Social Security Primer




Social Security Primer
Updated October 2, 2023
Congressional Research Service
https://crsreports.congress.gov
R42035




Social Security Primer

Summary
Social Security provides monthly cash benefits to retired or disabled workers and their family
members, and to the family members of deceased workers. Among the beneficiary population,
85.3% are retired or disabled workers; family members of retired, disabled, or deceased workers
make up the remainder. In February 2023, approximately 66.2 million beneficiaries received a
total of $112.2 billion in benefit payments for the month; the average monthly benefit was
$1,694.
Workers become eligible for Social Security benefits for themselves and their family members by
working in Social Security-covered employment. For 2023, an estimated 94% of workers will
work in paid employment or self-employment covered by Social Security, and their earnings are
subject to the Social Security payroll tax. Employers and employees each pay 6.2% of covered
earnings, up to an annual limit on taxable earnings ($160,200 in 2023).
Among other requirements, a worker generally needs 40 earnings credits (10 years of covered
employment) to be eligible for a Social Security retired-worker benefit. Fewer earnings credits
are needed to qualify for a disabled-worker benefit; the number needed varies depending on the
age of the worker when he or she became disabled. A worker’s initial monthly benefit is based on
his or her career-average earnings in covered employment. Social Security retired-worker benefits
are first payable at the age of 62, subject to a permanent reduction for early retirement. Full
(unreduced) retirement benefits are first payable at the full retirement age (FRA), which increased
gradually from 65 to 67 under a law enacted by Congress in 1983. The FRA is 67 for persons
born in 1960 or later (i.e., persons who become eligible for retirement benefits at the age of 62 in
2022 or later).
In addition to payroll taxes, Social Security is financed by federal income taxes that some
beneficiaries pay on a portion of their benefits and by interest income that is earned on the
Treasury securities held by the Social Security trust funds. In 2022, the Social Security trust funds
had receipts totaling $1.22 trillion, expenditures totaling $1.24 trillion, and accumulated assets
(U.S. Treasury securities) totaling $2.83 trillion. Over the program’s 88-year history, it has
collected roughly $26.40 trillion and paid out $23.57 trillion, leaving asset reserves of $2.83
trillion at the end of 2022 in its two trust funds. Projections by the trustees show that, based on
the program’s current financing and benefit structure, benefits scheduled under current law can be
paid in full and on time until 2034 (under the intermediate set of assumptions). Projections also
show that Social Security expenditures are estimated to exceed income by at least 20% over the
next 75 years. Restoring long-range trust fund solvency and other policy objectives (such as
increasing benefits for certain beneficiaries) have made Social Security reform an issue of
ongoing congressional interest.
This report provides an overview of Social Security financing and benefits under current law.
Specifically, the report covers the origins and a brief history of the program; Social Security
financing and the status of the trust funds; how Social Security benefits are computed; the types
of Social Security benefits available to workers and their family members; the basic eligibility
requirements for each type of benefit; the scheduled increase in the Social Security retirement
age; and the federal income taxation of Social Security benefits.
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Contents
Introduction ..................................................................................................................................... 1
Origins and Brief History of Social Security................................................................................... 1
Social Security Financing ................................................................................................................ 3
Taxation of Social Security Benefits ......................................................................................... 4
Status of the Social Security Trust Funds ........................................................................................ 4
Social Security Cash-Flow Surpluses and Deficits ................................................................... 6
Social Security Reform Debate ....................................................................................................... 6
Social Security Benefit Rules .......................................................................................................... 7
Full Retirement Age .................................................................................................................. 7
Computation of a Social Security Retired-Worker Benefit ....................................................... 8
Adjustments to Benefits Claimed Before or After the FRA ............................................... 9
Other Adjustments to Benefits (Including Government Pension Offset and

Windfall Elimination Provision) ...................................................................................... 9
Disabled-Worker Benefit ......................................................................................................... 10
Benefits for the Worker’s Family Members ............................................................................ 10

Maximum Family Benefit .................................................................................................. 11
Social Security Beneficiaries ......................................................................................................... 13

Tables
Table 1. Increase in the Full Retirement Age Scheduled Under Current Law................................. 7
Table 2. Computation of a Worker’s Primary Insurance Amount (PIA) in 2023
Based on an Illustrative AIME of $7,000 ..................................................................................... 8
Table 3. Social Security Benefits for the Worker’s Family Members ........................................... 12
Table 4. Social Security Beneficiaries, by Type, February 2023 ................................................... 14

Contacts
Author Information ........................................................................................................................ 14

Congressional Research Service

Social Security Primer

Introduction
Social Security is a self-financing program that provides monthly cash benefits to retired or
disabled workers and their family members and to the family members of deceased workers.1 As
of February 2023, there were approximately 66.2 million Social Security beneficiaries. Of those,
51.6 million (77.9%) were retired workers and family members, 8.8 million (13.2%) were
disabled workers and family members, and 5.8 million (8.8%) were survivors of deceased
workers.2
Social Security is financed primarily by payroll taxes paid by covered workers and their
employers. An estimated 183 million workers are covered by Social Security.3 Employers and
employees each pay 6.2% of covered earnings, up to an annual limit; self-employed individuals
pay 12.4% of net self-employment income, up to an annual limit. The annual limit on taxable
earnings is $160,200 in 2023.4 Social Security is also credited with tax revenues from the federal
income taxes paid by some beneficiaries on a portion of their benefits. In addition, Social
Security receives interest income from Social Security trust fund investments. Social Security
income and outgo are accounted for in two separate trust funds authorized under Title II of the
Social Security Act: the Federal Old-Age and Survivors Insurance (OASI) Trust Fund and the
Federal Disability Insurance (DI) Trust Fund.5 This report refers to the separate OASI and DI
trust funds on a combined basis as the Social Security trust funds.6 In 2022, the combined Social
Security trust funds (OASDI) had total receipts of $1.22 trillion, total expenditures of $1.24
trillion, and accumulated holdings (assets) of $2.83 trillion.7
Origins and Brief History of Social Security
Title II of the original Social Security Act of 19358 established a national plan designed to
provide economic security for the nation’s workers. The system of Old-Age Insurance it created
provided benefits to individuals who were aged 65 or older and who had “earned” retirement
benefits through work in jobs covered by the system. Benefits were to be financed by a payroll
tax paid by employees and their employers on wages up to a base amount ($3,000 per year at the

1 A person may receive retired-worker benefits and continue to have earnings. However, under certain circumstances,
earnings may affect the amount of a person’s monthly benefit.
2 Social Security Administration (SSA), Monthly Statistical Snapshot, February 2023, Table 2. See the latest edition of
the Monthly Statistical Snapshot at http://www.socialsecurity.gov/policy/docs/quickfacts/stat_snapshot/index.html.
3 Currently, 94% of workers in paid employment or self-employment are covered by Social Security. SSA, Social
Security Fact Sheet
, at https://www.ssa.gov/OACT/FACTS/.
4 The annual limit on covered wages and net self-employment income that is subject to the Social Security payroll tax
(the taxable wage base) is adjusted annually based on average wage growth, if a Social Security cost-of-living
adjustment (COLA) is payable.
5 42 U.S.C. §401.
6 Under current law, the Federal Old-Age and Survivors Insurance (OASI) and Federal Disability Insurance (DI) trust
funds cannot borrow from each other when faced with a funding shortfall. The shifting of funds between OASI and DI
can only be done with authorization from Congress. In the past, Congress has authorized temporary interfund
borrowing among the OASI, DI, and Medicare Hospital Insurance trust funds, as well as temporary payroll tax
reallocations between OASI and DI, to deal with funding shortfalls. Most recently, under the Bipartisan Budget Act of
2015 (P.L. 114-74), Congress authorized a temporary reallocation of payroll taxes from the OASI fund to the DI fund
for calendar years 2016 through 2018. Because of such actions, the OASI and DI trust funds are discussed on a
combined basis. For more information, see CRS Report R43318, The Social Security Disability Insurance (DI) Trust
Fund: Background and Current Status
.
7 SSA, Trust Fund Data, at https://www.ssa.gov/cgi-bin/ops_period.cgi.
8 P.L. 271, 74th Congress.
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time). Monthly benefits were to be based on cumulative wages in covered jobs. The law related
the amount of the benefit to the amount of a worker’s wages covered by the program, but the
formula was progressive. That is, the formula was weighted to replace a larger share of the
earnings of low-wage workers compared with those of higher-wage workers. Before the Old-Age
Insurance program was in full operation, the Social Security Amendments of 1939 shifted the
emphasis of Social Security from protection of the individual worker to protection of the family
by extending monthly cash benefits to the dependents and survivors of workers.9 The program
now provided OASI.
During the decades that followed, changes to the Social Security program were mainly ones of
expansion. Coverage of workers became nearly universal (the largest groups remaining outside
the system are state and local government employees who have not chosen to join the system and
federal employees who were hired before 1984). In 1956, Congress established the Disability
Insurance (DI) program.10 Over the years, there were increases in the payroll tax rate, which
increased from 2.0% of pay (1.0% each for employees and employers) in the 1937-1949 period to
its current level of 12.4%.11 In addition, there were increases in the amount of wages subject to
the payroll tax (the taxable wage base), which increased from $3,000 in the 1937-1950 period to
$160,200 in 2023.12 The types of individuals eligible for benefits were expanded over the years,13
and benefit levels were increased periodically. In 1972, legislation provided for automatic cost-of-
living adjustments, starting in 1975, indexed to the change in consumer prices as measured by the
Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) published by the
Department of Labor’s Bureau of Labor Statistics.14
Beginning in the late 1970s, legislative action regarding Social Security became more
concentrated on solving persistent financing problems. Legislation enacted in 1977 raised taxes
and curtailed future benefit growth in an effort to shore up the system’s finances.15 Still, in 1982,
the OASI trust fund needed to borrow assets from the DI trust fund and the Medicare Hospital
Insurance (HI) trust fund (borrowed amounts were fully repaid by 1986). In 1983, Congress
passed additional major legislation that was projected to restore solvency to the Social Security
system on average over the 75-year projection period at that time.16

9 P.L. 379, 76th Congress.
10 The DI program was established by the Social Security Amendments of 1956 (P.L. 880, 84th Congress). The program
became known as the Old-Age, Survivors, and Disability Insurance (OASDI) program, the formal name for Social
Security.
11 Congress has increased the Social Security payroll tax rate many times over the program’s history. The payroll tax
rate under current law (12.4%) was established by the Social Security Amendments of 1983 (P.L. 98-21). P.L. 98-21
increased the payroll tax rate gradually from 11.4% in 1984 to 12.4% in 1990.
12 The taxable wage base amounts are in nominal dollars. The most recent legislative change to the Social Security
taxable wage base was in 1977. The Social Security Amendments of 1977 (P.L. 95-216) established ad-hoc increases in
the taxable wage base for 1979, 1980, and 1981, followed by a return to automatic wage indexation for 1982 and
subsequent years.
13 For example, the Social Security Amendments of 1965 (P.L. 89-97) established benefits for divorced wives aged 62
or older.
14 See the Social Security Amendments of 1972 (P.L. 92-603). For more information, see CRS Report 94-803, Social
Security: Cost-of-Living Adjustments
.
15 See the Social Security Amendments of 1977 (P.L. 95-216).
16 Following the Social Security Amendments of 1983 (P.L. 98-21), projections showed the re-emergence of long-range
deficits as a result of changes in actuarial methods and assumptions and because program changes had been evaluated
with respect to their effect on the average 75-year deficit. That is, while program changes were projected to restore
trust fund solvency on average over the 75-year projection period, a period of surplus years was followed by a period
of deficit years. As time passed, the inclusion of additional deficit years in the 75-year valuation period resulted in a
return to projected long-range deficits.
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Current projections by the Social Security Board of Trustees show that the Social Security system
has a long-range funding shortfall, and that the system will operate with annual cash-flow deficits
each year through the end of the 75-year projection period (2097). These projections, and other
factors, have focused attention on potential Social Security program changes.
Social Security Financing
The Social Security program is financed primarily by revenues from Federal Insurance
Contributions Act (FICA) taxes and Self-Employment Contributions Act (SECA) taxes. FICA
taxes are paid by both employers and employees, however, it is employers who remit the taxes to
the U.S. Treasury. Employers remit FICA taxes on a regular basis throughout the year (e.g.,
weekly, monthly, quarterly, or annually), depending on the employer’s level of total employment
taxes (Social Security, Medicare, and federal individual income tax withholding).
The FICA tax rate of 7.65% each for employers and employees has two components: 6.20% for
Social Security and 1.45% for Medicare HI.17 Under current law, employers and employees each
pay 6.2% of covered wages, up to the taxable wage base, in Social Security payroll taxes. The
SECA tax rate is 15.3% for self-employed individuals, with 12.4% for Social Security and 2.9%
for Medicare HI. Self-employed individuals pay 12.4% of net self-employment income, up to the
taxable wage base, in Social Security payroll taxes.18 One-half of the SECA taxes are allowed as a
deduction for federal income tax purposes. SECA taxes are normally paid once a year as part of
filing an annual individual income tax return.19
In addition to Social Security payroll taxes, the Social Security program has two other sources of
income. First, certain Social Security beneficiaries must include a portion of Social Security
benefits in taxable income for the federal income tax, and the Social Security program receives
part of those federal tax revenues.20 Second, the Social Security program receives interest from
the U.S. Treasury on its investments in special U.S. government obligations.
As the Managing Trustee of the Social Security trust funds, the Secretary of the Treasury is
required by law to invest Social Security revenues in interest-bearing federal government
securities held by the trust funds.21 The revenues exchanged for the federal government securities
are deposited into the general fund of the U.S. Treasury and are indistinguishable from revenues
in the general fund that come from other sources. Because the assets held by the trust funds are
federal government securities, the trust fund balance represents the amount of money owed to the
Social Security trust funds by the general fund of the U.S. Treasury. Funds needed to pay Social

17 The Patient Protection and Affordable Care Act (ACA; P.L. 111-148) imposed an additional Medicare HI tax of 0.9
percentage point on high-income workers with wages over $200,000 for single filers and $250,000 for joint filers,
effective for taxable years beginning in 2013.
18 Self-employed individuals must pay Social Security payroll taxes if they have net earnings from self-employment of
$400 or more in a year; 92.35% of net earnings (up to the annual limit) are taxable.
19 If a self-employed individual does not pay himself or herself wages, SECA taxes are paid annually on the Internal
Revenue Service Form 1040 (U.S. Individual Income Tax Return). If a self-employed individual does pay himself or
herself wages, FICA taxes are paid during the year along with any FICA tax payments for his or her employees.
20 The tax revenues associated with including Social Security benefits in federal taxable income go to the Social
Security trust funds and the Medicare HI trust fund. For more information, see CRS Report RL32552, Social Security:
Taxation of Benefits
.
21 Social Security Act, Title II, §201(d). For more information, see SSA, Office of the Chief Actuary, Actuarial Note
Number 142, Social Security Trust Fund Investment Policies and Practices, by Jeffrey L. Kunkel, January 1999, at
http://www.ssa.gov/OACT/NOTES/n1990s.html.
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Security benefits and administrative expenses come from the redemption of federal government
securities held by the trust funds.22
Taxation of Social Security Benefits
Since 1984, Social Security benefits have been subject to the federal income tax. As part of the
Social Security Amendments of 1983 (P.L. 98-21), Congress made up to 50% of a person’s Social
Security benefits subject to the federal income tax if he or she has provisional income above a
specified threshold ($25,000 for an individual tax filer; $32,000 for a married couple filing
jointly). Provisional income is defined as total income from all sources recognized for tax
purposes plus certain otherwise tax-exempt income, including half of Social Security benefits.
Revenues from this “first tier” of taxation are credited to the Social Security trust funds. In 2022,
the trust funds received $48.6 billion (4.0% of total trust fund income) from this provision.23
Next, as part of the Omnibus Budget Reconciliation Act of 1993 (P.L. 103-66), Congress made up
to 85% of a person’s Social Security benefits subject to the federal income tax if he or she has
provisional income above a second higher threshold ($34,000 for an individual tax filer; $44,000
for a married couple filing jointly). Revenues from this “second tier” of taxation are credited to
the Medicare HI trust fund. In 2022, the HI trust fund received $32.8 billion (8.3% of total trust
fund income) from this provision.24
Under current law, the income thresholds are fixed (i.e., they are not adjusted for inflation or
wage growth). Over time an increasing number of beneficiaries will be subject to the federal
income tax on benefits. The Congressional Budget Office (CBO) estimates that about half of
current Social Security beneficiaries are affected by the taxation of benefits. 25
Status of the Social Security Trust Funds
Projections by the Social Security Board of Trustees (the trustees) show that Social Security
expenditures will exceed tax revenues each year through the end of the 75-year valuation period
(2097).26 That is, Social Security will operate with annual cash-flow deficits as it has since 2010.
With interest income taken into account, Social Security maintained a total surplus (tax revenues
plus interest income exceeded expenditures) from 2010 through 2020. In 2021 and 2022, total
cost exceeded total revenues. The trustees project that total costs will exceed total revenues for all
remaining years in the projection period; the last instance of costs exceeding revenues was in
1982. The trustees project that the trust funds will have a positive balance (asset reserves) until

22 SSA, Trust Fund FAQs, at http://www.socialsecurity.gov/OACT/ProgData/fundFAQ.html.
23 The 2023 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal
Disability Insurance Trust Funds, March 31, 2023, at https://www.ssa.gov/OACT/TR/2023/tr2023.pdf (hereinafter
cited as 2023 Annual Report of the Social Security Board of Trustees). See Table III.A3, p. 36.
24 Social Security and Medicare Boards of Trustees, Status of the Social Security and Medicare Programs: A Summary
of the 2023 Annual Reports
, March 31, 2023, p. 5, at https://www.ssa.gov/OACT/TRSUM/tr23summary.pdf.
25 Unpublished data from CBO showing projections for tax year 2014. For more information, see CRS Report
RL32552, Social Security: Taxation of Benefits, by Paul S. Davies. A 2015 SSA analysis projected that the share will
continue to rise, with more than 56% of Social Security beneficiary families owing income tax on their Social Security
benefits in 2050 (Income Taxes on Social Security Benefits,” SSA, Issue Paper no. 2015-02, December 2015, at
https://www.ssa.gov/policy/docs/issuepapers/ip2015-02.html).
26 Projections cited in this CRS report are based on the intermediate (or “best estimate”) set of assumptions in the 2023
Annual Report of the Social Security Board of Trustees and refer to the OASI and DI trust funds on a combined basis.
For more information on the trust fund projections, see CRS Report RL33028, Social Security: The Trust Funds.
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2034, allowing Social Security benefits scheduled under current law to be paid in full and on time
until then.27
Over the long run, the trustees project that the 75-year actuarial deficit for the trust funds is equal
to 3.61% of taxable payroll.28 Stated a different way, the trustees project that Social Security
expenditures will exceed income by at least 20% over the next 75 years. For illustration purposes,
the trustees point out that the following changes would be needed for the trust funds to remain
solvent throughout the 75-year projection period: (1) an immediate 3.44-percentage-point
increase in the payroll tax rate (from 12.40% to 15.84%);29 or (2) an immediate 21.3% reduction
in benefits for all current and future beneficiaries; or (3) some combination of these approaches.
Social Security’s projected long-range funding shortfall is attributed primarily to demographic
factors (such as lower fertility rates and increasing life expectancy) as well as program design
features (such as a wage-indexed benefit formula and annual COLAs).30
At the end of 2022, the trust funds were credited with asset reserves of $2.83 trillion. With the
projection that the program’s total costs will continue to exceed total revenue throughout the
projection period, the trustees estimated that the value of asset reserves held in the trust funds
peaked at the end of 2020. Thus, the trust fund balance began to decline in 2021 and is projected
to continue declining until exhaustion in 2034. The trust fund ratio can be used to put the size of
the trust fund balance into perspective. This ratio represents trust fund assets at the beginning of a
year as a percentage of cost for the year. In 2023, for example, the projected trust fund ratio is
204%. (Assets held by the trust funds at the beginning of 2023 are projected to be 2.04 times
greater than the cost of the program in 2023.) The trustees project that the trust fund ratio will
decline to 96% in 2029 and reach zero at the point of trust fund reserve depletion in 2034.31
After depletion of trust fund reserves, the program would continue to operate with incoming
Social Security receipts; those receipts are projected to be sufficient to pay 80% of benefits
scheduled under current law in 2034, declining to 74% of scheduled benefits in 2097.32 Under
current law, Social Security does not have authority to borrow from the general fund of the
Treasury. Therefore, the program cannot draw upon general revenues to make up the difference
between incoming receipts and benefit payments when the program no longer has asset reserves
to draw upon. The Social Security Act does not specify what would happen to the payment of

27 Separately, the OASI fund is projected to have asset reserves until 2033, at which point continuing income to the
fund would be sufficient to pay 77% of OASI scheduled benefits. The DI fund is projected to have asset reserves
throughout the 75-year projection period(2023 Annual Report of the Social Security Board of Trustees, pp. 4-5).
28 2023 Annual Report of the Social Security Board of Trustees, p. 4. The Congressional Budget Office (CBO) also
publishes long-range projections for the Social Security trust funds. CBO projects that the trust funds will have a
positive balance (asset reserves) until 2033 and a 75-year actuarial deficit equal to 4.9% of taxable payroll. See CBO,
2022 Long-Term Projections for Social Security, December 16, 2022, p. 4, https://www.cbo.gov/system/files/2022-12/
58564-Social-Security.pdf and https://www.cbo.gov/publication/57342 (Table B-5). Taxable payroll refers to total
earnings in the economy that are subject to Social Security payroll taxes (with some adjustments). Program costs and
income are evaluated as a percentage of taxable payroll because Social Security payroll taxes are the primary source of
funding for the program.
29 The estimated payroll tax increase needed to maintain solvency differs from the actuarial deficit for two reasons.
First, the estimated tax increase projects zero trust funds reserves at the end of the projection period whereas the
actuarial deficit assumes trust fund reserves equal to one year’s cost. Second, the estimated payroll tax increase needed
to maintain solvency does not reflect behavioral response changes to tax rate changes.
30 A wage-indexed benefit formula allows initial monthly benefits for successive groups of new beneficiaries to keep
pace with increases in the standard of living. An annual COLA for benefits already in payment allows benefits for
current beneficiaries to keep pace with increases in prices.
31 2023 Annual Report of the Social Security Board of Trustees, Table IV.A3, pp. 49-50.
32 Social Security and Medicare Boards of Trustees, Status of the Social Security and Medicare Programs: A Summary
of the 2023 Annual Reports
, March 31, 2023, p. 8.
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benefits scheduled under current law in the event of Social Security trust fund depletion. Two
possible scenarios are (1) the payment of full monthly benefits on a delayed basis or (2) the
payment of partial (reduced) monthly benefits on time.
Social Security Cash-Flow Surpluses and Deficits
From 1984 to 2009, Social Security generated surplus tax revenues (i.e., the program operated
with annual cash-flow surpluses). Surplus tax revenues and interest income credited to the trust
funds in the form of federal government securities contributed to a growing trust fund balance.
Beginning in 2010, however, the program began operating with annual cash-flow deficits, and the
trustees project that Social Security tax revenues will remain below program expenditures each
year throughout the 75-year projection period (2023-2097).
When Social Security operates with a cash-flow deficit, the trust funds redeem more federal
securities than the amount of current Social Security tax revenues, relying in part on trust fund
asset reserves to pay benefits and administrative expenses. Because the federal securities held by
the trust funds are redeemed with general revenues, this results in increased spending for Social
Security from the general fund. When there are no surplus governmental receipts, the federal
government must raise the necessary funds by increasing taxes or other income; reducing other
spending; borrowing from the public; or some combination of these measures.
With respect to the program’s reliance on general revenues, it is important to note that Social
Security does not have authority to borrow from the general fund of the Treasury under current
law. Rather, the program relies on revenues collected for Social Security purposes in previous
years that were used by the federal government at the time for other (non-Social Security)
spending needs and interest income earned on trust fund investments. The program draws on
those previously collected Social Security tax revenues and interest income (trust fund asset
reserves) when current Social Security tax revenues fall below current program expenditures.
Social Security Reform Debate
Social Security reform is an issue of ongoing interest to lawmakers. For some advocates of
reform, the focus is on restoring long-range solvency to the trust funds. For others, the focus is on
constraining the projected growth in spending for entitlement programs—including Social
Security, Medicare, and Medicaid—in the context of broader efforts to reduce growing federal
budget deficits. The Social Security reform debate reflects other policy objectives as well, such as
improving the adequacy and equity of benefits,33 and different philosophical views about the role
of the Social Security program and the federal government in providing retirement income. Over
the years, the debate has reflected two fundamentally different approaches to reform. The
traditional approach would maintain the current structure of the program (i.e., a defined benefit
system funded on a pay-as-you-go basis) by making relatively modest changes, such as an
increase in the retirement age or an increase in the taxable wage base. In general, the goal of this
approach is to preserve the social insurance nature of the program. In contrast, the personal
savings and investment approach
would redesign the 1930s-era program to create a prefunded
system in which benefits would be based partially or entirely on personal savings and

33 Traditionally, one of the principles governing the Social Security program has been balancing the competing goals of
social adequacy and individual equity. The social adequacy goal takes into account factors beyond a person’s payroll
tax contributions in determining the appropriate level of benefits (factors such as providing a minimum standard of
living). The individual equity goal takes into account the degree to which a person’s benefit level reflects his or her
payroll tax contributions to the system.
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investments. More recently, the Social Security debate has reflected a shift in focus among some
lawmakers away from efforts to scale back the program toward proposals that would expand
Social Security benefits to address concerns about the adequacy of benefits and, more broadly,
retirement income security.
Social Security Benefit Rules
Social Security provides monthly cash benefits to retired or disabled workers and to the family
members of retired, disabled, or deceased workers. Benefits are designed to replace part of a
worker’s earnings. As such, a worker’s benefit is based on his or her career-average earnings in
covered employment (i.e., earnings up to the annual taxable limit) and a progressive benefit
formula that is intended to provide adequate benefit levels for workers with low career-average
earnings. This section explains how the worker’s primary insurance amount (PIA) is computed.
The worker’s PIA is his or her monthly benefit amount payable at the full retirement age (FRA);
it also determines the amount of monthly benefits payable to family members based on the
worker’s record. This section also covers the basic eligibility requirements for different types of
Social Security benefits.
Full Retirement Age
Social Security retirement benefits are first payable to retired workers at the age of 62, subject to
a permanent reduction for “early retirement.” The age at which full (unreduced) retirement
benefits are first payable is the FRA.34 For most of the program’s history, the FRA was 65. As part
of the Social Security Amendments of 1983 (P.L. 98-21), Congress raised the FRA from 65 to 67.
The 1983 law established a gradual phase-in from 65 to 67 over a 22-year period (2000 to 2022).
Specifically, workers born in 1938 or later are affected by the increase in the FRA (i.e., workers
who become eligible for retirement benefits at age 62 in 2000 or later). The increase in the FRA
has been fully phased in for workers born in 1960 or later (i.e., workers who become eligible for
retirement benefits at age 62 in 2022 or later). Table 1 shows the scheduled increase in the FRA
being phased in under current law.35
Table 1. Increase in the Full Retirement Age Scheduled Under Current Law
Year of Birth
Full Retirement Age
1938
65 and 2 months
1939
65 and 4 months
1940
65 and 6 months
1941
65 and 8 months
1942
65 and 10 months
1943 to 1954
66
1955
66 and 2 months
1956
66 and 4 months
1957
66 and 6 months

34 The full retirement age is also called the normal retirement age (NRA).
35 For more information, see CRS Report R44670, The Social Security Retirement Age.
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Year of Birth
Full Retirement Age
1958
66 and 8 months
1959
66 and 10 months
1960 or later
67
Source: Social Security Administration, Office of the Chief Actuary, Normal Retirement Age, at
https://www.ssa.gov/OACT/ProgData/nra.html.
Computation of a Social Security Retired-Worker Benefit
Among other requirements, a worker generally needs 40 earnings credits (10 years of Social
Security-covered employment) to be eligible for a Social Security retired-worker benefit.36 A
worker’s initial monthly benefit is based on his or her highest 35 years of earnings in covered
employment, which are indexed to historical wage growth.37 The highest 35 years of indexed
earnings are summed, and the total is divided by 420 months (35 years x 12 months). The
resulting amount is the worker’s average indexed monthly earnings (AIME). If a worker has
fewer than 35 years of earnings in covered employment, years with no earnings are entered as
zeroes in the computation, resulting in a lower AIME and therefore a lower monthly benefit.
The worker’s PIA is determined by applying a formula to the AIME as shown in Table 2. First,
the AIME is sectioned into three brackets (or segments) of earnings, which are divided by dollar
amounts known as bend points. In 2023, the bend points are $1,115 and $6,721.38 Three different
replacement factors—90%, 32%, and 15%—are applied to the three brackets of AIME.39 The
three products derived from multiplying each replacement factor and bracket of AIME are added
together. For workers who become eligible for retirement benefits (i.e., those who attain age 62),
become disabled, or die in 2023, the PIA is determined as shown in the example in Table 2.
Table 2. Computation of a Worker’s Primary Insurance Amount (PIA) in 2023
Based on an Illustrative AIME of $7,000
Replacement
PIA for Worker with an Illustrative
Factors
Three Brackets of AIME
AIME of $7,000
90%
first $1,115 of AIME, plus
90% x $1,115 = $1,003.50
32%
AIME over $1,115 and through $6,721,
32% x $5,606 = $1,793.92
plus
15%
AIME over $6,721
15% x $279 = $41.85
Total: Worker’s PIA (rounded down to lower dime)
$2,839.20
Source: Congressional Research Service.

36 A worker may earn up to four earnings credits per calendar year. In 2023, a worker earns one credit for each $1,640
of covered earnings, up to a maximum of four credits for covered earnings of $6,560 or more. Earnings credits are also
called quarters of coverage.
37 Earnings through the age of 60 are indexed; earnings thereafter are counted at nominal value. Indexing past earnings
brings them up to near-current wage levels.
38 The bend points in the benefit formula are indexed to average wage growth under current law.
39 The replacement factors in the benefit formula are fixed under current law.
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Generally, a worker’s PIA increases each year from the year of eligibility (at age 62) to the year
of benefit receipt based on the Social Security COLA.40 In addition, Social Security benefits
already in payment generally increase each year based on the COLA.
Adjustments to Benefits Claimed Before or After the FRA
A worker’s initial monthly benefit is equal to his or her PIA if he or she begins receiving benefits
at the FRA. A worker’s initial monthly benefit will be less than his or her PIA if he or she begins
receiving benefits before the FRA, and it will be greater than his or her PIA if he or she begins
receiving benefits after the FRA.
A retired-worker benefit is payable as early as the age of 62, however, the benefit will be
permanently reduced to reflect the longer expected period of benefit receipt. Retired-worker
benefits are reduced by five-ninths of 1% (or 0.0056) of the worker’s PIA for each month of
entitlement before the FRA up to 36 months, for a reduction of about 6.7% per year. For each
month of benefit entitlement before the FRA in excess of 36 months, retirement benefits are
reduced by five-twelfths of 1% (or 0.0042), for a reduction of 5% per year.41
Workers who delay filing for benefits until after the FRA receive a delayed retirement credit
(DRC). The DRC applies to the period that begins with the month the worker attains the FRA and
ends with the month before he or she attains the age of 70. The DRC is 8% per year for
workers born in 1943 or later (i.e., workers who attain the age of 62 in 2005 or later).
The actuarial adjustment to benefits based on claiming age is intended to provide the worker with
roughly the same total lifetime benefits, regardless of the age at which he or she begins receiving
benefits (based on average life expectancy). Therefore, if a worker claims benefits before the
FRA, his or her monthly benefit is reduced to take into account the longer expected period of
benefit receipt. For a worker whose FRA is 66, the decision to claim benefits at the age of 62
results in a 25% reduction in his or her PIA. For a worker whose FRA is 67, the decision to claim
benefits at the age of 62 results in a 30% reduction in his or her PIA. Similarly, if a worker claims
benefits after the FRA, his or her monthly benefit is increased to take into account the shorter
expected period of benefit receipt.42
Other Adjustments to Benefits (Including Government Pension Offset and
Windfall Elimination Provision)

Other benefit adjustments may apply, such as those related to simultaneous entitlement to more
than one type of Social Security benefit. Under the dual entitlement rule, for example, a Social
Security spousal benefit is reduced if the person also receives a Social Security benefit based on

40 Automatic COLAs went into effect in 1975. Since that time, there have been three years when no COLA was payable
(2010, 2011, and 2016). For more information, see CRS Report 94-803, Social Security: Cost-of-Living Adjustments.
41 The early retirement reduction for spousal benefits is different. Spousal benefits claimed before the FRA are reduced
by 25/36 of 1% (or 0.0069) for each month of entitlement before the FRA, up to 36 months, and by five-twelfths of 1%
(or 0.0042) for each month of entitlement before the FRA in excess of 36 months. The reduction is applied to the base
spousal benefit, which is 50% of the worker’s PIA. The spousal benefit is not reduced for entitlement before the FRA if
the spouse is caring for a qualifying child. The early retirement reduction also differs for widow(er)’s benefits. The
maximum reduction for widow(er)’s benefits claimed before the FRA is equal to 28.5% of the deceased worker’s PIA.
Alternatively, if a widow(er) claims benefits at the FRA, his or her benefits are reduced if the deceased worker claimed
benefits before the FRA and therefore was receiving a reduced benefit. Under the widow(er)’s limit provision, the
widow(er)’s benefit is limited to the higher of (1) the benefit the deceased worker would be receiving if he or she were
still alive or (2) 82.5% of the deceased worker’s PIA. In this case, the maximum reduction applied to the widow(er)’s
benefit is equal to 17.5% of the deceased worker’s PIA.
42 For more information, see CRS Report R43542, How Social Security Benefits Are Computed: In Brief.
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his or her own work in covered employment (i.e., a retired-worker or disabled-worker benefit).43
Similarly, under the government pension offset (GPO), a Social Security spousal benefit is
reduced if the person also receives a pension based on his or her own work in noncovered
employment.
Under the windfall elimination provision (WEP), a modified benefit formula is used to compute a
worker’s Social Security benefit when he or she also receives a pension from noncovered
employment. The modified formula results in a lower initial monthly benefit compared to the
regular benefit formula.44 Under the retirement earnings test (RET), a person’s Social Security
benefit is subject to withholding when he or she is below the FRA and has wage or salary income
above an annual dollar threshold (i.e., above an annual exempt amount).45 Under the Social
Security maximum family benefit rules, benefits payable to each family member (with the
exception of the worker) are subject to reduction when total benefits payable to the family based
on the worker’s record exceed a specified limit.
Disabled-Worker Benefit
For Social Security disability benefits, “disability” is defined as the inability to engage in
substantial gainful activity (SGA) by reason of a medically determinable physical or mental
impairment that is expected to last for at least 12 months or result in death. Generally, the worker
must be unable to do any kind of substantial work that exists in the national economy, taking into
account age, education, and work experience. As noted previously, a worker generally needs 40
earnings credits to qualify for a Social Security retired-worker benefit. A worker under the age of
62 can qualify for a Social Security disabled-worker benefit with fewer earnings credits. The
number of earnings credits needed varies, depending on the age of the worker when he or she
became disabled; however, a minimum of six earnings credits is needed. Similarly, while the
worker’s highest 35 years of earnings are used to compute a retired-worker benefit, fewer years of
earnings may be used to compute a disabled-worker benefit.46 Because a disabled worker’s
benefit is not reduced for entitlement before the FRA, a disabled worker’s benefit is equal to his
or her PIA.47
Benefits for the Worker’s Family Members
Although the majority of Social Security beneficiaries are retired or disabled workers, 9.8 million
beneficiaries (14.7% of the total) are the dependents and survivors of retired, disabled, or
deceased workers.48
Social Security benefits are payable to the spouse, divorced spouse, or child of a retired or
disabled worker. Benefits are also payable to the widow(er), divorced widow(er), child, or parent

43 For more information, see CRS In Focus IF10738, Social Security Dual Entitlement.
44 The WEP differs from other types of benefit adjustments in that it involves an alternative PIA formula. For more
information, see CRS In Focus IF10203, Social Security: The Windfall Elimination Provision (WEP) and the
Government Pension Offset (GPO)
.
45 For more information, see SSA, Exempt Amounts Under the Earnings Test, at https://www.ssa.gov/OACT/COLA/
rtea.html.
46 For more information, see CRS Report R43370, Social Security Disability Insurance (SSDI): Becoming Insured,
Calculating Benefit Payments, and the Effect of Dropout Year Provisions
.
47 For more information, see CRS Report R44948, Social Security Disability Insurance (SSDI) and Supplemental
Security Income (SSI): Eligibility, Benefits, and Financing
.
48 SSA, Monthly Statistical Snapshot, February 2023, Table 2. See the latest edition of the Monthly Statistical Snapshot
at http://www.socialsecurity.gov/policy/docs/quickfacts/stat_snapshot/index.html.
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of a deceased worker. In addition, mother’s or father’s benefits are payable to a young widow(er)
who is caring for a deceased worker’s child; the child must be under the age of 16 or disabled,
and the child must be entitled to benefits.49 Benefits payable to family members are equal to a
specified percentage of the worker’s PIA, subject to a maximum family benefit. For example, the
spouse of a retired worker may receive up to 50% of the retired worker’s PIA, and the widow(er)
of a deceased worker may receive up to 100% of the deceased worker’s PIA. Benefits payable to
family members may be subject to adjustments based on the person’s age at entitlement, receipt
of a Social Security benefit based on his or her own work record, and other factors.
Table 3 provides a summary of Social Security benefits payable to the family members of a
retired, disabled, or deceased worker. It includes the basic eligibility requirements and basic
benefit amounts before any applicable adjustments (such as for the maximum family benefit).
Maximum Family Benefit
The total amount of Social Security benefits payable to a family based on a retired, disabled, or
deceased worker’s record is capped by the maximum family benefit. The family maximum cannot
be exceeded, regardless of the number of beneficiaries entitled to benefits on the worker’s
record.50 If the sum of all benefits payable on the worker’s record exceeds the family maximum,
the benefit payable to each dependent or survivor is reduced in equal proportion to bring the total
amount of benefits payable to the family within the limit. In the case of a retired or deceased
worker
, the maximum family benefit is determined by a formula and varies from 150% to 188%
of the worker’s PIA. For the family of a worker who attains the age of 62 in 2023, or dies in 2023
before attaining the age of 62, the total amount of benefits payable to the family is limited to
• 150% of the first $1,425 of the worker’s PIA, plus
• 272% of the worker’s PIA over $1,425 and through $2,056, plus
• 134% of the worker’s PIA over $2,056 and through $2,682, plus
• 175% of the worker’s PIA over $2,682.51
The dollar amounts in the maximum family benefit formula ($1,425 / $2,056 / $2,682 in 2023)
are indexed to average wage growth, as in the regular benefit formula. In the case of a disabled
worker
, the maximum family benefit is equal to 85% of the worker’s AIME; however, the family
maximum cannot be less than 100% or more than 150% of the worker’s PIA.52

49 To receive mother’s/father’s benefits, the person must be unmarried and must not be entitled to widow(er)’s benefits.
50 Social Security Act, Title II, §203.
51 SSA, Formula for Family Maximum Benefit, at https://www.socialsecurity.gov/OACT/COLA/familymax.html.
52 Benefits for a divorced beneficiary are not taken into account for purposes of the family maximum. See SSA,
Program Operations Manual System (POMS), Section RS 00615.682, “Family Benefits Where a Divorced Spouse or a
Surviving Divorced Spouse is Entitled,” at https://secure.ssa.gov/apps10/poms.nsf/lnx/0300615682.
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Table 3. Social Security Benefits for the Worker’s Family Members
Basic Benefit Amount
Before Any Applicable
Basis for Entitlement
Basic Eligibility Requirements
Adjustments
Spouse
At least age 62, or
50% of worker’s PIA
Any age if caring for the child of a
retired or disabled worker. The child
must be under the age of 16 or
disabled, and the child must be entitled
to benefits.
Divorced Spouse
At least age 62
50% of worker’s PIA
(The divorced individual must have
Must be unmarried
been married to the worker for at
Note: A divorced spouse who is under
least 10 years before the divorce
the age of 62 is not eligible for spousal
became final.)
benefits even if he/she is caring for the
child of a retired or disabled worker.
Aged Widow(er) &
At least age 60
100% of worker’s PIAa
Divorced Aged Widow(er)
Must be unmarried (unless the
(The divorced individual must have
marriage occurred after attainment of
been married to the worker for at
age 60)
least 10 years before the divorce
became final.)
Disabled Widow(er) &
At least age 50 (ages 50-59)
71.5% of worker’s PIAa
Divorced Disabled Widow(er)
Must be unmarried (unless the
Disabled widow(er)s and
(The divorced individual must have
marriage occurred after attainment of
divorced disabled widow(er)s
been married to the worker for at
age 50)
ages 50-59 receive the same
least 10 years before the divorce
The qualifying disability must have
rate of reduction set for
became final.)
occurred
widow(er)s at age 60 (28.5% of
the worker’s PIA), regardless of
(1) before or within seven years of the their age at the time of
worker’s death;
entitlement.
(2) within seven years of having been
previously entitled to benefits on the
worker’s record as a widow(er) with a
child in his or her care; or
(3) within seven years of having been
previously entitled to benefits as a
disabled widow(er) that ended
because the qualifying disability ended
(whichever is later).
Widowed Mother or Father
Surviving spouse of any age who is
75% of deceased worker’s PIA
(Young Widow(er) with Child)
caring for the deceased worker’s child.
The child must be under the age of 16
or disabled, and the child must be
entitled to benefits.
Must be unmarried
Must not be entitled to widow(er)’s
benefits
Note: In the case of a surviving
divorced parent, the child must be his
or her natural or legally adopted child.
The 10-year marriage requirement
that applies to divorced spouses under
other circumstances does not apply.
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Basic Benefit Amount
Before Any Applicable
Basis for Entitlement
Basic Eligibility Requirements
Adjustments
Child
A dependent, unmarried child of a
50% of worker’s PIA for child of
retired, disabled, or deceased worker. a retired or disabled worker
The child must be
75% of deceased worker’s PIA
(1) under the age of 18;
for child of a deceased worker
(2) a ful -time elementary or
secondary student under the age of
19; or
(3) a disabled person aged 18 or older
whose disability began before age 22.
The term child refers to a biological
child, adopted child, stepchild, or in
some cases grandchild, of the worker.
Dependent Parent of a
At least age 62
82.5% of deceased worker’s PIA
Deceased Worker
Must not have married since the
if one parent is entitled to
worker’s death
benefits
Must have been receiving at least
75% of deceased worker’s PIA
one-half of his or her support from
(for each parent) if two parents
the worker at the time of the
are entitled to benefits
worker’s death (or, if the worker had
a period of disability that continued
until death, at the beginning of the
period of disability).
Source: Congressional Research Service.
Notes: The family relationship requirement for entitlement to benefits based on the worker’s record may be
met in alternative ways. For example, the relationship requirement can be met if, under state law as interpreted
by the courts of the state, the applicant would be able to inherit a share of the worker’s personal property if the
worker were to die without leaving a wil . The table shows the minimum eligibility age for each type of benefit
(i.e., the age at which benefits are first payable on a reduced basis). The maximum family benefit may apply,
reducing the benefit payable to each family member (excluding the worker) on a proportional basis. In the case
of a retired or deceased worker, the maximum family benefit varies from 150% to 188% of the worker’s PIA. In
the case of a disabled worker, the maximum family benefit is equal to the lesser of 85% of the worker’s AIME or
150% of the worker’s PIA, but no less than 100% of the worker’s PIA. Other benefit adjustments may apply.
a. A worker’s claiming age affects the widow(er) benefit. If a worker was receiving a reduced benefit due to
claiming benefits before the ful retirement age, the widow(er) benefit cannot exceed the worker’s reduced
benefit amount. Alternatively, if a worker was entitled (or would have been entitled) to a higher benefit due
to claiming benefits after the ful retirement age, the worker’s PIA—adjusted to take into account the
delayed retirement credit—is used to compute the widow(er) benefit, thereby increasing the benefit.
Social Security Beneficiaries
In February 2023, there were approximately 66.2 million Social Security beneficiaries. As shown
in Table 4, retired-worker and disabled-worker beneficiaries accounted for 85.3% of the
beneficiary population. The largest single category of beneficiaries was retired workers (73.9%),
with an average monthly benefit of $1,782. The second-largest category was disabled workers
(11.4%), with an average monthly benefit of $1,483. Family members of retired, disabled, or
deceased workers accounted for the remainder of the beneficiary population (14.7%).53 Table 4
provides a breakdown of the Social Security beneficiary population in February 2023.

53 Percentages do not sum to 100% due to rounding.
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Table 4. Social Security Beneficiaries, by Type, February 2023
Total Monthly
Number
Benefits
Average Monthly
Type of Beneficiary
(in thousands)
Percentage
(in millions)
Benefit
All beneficiaries
66,243
100.0
112,207
1,693.88
Old-Age and Survivors
Insurance

57,480
86.8
100,458
1,747.72
Retirement benefits
51,630
77.9
91,986
1,781.63
Retired workers
48,943
73.9
89,597
1,830.66
Spouses of retired
workers
1,998
3.0
1,797
899.20
Children of retired
workers
689
1.0
592
858.79
Survivor benefits
5,849
8.8
8,472
1,448.38
Children of
deceased workers
2,040
3.1
2,182
1,069.48
Widowed
mothers/fathers
105
0.2
128
1,218.60
Nondisabled
widow(er)s
3,491
5.3
5,971
1,710.46
Disabled widow(er)s
212
0.3
190
893.54
Parents of deceased
1
1
1,538.25
a
workers

Disability Insurance
8,763
13.2
11,749
1,340.70
Disabled workers
7,534
11.4
11,174
1,483.17
Spouses of disabled
workers
89
0.1
36
406.31
Children of disabled
workers
1,140
1.7
539
472.28
Source: Table reproduced from Social Security Administration, Monthly Statistical Snapshot, February 2023, Table
2. See the latest edition of the Monthly Statistical Snapshot at http://www.socialsecurity.gov/policy/docs/quickfacts/
stat_snapshot/index.html.
a. Indicates a value less than 0.05%.


Author Information

Emma K. Tatem
Barry F. Huston
Analyst in Social Policy
Analyst Social Policy


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Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan
shared staff to congressional committees and Members of Congress. It operates solely at the behest of and
under the direction of Congress. Information in a CRS Report should not be relied upon for purposes other
than public understanding of information that has been provided by CRS to Members of Congress in
connection with CRS’s institutional role. CRS Reports, as a work of the United States Government, are not
subject to copyright protection in the United States. Any CRS Report may be reproduced and distributed in
its entirety without permission from CRS. However, as a CRS Report may include copyrighted images or
material from a third party, you may need to obtain the permission of the copyright holder if you wish to
copy or otherwise use copyrighted material.

Congressional Research Service
R42035 · VERSION 43 · UPDATED
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