Many Americans spend their working lives paying into Social Security in the hope that this crucial program will provide them with a steady stream of funds once they retire. The amount of monthly benefits is dependent on contributions, going from just over $1,000 to approximately $4,500. Inflation continuing to skyrocket is forcing those retirees more than ever to depend on such payments for meeting fundamental needs.
In 2024, the program is expected to pay benefits to nearly 64 million people across the United States, many of whom are dependent on the same for their economic survival. Yet, there are those seniors who are just not that fortunate. According to the Social Security Administration (SSA), 3.3% of the U.S. older population are not in receipt of any benefits, thus considered “never beneficiaries,” despite their age and qualification.
Why some people never receive Social Security Benefits
Most people falling into the “never beneficiaries” category belong to specific subgroups. A large part are immigrants who came to the U.S. later in life. The SSA estimates that 88% of “never beneficiaries” are late-arriving immigrants or sporadic workers. Those immigrants arriving later in life often have careers too short to reach the minimum requirement of contributions for benefits.
Workers in discontinuous employment, whose work history does not guarantee the necessary contributions, are also affected. Also, some workers in fields from which Social Security contributions are excluded, like certain government workers, have another income source, such as a pension. In other instances, those entitled to benefits do not live long enough to get any.
For the never beneficiaries, retirement in poverty is typically encountered. SSA documented that 54.3% of these people live below poverty line, with it being only 5.8% among these who were in receipt of benefits. Such a tremendous disparity indicates the exceptional role the scheme has played in preventing financial insecurity among the elderly.
The Social Security system is characterized by an overwhelming burden of rules, in thousands, that govern eligibility and calculation of monetary benefits. Extraneous small mistakes during filing may lead to individuals missing out on the payment that they are entitled to receive. A common estimate says that an average American loses around $100,000 in lifetime benefits due to application process errors that may have been avoided.
Some choose to hold off on receiving Social Security benefits to maximize their payment, because they rise 8% for every year they wait. This can backfire, however, if that person does not live long enough to reap the rewards or if some escape changes the Social Security system. Even higher benefits may cause one to pay more in taxes, which may lessen the financial advantages of waiting.
