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.
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 Academy members think:*
- Elisa Walker: “Quick Facts on Social Security’s 1.7% COLA for 2012” (2012)
- Jasmine Tucker: “Giving Thanks: Key Programs Keep 26 Million Out of Poverty” (2012)
- Jennifer Clark: “Why aren’t we talking about increasing Social Security benefits?” (2011)
* The views of Academy members are their own and not an official position of the National Academy of Social Insurance or its funders.