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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 2017 with a lifetime of “medium” earnings (about $49,366 in 2016) would receive about $18,971 a year, which would replace about 38 percent of past earnings. A “low” earner who made about $22,215 in 2016 would receive about $11,517, which would replace about 52 percent of prior earnings. A worker who always earned the “maximum” taxable amount (for a career-average taxable earnings of $120,418 in 2016) would get benefits that replace about 25 percent of prior earnings. 

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* The views of Academy members are their own and not an official position of the National Academy of Social Insurance or its funders.