- Social Security
- What is Social Security?
- Who Pays for Social Security?
- Who Gets Social Security?
- What is the Social Security Retirement Age?
- How Do Benefits Compare to Earnings?
- The Role of Benefits in Income and Poverty
- Where Do Social Security Taxes Go?
- Social Security's Future Finances
- Public Opinions on Social Security
- How Will Boomers Affect Social Security?
- Social Security as a Share of the Economy
- Options to Balance Social Security Finances
- Proposals for Private Accounts
- Children's Stake in Social Security
- Social Security and People of Color
- Women's Stake in Social Security
- Social Security, Marriage, and Divorce
- Social Security for Widowed Spouses in Retirement
- What is Social Security Disability Insurance?
- Key Dates in the History of Social Security
- Social Security: Just the Facts on Finances, Benefits, and Public Opinion
- About the Social Security Section of this Sourcebook
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Social Security: Just the Facts Video
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How Do Benefits Compare to Earnings?
Social Security retirement benefits are designed to replace part of a worker's earnings from work. The formula used to calculate these benefits takes into account lifetime earnings over 35 years. Social Security benefits replace a larger share of past earnings for low earners. While high earners receive larger benefits, their benefits replace a smaller share of what they had been making.
For example, a 65-year-old who retired in 2012 with a lifetime of “medium” earnings (about $43,000 in 2011) would receive about $17,500 a year, which would replace about 41 percent of past earnings. A “low” earner who made about $19,400 in 2011 would receive about $10,600, which would replace about 55 percent of prior earnings. A worker who always earned the “maximum” taxable amount ($106,800 in 2009-2011) would get benefits that replace about 26 percent of prior earnings.
Source: Annual Trustees' Report, Social Security Administration, 2012; Table V.C7
For more information, see:
- Social Security Benefits, Finances, and Policy Options: A Primer
- How Would Seniors Fare – by Age, Gender, Race and Ethnicity, and Income – Under the Bowles-Simpson Social Security Proposals by 2070?, Social Security Brief No. 38
- Social Security Beneficiaries Face 19% Cut; New Revenue Can Restore Balance, Social Security Brief No. 37
- Should Social Security’s Cost-of-Living Adjustment Be Changed?, Social Security Fact Sheet No. 2
- Strengthening Social Security for the Long Run, Social Security Brief No. 35
- Strengthening Social Security for Workers in Physically Demanding Occupations
- Survivor Benefits for Families of Deceased Service members and Overseas Contract Workers, Social Security Brief No. 23
Read what some NASI members think:*
- Jasmine Tucker: "Thankful for Three Key Social Insurance Programs That Kept More Than 24.0 Million Americans Out of Poverty in 2010” (2011)
- Jennifer Clark: "Why aren’t we talking about increasing Social Security benefits?" (2011)
* The views of NASI members are their own and not an official position of the National Academy of Social Insurance or its funders.
