio of workers to beneficiaries peaked in 1999 at 2.927 to 1.
  • The ratio of workers to beneficiaries was 2.361 to 1 at the end of 2012.
  • The ratio of workers to beneficiaries is falling fast and will continue to fall fast for a decade as the baby boomer population ages.
  • The average payout and the number of payouts are both rising fast
  • Total Social Security payouts (a multiplication of two rising numbers) are on an unsustainable exponential growth path.

The system is currently running a deficit. Trends say that deficit is going to worsen with each passing year unless benefits are cut and/or taxes are hiked.

About the author: Mike “Mish” Shedlock is a registered investment advisor representative for Sitka Pacific Capital Management. His top-rated global economics blog Mish’s Global Economic Trend Analysis offers insightful commentary every day of the week. He is also a contributing “professor” on Minyanville, a community site focused on economic and financial education. Every Thursday he does a podcast on HoweStreet and on an ad hoc basis he contributes to many other websites, including UnionWatch.

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