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 2015 with a lifetime of “medium” earnings (about $46,290 in 2014) would receive about $18,320 a year, which would replace about 40 percent of past earnings. A “low” earner who made about $20,830 in 2014 would receive about $11,120, which would replace about 53 percent of prior earnings. A worker who always earned the “maximum” taxable amount ($112,085 in 2014) would get benefits that replace about 26 percent of prior earnings.
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:*
* The views of NASI members are their own and not an official position of the National Academy of Social Insurance or its funders.