2006 State Report > Economics > Social Security
Economics: Social Security
Social Security is currently an important topic of national discussion due to questions about its long-term financing. These financing problems are due to a number of factors, including longer life expectancy, the Baby Boomer population nearing retirement age, and a lowered birth rate. As a result, the ratio of workers to Social Security beneficiaries has fallen from 16.5-to-1 in 1950 to 3.3-to-1 today. Within 40 years, the ratio will be 2-to-1, which will be too few workers to pay scheduled benefits at current tax rates. As of the publication date of this document, there were no plans to cut Social Security benefits to current retirees or "near-retirees," defined as people aged 55 and older.
Current plans for reforming Social Security involve combinations of four basic alternatives:
- Increasing payroll taxes
- Decreasing benefits
- Using general revenues
- Pre-funding future benefits through personal savings accounts or direct investments of the trust funds.
According to the Social Security Administration, benefits were paid to 750,970 persons in South Carolina in December 2004. Of these, 453,910 were retired workers. Retired workers in the state received an average monthly benefit of $931 per month. Social Security beneficiaries represented 93.2 percent of the state’s population aged 65 and older.
According to data from the 2000 Census, there were 141,990 beneficiaries aged 60 and over in South Carolina for whom Social Security was their only source of income.
Older women typically receive less from Social Security than older men do. Social Security benefits are based on the amount of salary earned, the number of years worked, and age at retirement. Since many women spend time out of the labor force to raise children, their Social Security checks are generally smaller. Nationally, over half of Social Security beneficiaries are women, and for one in four it is their only source of income in retirement.
According to 1999-2001 data from the Current Population Survey, the median annual Social Security benefit for South Carolina women aged 62-74 was $6,814, compared with $10,193 for men in the same age range. For women aged 75 and older, the median annual benefit was $8,574, compared with $10,236 for men. This data includes people receiving Social Security pensions and survivor benefits, as well as permanent disability payments made by the Social Security Administration.