Advantages & Disadvantages of Social Security

Advantages & Disadvantages of Social Security
••• Tetra Images/Tetra images/GettyImages

Social Security was introduced in 1935 to make sure the country’s elderly would have an income after they finished working. The same system is still in place today, with close to 67.7 million people receiving social security benefits as of September 2018, according to the Social Security Administration. The system provides income – a huge advantage to those who receive benefits – but it also has some disadvantages.


  • Social Security has its advantages since it provides post-retirement income, gives recipients a choice when they want to receive benefits and allows eligible non-working spouses to receive benefits. Its disadvantages include that some people will not be eligible and that the funds for it are dwindling.

Disability and Retirement Income

The main advantage of Social Security is that it gives you some monthly income after you retire. The Social Security Administration reports that 81 cents of each dollar paid into the system goes to retirees, their families, surviving spouses and children whose parents have died. The other 19 cents goes to pay people who are on disability. If you have a disease or condition that may limit your lifespan, you can start collecting Social Security at an earlier age.

Age Affects Benefits

Social Security bases its benefits on when you choose to retire, putting each individual in control of her finances. You can retire and receive benefits as early as age 62. Though you will receive a smaller monthly payment for the rest of your life than if you wait until full retirement age, this may be preferable if you're in need of the money beforehand. If you delay receiving benefits until after your full retirement age -- generally between 66 and 67 -- you'll receive a larger monthly payment thereafter to compensate you for waiting. Waiting until you turn 70 to collect provides the maximum benefit.

Dwindling Funds

The current Social Security system is partially funded, meaning that while you work, the Social Security taxes you contribute with each paycheck help pay the retirees currently collecting from the system. Another option would be a fully-funded system in which all benefits are paid from a trust fund, and workers would not need to pay into the system to fund current beneficiaries.

But the number of people taking Social Security by 2022 will surpass the amount of money coming into the system from those who are working, so a fully-funded system is not possible. Instead, Treasury securities will need to be redeemed, potentially resulting in higher taxes or a federal deficit, according to the National Academy of Social Insurance.

Limits on Eligibility

The Social Security system does not provide for everyone. To qualify for Social Security, you need 40 credits, with a maximum of four credits awarded each year based on your work history and the specific dollar amounts you earn. Some will never receive benefits because their earning history does not reach a sufficient amount to qualify. Others who are unlikely to receive Social Security include immigrants who arrive in the country late in life, and those who do not have a steady work history.

Non-Working Spouses

Non-working citizens still can collect Social Security as long as their spouses are eligible for the benefit. A non-working spouse can receive an amount equivalent to 50 percent of the working spouse's benefit, as long as the couple has been married for one year prior to applying for benefits.