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Sunday, December 4, 2022

Federal Stimulus Checks Provided Social Security To The Greatest Number Of Americans Ever

The Social Security Act of 1935 set in motion the start of monthly benefits for elderly people in 1942. A form of vesting period was tagged to it in which a minimum period of work was required to qualify for monthly benefits. Unlike the present system of stimulus checks, individuals contributed something to the federal system that they received some returns for their contribution once they retired or were rendered unable to work.

The present system of Social Security is the term used for the US Old Age, Survivors, and Disability Insurance (OASDI), operated by the SSA, the Social Security Administration. And its coverage is not limited to retirement benefits. It also gives survivor benefits and income for disabled workers.

Impetus Behind The Stimulus Checks

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At present around 70.2 million Americans collect benefits. The stimulus checks also provided one-off social security to citizens though the source and the impetus behind it were vastly different. The stimulus checks were the federal government’s response to the pandemic and the economic downturn that followed across the nation.

The total shutdown of the economy led to millions of people facing starvation, homelessness, and payment defaults. Around 160 million individuals and households benefitted from the third stimulus checks alone. This economic impact payment was part of the American Rescue Plan Act, 2021 signed by President Biden soon after he took over office in January 2021.

Almost everyone whose earnings were within the stipulated limit and those the IRS had tax information for benefit from the payments. The payment was only delayed in some cases as the IRS had to confirm the eligibility of beneficiaries and get the address right.

Stimulus Check
Stimulus Check

Stimulus Checks For Social Security Beneficiaries

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While there was no link between social security beneficiaries and the stimulus checks, most SS beneficiaries received the $1,400 third stimulus check. Over 19 million stimulus checks totaling over $26 billion went to Social Security beneficiaries who had not filed their tax returns for 2019 or 2020 nor used the IRS non-filer tool.

The list of beneficiaries included people who receive Social Security retirement, disability, or survivor checks. Moreover, over 3 million payments, representing over $5 billion were issued to beneficiaries of Supplemental Security Income. Another 85,000 payments of over $119 million went to Railroad Retirement Board beneficiaries.

Entitlement For Social Security Benefits

A citizen is entitled to social security benefits as a worker if they are over 62 years. The disabled or the blind are also entitled to benefits if they are insured and have sufficient work credits. Both US citizens and lawfully present aliens are entitled to receive monthly Social Security benefits.

The ‘work credits’ system measures the amount of work a person has contributed to his account. Workers can earn up to four work credits a year depending on their annual income. The number of earnings that is required for a work credit increases every year as there is an increase in general wage levels.

A worker becomes eligible for most types of benefits including retirement or blindness once they have earned an average of one work credit for every calendar year starting at 21 years of age and ending at the age of 62 or when they become blind or disabled. A maximum of 40 credits are allowed. A minimum of 6 credits are required, irrespective of age.

People who claim benefits for a disability other than blindness must have worked for a period that is sufficiently long and recent. The number of credits required depends on the age at which the worker became disabled.

A minimum of 20 work credits in the past 10 years of service is required to qualify for the social security benefits ending with the year when the worker turned disabled.

Only the direct beneficiary needs work credits which are based on the earning record if retired, blind, or disabled and have sufficient work credits. Family members qualifying for benefits on the work credits of a worker do not need work credits on their own.

Spouses of workers receiving disability or retirement benefits will qualify if they are above 62. Divorcees who have been married for over 10 years before their divorce also qualify.

The Growth And Propagation Of Social Security

The Social Security system is undoubtedly the most successful of the social insurance programs initiated by the government. It has had an immense impact on the history of the US and has paid out over $11 trillion to over 213 million people.

For over 2 decades, the Social Security program has been the largest of the federal government budget functions. The SS system at present accounts for around 5% of the total GDP of the US.

Stimulus Check
Stimulus Check

The Social Security system has in terms of its impact been able to dramatically reduce the incidence of poverty among the elderly. By the turn of the century, the incidence of poverty was reduced from a high of 50 in the early 1930s to below 10%. At present over a third of senior citizens and the disabled rely on social security for 90% of their total earnings.

Two-thirds of beneficiaries rely on social security for much of their income. It has become central to life for most Americans over the past three-quarters of a century. The future of the program is thus crucial for the well-being of all disabled and elderly Americans.

Stimulus Checks For Social Security Recipients

Social Security beneficiaries also benefitted from the three rounds of stimulus checks. All people eligible for Social Security benefits including Railroad retirees who received benefits, retired seniors, and SSDI beneficiaries qualified for the three rounds of stimulus checks. In most cases, it was in the form of direct deposit payments.

The aging of the American population has raised concern among some people that the system may no longer be viable at some stage as fewer active workers support an ever-increasing number of retirees.

The Trustees of the Social Security Board have forecasted this year that the retirement funds will be depleted by 2034 and which will lead to tax revenues sufficient for only 77% of the total scheduled benefits. Congress will have to find ways to avoid this gap and that means higher taxes on serving workers, lower benefits in the future, a higher age requirement for retirees, or a combination of either or all of these elements.

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