Little-Known Facts About Social Security Benefits: Part 2


By Rick Barnett

Social Security benefits have been America’s retirement safety net for nearly 90 years. The organization has survived multiple challenges and societal changes over that time. However, with its complexity and flexibility, even the most capable adults may have trouble understanding how Social Security works. That’s why in this two-part series (see Part 1 here) we’ve been highlighting some commonly overlooked Social Security facts.

Now in Part 2 we unravel some of the facets of Social Security benefits you might have overlooked—or didn’t know about in the first place.

Benefits Are Adjusted for COLA Every Year

Social Security benefits were first provided to retirees over 65 in 1937. Benefit amounts were originally calculated according to the beneficiary’s average working age. 

With the Social Security Amendment of 1952, legislators established annual Cost-of-Living-Adjustments (COLA) to keep up with rising costs. The U.S. Bureau of Labor Statistics (BLS) used the Consumer Price Index (CPI) to determine how to change Social Security benefits. 

Initially, the CPI only considered how much urban dwellers paid for everyday expenses. Rural and other non-urban families, who generally paid more for goods, bore the brunt of the imbalance. 

When Congress passed the COLA Act in 1973, legislators tied the annual increase to annual inflation rates across the board to keep pace. Social Security benefits adjusted as the CPI went up and remained unchanged if the index leveled out or went down. Aside from a few changes and legislative tinkering, it’s been that way ever since. Last year, Social Security benefits went up by 3.2%.

Social Security Is the Primary Income Source for Most Retirees

Social Security benefits are more important to retirees than ever before. The AARP reports that 42% of those aged 65 or older rely on Social Security benefits for at least 50% of their overall earnings. About 20% said Social Security benefits accounted for nearly 90% of their total income.

When inflation hit hard in 2022 and 2023, Social Security raised its benefits by 5.9% and 8.7%, respectively. The increase dropped to 3.2% in January 2024.

Children Can Get Social Security Survivor Benefits

Social Security benefits are commonly associated with the elderly. However, dependent children whose parents have died, retired, or become disabled can earn Social Security survivor benefits as well.

To receive the benefits, the child’s parents must have either retired (or become disabled) and were eligible for Social Security benefits, or died after working in a job that provided Social Security benefits.

A child whose parents have only recently died can get up to 75% of the deceased person’s retirement benefits until age 18 or 19. They may also receive a lump-sum payment of $255 to cover immediate expenses in the wake of their parent’s death, like groceries and funerals. Surviving children must be unmarried and under 18 years old to get the benefits. 

You May Qualify for Automatic Enrollment in Medicare

Adults who get Social Security benefits before age 65 are automatically enrolled in Medicare without having to do anything. Those in Medicare’s Original Plan automatically get enrolled in Medicare Part A (hospital insurance) and B (medical insurance). They also may enroll for Plan D (drug plan) or get a Medigap policy to account for missing coverages.

Those who prefer being in the Medicare Advantage Plan (Plan C) can get coverage if they have Parts A and B and live in the service area they wish to join. You must have a Medicare number and beginning dates for A and B coverage. You can find all that information on your Medicare card.

Find Out More About Social Security Benefits

Barnett Financial & Tax, an advisory firm serving Grand Blanc, MI, Auburn Hills, MI, and Charlotte, NC, helps clients navigate the tangled world of Social Security benefits and other retirement issues. We take pride in providing the cure to your retirement planning uncertainties. From estate concerns to tax planning, our strategies are personalized to your needs.

If we sound like a good fit to partner with you on your financial journey, schedule a complimentary consultation by calling (800) 425-7044 or emailing myteam@bftwealth.com.

About Rick 

Rick Barnett is founder and CEO of Barnett Financial & Tax, a financial services firm helping people build, preserve, and enjoy their wealth in Grand Blanc, MI, Auburn Hills, MI, and Charlotte, NC. Since beginning his financial services career in 1990, Rick has grown his firm into a one-stop financial hub for hundreds of individuals, families, and businesses in Michigan and beyond. Providing a variety of products and services to assist clients in pursuing their financial goals, his team prides themselves on addressing the hole in their retirement plan—taxes. Rick’s team thrives on creating solid financial plans that produce the best outcomes for their clients. 

Rick holds several professional designations, including Certified Estate Planning Professional (CEPP), Master of Estate Preservation (MEP), and Christian Financial Consultant and Advisor (CFCA). In addition to having hosted his financial radio show, the Barnett Financial Hour, he also frequently appeared on ABC, CBS, NBC, and Fox 66. Rick gives back to the community through board participation and charitable service for over 20 different organizations. He and his wife, Leah, have four children: Parker, Gabrielle, Harrison, and Broderick. To learn more about Rick, connect with him on LinkedIn.

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