Value of Social Security Benefits Even Higher Now

Jun 12, 2020 / Amanda Chase, Horsesmouth Assistant Editor

The stock market has been erratic, real estate is hurting, bond yields are painfully low and dividends are shrinking. In the coronavirus recession, most financial assets have been disturbingly volatile. But one widely held financial asset, perhaps the most important one for the vast majority of Americans, has performed splendidly: their stake in Social Security. It hasn’t merely been a solid support for millions of people in a difficult time. While the income-producing power of so many other assets has been sapped by economic weakness and low interest rates, Social Security payments have held steady. And thanks to those rock-bottom interest rates, the market value of the Social Security income stream has soared in a measurable way.

You may not think of Social Security as a personal asset, like a bank account, a portfolio of stocks and bonds or a house. But Social Security retirement benefits are a kind of annuity, and annuities have a definite market value. Considered this way, Social Security’s value has been rising. Even if you aren’t receiving payments now, you have a stake in the asset, and it is in your interest to protect it.

Those federal retirement benefits are essentially annuities: bonds wrapped in insurance. So-called single-premium immediate annuities—in which an insurance company will provide you with income, in exchange for a sum of cash—can’t do everything Social Security does, but they come close. Mr. Kintzel has used annuities to approximate the cash value of Social Security benefits. Those values are startlingly high.

Mr. Kintzel found that for the average 65-year-old man, who last year received a retirement benefit of $1,375 a month, an annuity supplying that lifetime cash flow would cost at least $459,866—13 percent more than a comparable annuity in 2014. For a 65-year-old woman, the average monthly benefit was $1,102 last year. A comparable commercial annuity, Mr. Kintzel said, would cost $368,562. These figures are based on data from, which tracks annuity prices.

These are just average amounts and would be much bigger—perhaps as much as $1 million—for high-income people who delay claiming benefits until they are 70. Note that all of these estimates understate the value of Social Security, which provides disability benefits and supplemental income in addition to basic retirement benefits. And these estimates don’t take into account the effects of the further decline in interest rates since the beginning of this year, which have reduced income streams from many assets, but not for Social Security.

You can find the full article at The New York Times.


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