Updated May 16, 2023
Social Security Overview
Social Security provides monthly cash benefits to retired or
Who Qualifies for Benefits?
disabled workers and their family members, as well as to
Social Security benefits are payable to retired or disabled
the family members of deceased workers. It is one of the
workers who meet the minimum insured requirements,
federal government’s largest programs, both in terms of the
among other factors. In general, 10 years of covered
number of people affected (workers and beneficiaries) and
employment are needed to qualify for retired-worker
its finances. People of all ages are affected by the program,
benefits. The number of years of coverage to be insured in
including 183 million covered workers and over 66 million
the event of disability or death varies by age, from 1½ years
beneficiaries (of whom 3.9 million are children) in 2023.
for the youngest workers to 10 years for older workers. In
general, disabled workers must have worked for 5 of the
In 2022, the program had total income of $1.22 trillion
past 10 years immediately before the onset of disability.
(94.6% from dedicated tax revenues) and total expenditures
of $1.24 trillion (99.0% for benefit payments). Currently,
Key Points on Social Security
the Social Security trust funds hold about $2.83 trillion in
U.S. Treasury securities—asset reserves that are available
•
183 mil ion covered workers (and their employers) pay into
for future program spending. Over the long term, however,
the system.
Social Security is projected to be unable to pay full benefits
•
Over 66 mil ion beneficiaries receive monthly cash benefits,
scheduled under current law beginning in 2034. At that
including retired workers, disabled workers, spouses,
point, the asset reserves held by the trust funds are
children, and widow(er)s.
projected to be depleted, and the program’s tax income is
•
It is a self-financing program, with 94.6% of its total income
projected to cover about three-fourths of scheduled benefit
from dedicated tax revenues.
payments through the remainder of the projection period
•
Over its 88-year history, the program has col ected $26.40
(i.e., 2034-2097). These projections are made under the
tril ion and paid out $23.57 tril ion, leaving trust fund asset
Board of Trustees’ intermediate assumptions in the 2023
reserves of about $2.83 tril ion.
annual report; the 2023 report reflects the trustees’
understanding of Social Security at the start of 2023.
•
It is projected to be unable to pay ful benefits starting in
2034, largely due to demographic factors.
How Is Social Security Financed?
Another eligibility factor is age. For example, a worker can
Social Security, authorized under Title II of the Social
claim retired-worker benefits as early as age 62. However,
Security Act, is a self-financing program with most of its
benefits claimed before the full retirement age (FRA) are
income derived from dedicated payroll tax contributions
reduced to take into account the longer expected period of
(90.6%). The program also receives income from the
benefit receipt. (The FRA ranges from 65 to 67, depending
federal income taxes that some beneficiaries pay on a
on the worker’s year of birth.) Similarly, a worker may
portion of their benefits (4.0%), interest income on asset
delay claiming retired-worker benefits until after the FRA;
reserves held by the Social Security trust funds (5.4%), and
in this case, benefits are increased (up to age 70) to take
a small amount (less than 1%) of other income (including
into account the shorter expected period of benefit receipt.
reimbursements from the General Fund of the Treasury).
Adjustments for early or delayed retirement are intended to
provide the worker with the same total lifetime benefits
Workers who are covered by Social Security (94% of all
(based on average life expectancy).
workers in 2023) and their employers must pay Social
Security payroll taxes. The payroll tax rate is 12.4%,
Benefits are also payable to the family members of retired,
divided evenly between the worker and the employer (each
disabled, or deceased workers. Eligible family members
pays 6.2%). The payroll tax is applied to the worker’s
include spouses, divorced spouses, widow(er)s, dependent
earnings in covered employment, up to an annual limit (the
children, and dependent parents. The benefit amount
taxable maximum). The taxable maximum is generally
payable to a family member is based on the type of benefit
adjusted each year based on average wage growth. The
and the worker’s basic benefit amount (before any
payroll tax is applied to earnings up to $160,200 in 2023. A
worker’s earnings
adjustments are made). For example, spouses receive up to
above the taxable maximum are not
50% of the worker’s basic benefit amount; widow(er)s
subject to the Social Security payroll tax, and they are not
counted in the worker’s benefit computation.
receive up to 100% of the worker’s basic benefit amount.

There is an overall limit on the amount of benefits payable
on a worker’s record. If total benefits payable to the worker
Among workers who are not covered by Social Security
and family members exceed the maximum, benefits for
(6% of all workers), the largest groups consist of some state
each family member (excluding the worker) are reduced on
and local government employees who participate in
a proportional basis. Other adjustments may be made to the
alternative pension plans.
family member’s benefit, based on the person’s age when
claiming benefits, whether the person receives a Social
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Social Security Overview
Security benefit or a noncovered pension based on his or
Disabled workers
7.5 mil ion
her own work record, and other factors.
Spouses of disabled workers
0.1 mil ion
Children of disabled workers
1.1 mil ion
How Are Benefits Computed?
Survivors of deceased workers
5.8 mil ion
Social Security benefits are designed to replace part of a
worker’s earnings from work. As such, the amount of a
How Much Do Beneficiaries Receive?
worker’s benefit is based on his or her career-average
Benefit amounts vary by individual based on a number of
earnings in covered employment (i.e., earnings up to the
factors, including an individual’s earnings history, the age
taxable maximum) and a progressive benefit formula that is
at which he or she claims benefits, and the type of benefit
intended to provide adequate benefit levels for workers with
(for example, a retired-worker benefit or a spousal benefit).
low career-average earnings.
The following statistics show average monthly benefit
amounts by category as of February 2023.
The benefit computation process includes several steps.
Retired workers
$1,831
First, the worker’s earnings (up to the taxable maximum)
Spouses of retired workers
$899
are indexed to average wage growth; indexing brings
Children of retired workers
$859
nominal earnings up to near-current wage levels. The
Disabled workers
$1,483
highest 35 years of indexed earnings are selected and
Spouses of disabled workers
$406
summed; the total is divided by 420 months (35 years x 12
Children of disabled workers
$472
months). The result is the worker’s Average Indexed
Survivors of deceased workers
$1,448
Monthly Earnings (AIME). If a worker has fewer than 35
years of earnings in covered employment, years with no

What Is Social Security’s Status?
earnings are entered as zeros, resulting in a lower AIME.
(In the case of disabled-worker and survivor benefits, fewer
For many years, Social Security collected more revenues
than 35 years of earnings may be used in the computation.)
than needed to pay benefits, resulting in accumulated assets
(interest-bearing U.S. Treasury securities) held by the trust
Next, the Social Security benefit formula is applied to the
funds available for future spending on Social Security.
worker’s AIME. The benefit formula has three parts—with
Today, as Social Security collects less revenue than needed
three different formula factors (90%, 32%, and 15%)—that
to pay benefits, it draws upon those asset reserves to meet
are applied to three segments of the worker’s AIME. The
its expenditures. The Social Security Board of Trustees
result is the worker’s Primary Insurance Amount (PIA).
projects that Social Security will draw down about $2.83
The PIA is the initial monthly benefit payable to the worker
trillion in asset reserves by 2034. At that point, the
at the full retirement age. It is also used to determine the
program’s tax income is projected to cover about three-
amount of benefits payable to family members based on the
fourths of benefit payments each year going forward. Over
worker’s record (i.e., benefits for family members are equal
a 75-year projection period, on average, Social Security’s
to a specified percentage of the worker’s PIA).
expenditures are projected to exceed its income by about
23%. Demographic factors, such as lower fertility rates and
The benefit computation process, including the progressive
increasing longevity, contribute in large part to Social
Security’s pro
three-part benefit formula, results in
jected funding imbalance. Together, they
contribute to a decline in the number of workers paying into
• benefits that replace a certain share of a worker’s career-
the system relative to the number of beneficiaries. Other
average earnings in covered employment;
contributing factors include program design features, such
• a higher benefit (dollar amount) for workers with higher
as wage indexing in the benefit-computation process.
career-average earnings; and
•
The program’s projected financial outlook has prompted

a higher replacement rate for workers with lower
career-average earnings (initial monthly benefits replace
discussion among policymakers about changes to Social
a greater share of the worker’s preretirement earnings).
Security, with the policy debate reflecting a variety of
objectives and approaches to reform. For example, the
Adjustments may be made to the worker’s PIA based on
Social Security debate reflects efforts to scale back the
a number of factors, including the age at which the
program in response to Social Security’s projected funding
worker claims benefits. Unlike many other sources of
shortfalls, growing federal budget deficits, and other
retirement income, Social Security benefits are adjusted
concerns. In general, such proposals include a combination
for inflation through annual cost-of-living adjustments.
of revenue increases and benefit reductions. The Social
Security debate also reflects a shift in focus among some
Who Is Receiving Benefits?
policymakers toward proposals that would expand Social
As of February 2023, there are over 66 million Social
Security benefits to address concerns about the adequacy of
Security beneficiaries. The largest group is retired workers
benefits and, more broadly, retirement income security.
(73.9%), followed by disabled workers (11.4%). Family
members of deceased workers make up 8.8% of the total,
For more information, see CRS Report R42035, Social
and family members of retired or disabled workers make up
Security Primer.
5.9%.
Retired workers
48.9 mil ion
Barry F. Huston, Analyst Social Policy
Spouses of retired workers
2.0 mil ion
IF10426
Children of retired workers
0.7 mil ion
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Social Security Overview


Disclaimer
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