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The 5 Best Perks of Social Security

Sean Williams, The Motley Fool

Social Security is arguably our nation's most treasured -- and successful -- social program. Signed into law 84 years ago, it's grown into a program that pays benefits to more than 63 million people each month and will outlay more than $1 trillion in spending this year.

This is also a program that a lot of retired workers lean on. According to data from the Social Security Administration, 62% of retired workers rely on their monthly payout to account for at least half of their income, with 34% leaning on the program for virtually all of their income (more than 90%).

Yet there's so much more that Social Security does for those who qualify for a benefit. Here's a brief rundown of five of Social Security's best perks.

A golden key lying atop two Social Security cards.

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1. You'll never have to worry about the program going bankrupt

You might have a tendency to glance over Social Security's longevity, but the program's greatest perk is that its eligible beneficiaries never have to worry about its bankruptcy or insolvency.

Make no mistake about it, Social Security is contending with a number of problems. The program has more than a half-dozen factors that are responsible for contributing to what's currently estimated to be a $13.9 trillion cash shortfall between 2035 and 2093. If additional revenue isn't raised and/or expenditure cuts made, the Social Security Board of Trustees suggests that retired workers could face benefit cuts of up to 23% by 2035, which is when the program's nearly $2.9 trillion in asset reserves would be exhausted.

While it's possible that the current payout schedule is unsustainable over the long run, survivability isn't an issue. That's because Social Security has two sources of recurring revenue: the 12.4% payroll tax on earned income and the taxation of benefits. As long as Americans keep working, the program will keep collecting payroll taxes, providing ample revenue that can be disbursed to eligible beneficiaries. Last year, these two sources of income accounted for $920 billion of the just over $1 trillion collected by Social Security.

Not having to worry about Social Security providing you a benefit, assuming you qualify for one, is a pretty nice perk.

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2. As a worker, you're probably covered by long-term disability protection

Another way Social Security has your back is by providing long-term disability protection to workers. According to the Social Security Administration, 90% of workers between the ages of 21 and 64 are protected in the event of a long-term disability, with more than 25% of today's 20-year-olds expected to become disabled prior to reaching their full retirement age (67).

As you'll note by the percentages, not everyone will qualify. As with retired worker benefits, you'll need to have earned a certain number of work credits to qualify for long-term disability benefits. However, the scale to qualify for disability benefits is staggered, making it easier for younger workers to receive a long-term disability payout.

As of July 2019, the average disabled worker was bringing home $1,236 each month.

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3. The program provides survivor insurance protections to most workers

In addition to disability benefits, Social Security provides survivor's insurance protection to a whopping 96% of all working Americans between the ages of 20 and 49 that have young children and/or a surviving spouse. Survivor's insurance can help to financially buoy your loved ones in the event of your untimely death by providing them with a monthly benefit.

Though we don't like to think about our expiration date, the Social Security Administration finds that 1 out of 8 of today's 20-year-olds won't live to see age 67. As of July, almost 5.9 million people were receiving a survivor benefit, with the average payout equating to $1,198 a month.

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4. Spouses, ex-spouses, and children can qualify for benefits, too

A fourth Social Security perk is that the program can provide benefits above and beyond what's given to a primary worker. Spouses, ex-spouses, and the young children of beneficiaries all have the opportunity to qualify for a benefit based on the earnings history of a primary worker.

Now, here's the best part: If a spouse, ex-spouse, and/or children do qualify for a benefit based on a primary worker's earnings, the primary worker's payout isn't affected. This means that even if a retired worker's former spouse nets a monthly payout on their behalf, the primary worker's monthly benefit won't be reduced. In certain instances, spouses and children being able to receive a monthly benefit based on the earnings history of a primary worker can lead to an aggregate household payout of between 150% and 180% of the primary worker's benefit.

A person filling out a Social Security benefits application form.

Image source: Getty Images.

5. There's a built-in do-over clause

One final great perk of Social Security is that it provides retired workers with a little-known do-over clause known as Form SSA-521 (officially, "Request for Withdrawal of Application").

Deciding when to take Social Security benefits is probably the biggest decision seniors make, because your claiming age can have a huge impact on what you'll receive each month. All things being equal, claiming benefits at age 70 versus age 62 can result in a payout that's up to 76% larger per month -- although waiting until age 70 to take benefits isn't going to be for everyone. Most retired workers begin taking their payout prior to age 65 and are therefore accepting a permanent reduction in their payout.

Form SSA-521 allows retired workers who regret their early claiming decision to file paperwork with the Social Security Administration to have their benefit claim undone. If approved, it'll be as if their claim never occurred, and their benefit will continue growing at roughly 8% per year.

The catch? You only have 12 months from receiving your first benefit to file Form SSA-521, and you'll also have to repay every cent you've received in benefits from the program. Nevertheless, having a mulligan in your back pocket is pretty nice should you quickly change your mind about your Social Security claiming decision.

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