News that Social Security recipients would get a 2.2% cost of living increase didn’t get much public attention in mid-July when the story broke. Maybe it’s because the extra $3.4 million a month won’t show up in the Tri-Cities until the first of next year. Or it could be that demographics just doesn’t register with some folks.
Social Security is a big economic fact of life here – really big. According to reports covering zip codes serviced by the local Social Security offices close to one-in-three area residents get a check every month and the number will increase as the local population continues aging.
Here’s another way to look at it.
If the area’s Social Security recipients had a city all to themselves it would have a population larger than Bristol TN, Kingsport and Johnson City combined.
Here’s the most current number – 155,345 people.
Need another number to get a fix on just how big an economic impact Social Security has on the Tri-Cities economy?
Current Social Security reports for our region show the monthly checks total $113.6 million.
That will go up next year when the cost of living increase is added, but we’ll have to wait on Social Security reports to get a total because new recipients are coming online every day and others die.
Residents can sign up early for a reduced check from the retirement account when they’re 62, wait until they’re eligible for full-retirement and opt to hold out the biggest benefit when they’re 70. And then there’s the group getting SSI and the children receiving survivor benefits.
The current average aging pace is 20 local residents turn 65 every day. That will go on for a while because there are about 116,000 Baby Boomers in the Tri-Cities and it will be another 20 years before the youngest of them turn 70.
The median Social Security income, that’s the point where half of the checks are larger, and half are smaller, is $18,023 per household. Contrast that to the mean retirement income of $20,493.
That median Social Security number is a little fuzzy because the actual individual number varies widely with personal circumstances. The current retirement average is $1,367. But the monthly maximum this year is $2,687 a month. Past earnings and when a person signs up are the determining factors. As more Boomers retire who had earnings in the $50,000 to $80,000 ranges during their peak earning years begin filing the average will increase.
According to the Social Security Administrator’s report, the Old-Age and Survivors Insurance and Disability Insurance Trust Funds will be depleted in the next 17 years without some reforms that have recommended for decades. Alone, the Disability Insurance Trust Fund will be insolvent by 2028 if Congress does nothing – which it historically has chosen to do. All of the lines up with when most of the Tri-Cities’ Baby Boomers will have reached their prime eligibility years.
The Committee for a Responsible Federal Budget suggests policymakers phase in gradual changes that would allow for more time to plan but also promote long-term economic growth.
“The Social Security Trustees continue to underscore the need to address Social Security’s financing shortfall soon,” the committee recently said. “Failure to act would result in all beneficiaries receiving a 23% across-the-board benefit cut when the combined trust fund exhausts in just 17 years, (that just shy of the time frame when the youngest Tri-Cities Baby Boomers will reach 70) when today’s 50-year-olds reach the normal retirement age. The SSDI program faces an even more immediate deadline and will deplete its trust fund in 2028.”
“Policymakers can still address Social Security’s financial problem without making drastic tax or benefit changes, but the window for responsible action is closing,” the committee added. “If policymakers are willing to act soon, they can create a plan that strengthens the program’s finances while phasing in changes gradually to give workers time to plan, improving retirement security for vulnerable beneficiaries and promoting long-term economic growth.”
Social Security paid $911 billion in benefits in 2016. Nationwide, it’s the primary source of income for nine out of every 10 individuals 65 and older, according to Social Security reports.