Social Security Overview
Updated May 10, 2024
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 182 million covered workers and 67.5 million
the event of disability or death varies by age, from 1½ years
beneficiaries (of whom 3.8 million are children) in 2024.
for the youngest workers to 10 years for older workers. In
general, disabled workers must have worked for 5 of the
In 2023, the program had total income of $1.35 trillion
past 10 years immediately before the onset of disability.
(95.1% from dedicated tax revenues) and total expenditures
of $1.39 trillion (99.1% for benefit payments). Currently,
Key Points on Social Security
the Social Security trust funds hold about $2.79 trillion in
U.S. Treasury securities—asset reserves that are available
•
182 mil ion covered workers (and their employers) pay into
for future program spending. On a combined basis, the
the system.
Social Security trust funds are projected to be unable to pay
•
67.5 mil ion beneficiaries receive monthly cash benefits,
full benefits scheduled under current law beginning in
including retired workers, disabled workers, spouses,
2035. At that point, the asset reserves held by the combined
children, and widow(er)s.
trust funds are projected to be depleted, and the program’s
•
It is a self-financing program, with about 95.1% of its total
continuing tax income is projected to cover 83% of
income from dedicated tax revenues.
scheduled benefit payments in 2035, falling to 73% at the
•
Over its 89-year history, the program has col ected $27.75
end of the projection period (2098). These projections are
made under the Board of Trustees’ intermediate
tril ion and paid out $24.96 tril ion, leaving trust fund asset
reserves of about $2.79 tril ion.
assumptions in the 2024 annual report; the 2024 report
reflects the trustees’ understanding of Social Security at the
•
On a combined basis, the Social Security trust funds are
start of 2024.
projected to be unable to pay ful benefits starting in 2035,
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
(91.3%). 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 (3.8%), interest income on asset
delay claiming retired-worker benefits until after the FRA;
reserves held by the Social Security trust funds (5.0%), 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 (about 94% of
(based on average life expectancy).
all workers in 2024) 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
pays 6.2%). The payroll tax is applied to the worker’s
disabled, or deceased workers. Eligible family members
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 $168,600 in 2024. A
worker’s earnin
adjustments are made). For example, spouses receive up to
gs 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
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Social Security Overview
claiming benefits, whether the person receives a Social
Disabled workers
7.3 mil ion
Security benefit or a noncovered pension based on his or
Spouses of disabled workers
0.1 mil ion
her own work record, and other factors.
Children of disabled workers
1.1 mil ion
Survivors of deceased workers
5.8 mil ion
How Are Benefits Computed?
Social Security benefits are designed to replace part of a
How Much Do Beneficiaries Receive?
worker’s earnings from work. As such, the amount of a
Benefit amounts vary by individual based on a number of
worker’s benefit is based on his or her career-average
factors, including an individual’s earnings history, the age
earnings in covered employment (i.e., earnings up to the
at which he or she claims benefits, and the type of benefit
taxable maximum) and a progressive benefit formula that is
(for example, a retired-worker benefit or a spousal benefit).
intended to provide adequate benefit levels for workers with
The following statistics show average monthly benefit
low career-average earnings.
amounts by category as of March 2024.
Retired workers
$1,913
The benefit computation process includes several steps.
First, the worker’s earnings (up to the taxable maximum)
Spouses of retired workers
$912
Children of retired workers
$893
are indexed to average wage growth; indexing brings
Disabled workers
$1,537
nominal earnings up to near-current wage levels. The
Spouses of disabled workers
$419
highest 35 years of indexed earnings are selected and
Children of disabled workers
$494
summed; the total is divided by 420 months (35 years x 12
months). The result is the worker’s Average Indexed
Survivors of deceased workers
$1,504
Monthly Earnings (AIME). If a worker has fewer than 35
What Is Social Security’s Status?
years of earnings in covered employment, years with no
earnings are entered as zeros, resulting in a lower AIME.
For many years, Social Security collected more revenues
(In the case of disabled-worker and survivor benefits, fewer
than needed to pay benefits, resulting in accumulated assets
than 35 years of earnings may be used in the computation.)
(interest-bearing U.S. Treasury securities) held by the trust
funds available for future spending on Social Security.
Next, the Social Security benefit formula is applied to the
Today, as Social Security collects less revenue than needed
worker’s AIME. The benefit formula has three parts—with
to pay benefits, it draws upon those asset reserves to meet
three different formula factors (90%, 32%, and 15%)—that
its expenditures. The trustees project that Social Security
are applied to three segments of the worker’s AIME. The
will draw down about $2.79 trillion in asset reserves by
result is the worker’s Primary Insurance Amount (PIA).
2035. At the point of reserve depletion, the program’s
The PIA is the initial monthly benefit payable to the worker
continuing tax income is projected to cover 83% of benefit
at the full retirement age. It is also used to determine the
payments, falling to 73% in 2098. Over a 75-year
amount of benefits payable to family members based on the
projection period, on average, Social Security’s
worker’s record (i.e., benefits for family members are equal
expenditures are projected to exceed its income by about
to a specified percentage of the worker’s PIA).
22%. Demographic factors, such as lower fertility rates and
increasing longevity, contribute in large part to Social
Security’s projected funding imbalance. Together, they
The benefit computation process, including the progressive
three-part benefit formula, results in
contribute to a decline in the number of workers paying into
the system relative to the number of beneficiaries. Other
• benefits that replace a certain share of a worker’s career-
contributing factors include program design features, such
average earnings in covered employment;
as wage indexing in the benefit-computation process.
• a higher benefit (dollar amount) for workers with higher
career-average earnings; and
The program’s projected financial outlook has prompted
•
discussion among policymakers about changes to Social
a higher replacement rate for workers with lower
career-average earnings (initial monthly benefits replace
Security, with the policy debate reflecting a variety of
a greater share of the worker’s preretirement earnings).
objectives and approaches to reform. For example, the
Social Security debate reflects efforts to scale back the
Adjustments may be made to the worker’s PIA based on a
program in response to Social Security’s projected funding
number of factors, including the age at which the worker
shortfalls, growing federal budget deficits, and other
claims benefits. Unlike many other sources of retirement
concerns. In general, such proposals include a combination
income, Social Security benefits are adjusted for inflation
of revenue increases and benefit reductions. The Social
through annual cost-of-living adjustments.
Security debate also reflects a shift in focus among some
policymakers toward proposals that would expand Social
Who Is Receiving Benefits?
Security benefits to address concerns about the adequacy of
As of March 2024, there are 67.5 million Social Security
benefits and, more broadly, retirement income security.
beneficiaries. The largest group is retired workers (75.1%),
followed by disabled workers (10.8%). Family members of
For more information, see CRS Report R42035, Social
deceased workers make up 8.6% of the total, and family
Security Primer.
members of retired or disabled workers make up 5.5%.
Retired workers
50.7 mil ion
Emma K. Tatem, Analyst in Social Policy
Spouses of retired workers
1.9 mil ion
IF10426
Children of retired workers
0.7 mil ion
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Social Security Overview
Disclaimer
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