363 lines
No EOL
73 KiB
HTML
363 lines
No EOL
73 KiB
HTML
<!doctype html>
|
|
<html lang="en" class="no-js">
|
|
<head>
|
|
<meta charset="UTF-8" /><meta http-equiv="X-UA-Compatible" content="IE=edge,chrome=1" /><meta name="viewport" content="width=device-width, initial-scale=1" />
|
|
<title>Annual Statistical Supplement, 2023 - Social Security (Old-Age, Survivors, and Disability Insurance) Program Description and Legislative History</title>
|
|
<meta name="DCTERMS:dateCreated" content="2023" />
|
|
<meta name="DCTERMS:contentOffice" content="ORDP:ORES" />
|
|
<meta name="DCTERMS:contentOwner" content="publications@ssa.gov" />
|
|
<meta name="DCTERMS:coderOffice" content="ORDP:ORES:OD" />
|
|
<meta name="DCTERMS:coder" content="op.webmaster@ssa.gov" />
|
|
<meta name="DCTERMS:dateCertified" content="2025-01-01" />
|
|
<meta name="description" content="Social Security Administration Research, Statistics, and Policy Analysis" />
|
|
<meta property="og:site_name" content="Social Security Administration Research, Statistics, and Policy Analysis"/>
|
|
<link rel="stylesheet" href="/policy/styles/doc.css" />
|
|
<link rel="stylesheet" href="/policy/styles/global.css" />
|
|
<!-- SSA INTERNET HEAD SCRIPTS -->
|
|
<script src="https://code.jquery.com/jquery-3.7.1.min.js" integrity="sha256-/JqT3SQfawRcv/BIHPThkBvs0OEvtFFmqPF/lYI/Cxo=" crossorigin="anonymous"></script>
|
|
<script src="/framework/js/ssa.internet.head.js"></script>
|
|
|
|
<script>(window.BOOMR_mq=window.BOOMR_mq||[]).push(["addVar",{"rua.upush":"false","rua.cpush":"false","rua.upre":"false","rua.cpre":"false","rua.uprl":"false","rua.cprl":"false","rua.cprf":"false","rua.trans":"SJ-3a3bb884-f513-47e3-a86c-84bab05e21dc","rua.cook":"true","rua.ims":"false","rua.ufprl":"false","rua.cfprl":"false","rua.isuxp":"false","rua.texp":"norulematch","rua.ceh":"false","rua.ueh":"false","rua.ieh.st":"0"}]);</script>
|
|
<script>!function(e){var n="https://s.go-mpulse.net/boomerang/";if("False"=="True")e.BOOMR_config=e.BOOMR_config||{},e.BOOMR_config.PageParams=e.BOOMR_config.PageParams||{},e.BOOMR_config.PageParams.pci=!0,n="https://s2.go-mpulse.net/boomerang/";if(window.BOOMR_API_key="LERZW-HECFS-R8H4E-23UQ7-ERMQB",function(){function e(){if(!o){var e=document.createElement("script");e.id="boomr-scr-as",e.src=window.BOOMR.url,e.async=!0,i.parentNode.appendChild(e),o=!0}}function t(e){o=!0;var n,t,a,r,d=document,O=window;if(window.BOOMR.snippetMethod=e?"if":"i",t=function(e,n){var t=d.createElement("script");t.id=n||"boomr-if-as",t.src=window.BOOMR.url,BOOMR_lstart=(new Date).getTime(),e=e||d.body,e.appendChild(t)},!window.addEventListener&&window.attachEvent&&navigator.userAgent.match(/MSIE [67]\./))return window.BOOMR.snippetMethod="s",void t(i.parentNode,"boomr-async");a=document.createElement("IFRAME"),a.src="about:blank",a.title="",a.role="presentation",a.loading="eager",r=(a.frameElement||a).style,r.width=0,r.height=0,r.border=0,r.display="none",i.parentNode.appendChild(a);try{O=a.contentWindow,d=O.document.open()}catch(_){n=document.domain,a.src="javascript:var d=document.open();d.domain='"+n+"';void(0);",O=a.contentWindow,d=O.document.open()}if(n)d._boomrl=function(){this.domain=n,t()},d.write("<bo"+"dy onload='document._boomrl();'>");else if(O._boomrl=function(){t()},O.addEventListener)O.addEventListener("load",O._boomrl,!1);else if(O.attachEvent)O.attachEvent("onload",O._boomrl);d.close()}function a(e){window.BOOMR_onload=e&&e.timeStamp||(new Date).getTime()}if(!window.BOOMR||!window.BOOMR.version&&!window.BOOMR.snippetExecuted){window.BOOMR=window.BOOMR||{},window.BOOMR.snippetStart=(new Date).getTime(),window.BOOMR.snippetExecuted=!0,window.BOOMR.snippetVersion=12,window.BOOMR.url=n+"LERZW-HECFS-R8H4E-23UQ7-ERMQB";var i=document.currentScript||document.getElementsByTagName("script")[0],o=!1,r=document.createElement("link");if(r.relList&&"function"==typeof r.relList.supports&&r.relList.supports("preload")&&"as"in r)window.BOOMR.snippetMethod="p",r.href=window.BOOMR.url,r.rel="preload",r.as="script",r.addEventListener("load",e),r.addEventListener("error",function(){t(!0)}),setTimeout(function(){if(!o)t(!0)},3e3),BOOMR_lstart=(new Date).getTime(),i.parentNode.appendChild(r);else t(!1);if(window.addEventListener)window.addEventListener("load",a,!1);else if(window.attachEvent)window.attachEvent("onload",a)}}(),"".length>0)if(e&&"performance"in e&&e.performance&&"function"==typeof e.performance.setResourceTimingBufferSize)e.performance.setResourceTimingBufferSize();!function(){if(BOOMR=e.BOOMR||{},BOOMR.plugins=BOOMR.plugins||{},!BOOMR.plugins.AK){var n="false"=="true"?1:0,t="cookiepresent",a="eyd7g6aaiaaamjqacqdfqaaaabt3movv-f-c3d7ea859-clienttons-s.akamaihd.net",i="false"=="true"?2:1,o={"ak.v":"39","ak.cp":"1204614","ak.ai":parseInt("728289",10),"ak.ol":"0","ak.cr":3,"ak.ipv":6,"ak.proto":"h2","ak.rid":"9558a1b","ak.r":19138,"ak.a2":n,"ak.m":"dsca","ak.n":"essl","ak.bpcip":"2607:f378:40:6::","ak.cport":40604,"ak.gh":"23.60.168.61","ak.quicv":"","ak.tlsv":"tls1.3","ak.0rtt":"","ak.0rtt.ed":"","ak.csrc":"-","ak.acc":"","ak.t":"1739995829","ak.ak":"hOBiQwZUYzCg5VSAfCLimQ==iYpGAxfOJpah5WlMK9HB7maw276XAhdG7ygLRkvLz51F8ImkOdlNr1rjvJQ6vcl9pqwUQ0RTkOk92rE+x9UKRUUbGR6Xu1R55YT0bisJH1XnSERQfPkg3LXH4qrhP+osgqThQ5ozwFhpRa6/zdYFbzkePH2s2443Ignz7aFL7b35sRVPdfWPOhoL+4dY/hVvigyCHohzQQJYbziUEDkUqfbpsrpKhVv1OOl4YOZ3byzWnmwnBuu9YqJwWsmMZ+0v2SeW0aBZFgVsn8WilcPb40f/FR7jrOVQDJfsTObxKweOFPpPh2jgEpml46bnopYMj4VJ5Kg/camR8NWcRWwql4RsqpNts74E4MTyFIHoJnioCfzmiqR6CVAaTNiJp8DTmF/9Ar8KTSnaCr76WSg8VpiCSeAvFpnufqRkVaNBMk0=","ak.pv":"98","ak.dpoabenc":"","ak.tf":i};if(""!==t)o["ak.ruds"]=t;var r={i:!1,av:function(n){var t="http.initiator";if(n&&(!n[t]||"spa_hard"===n[t]))o["ak.feo"]=void 0!==e.aFeoApplied?1:0,BOOMR.addVar(o)},rv:function(){var e=["ak.bpcip","ak.cport","ak.cr","ak.csrc","ak.gh","ak.ipv","ak.m","ak.n","ak.ol","ak.proto","ak.quicv","ak.tlsv","ak.0rtt","ak.0rtt.ed","ak.r","ak.acc","ak.t","ak.tf"];BOOMR.removeVar(e)}};BOOMR.plugins.AK={akVars:o,akDNSPreFetchDomain:a,init:function(){if(!r.i){var e=BOOMR.subscribe;e("before_beacon",r.av,null,null),e("onbeacon",r.rv,null,null),r.i=!0}return this},is_complete:function(){return!0}}}}()}(window);</script></head>
|
|
<body>
|
|
<article>
|
|
<header>
|
|
<div id="hLogo"><a class="navLogo" href="/policy/index.html">Social Security</a><a class="navSearch" href="https://search.ssa.gov/search?affiliate=ssa">SEARCH</a></div>
|
|
<div id="hRedBar">
|
|
<div id="hDocInfo">
|
|
<h1>Annual Statistical Supplement, 2023</h1>
|
|
</div>
|
|
</div>
|
|
</header>
|
|
<nav>
|
|
<div id="breadcrumbs" itemscope itemtype="http://schema.org/BreadcrumbList">You are here: <span itemprop="itemListElement" itemscope itemtype="http://schema.org/ListItem"><a href="/" itemprop="item"><span itemprop="name">Social Security Administration</span></a><meta itemprop="position" content="1" /></span> > <span itemprop="itemListElement" itemscope itemtype="http://schema.org/ListItem"><a href="/policy/index.html" itemprop="item"><span itemprop="name">Research, Statistics & Policy Analysis</span></a><meta itemprop="position" content="2" /></span> > <span itemprop="itemListElement" itemscope itemtype="http://schema.org/ListItem"><a href="index.html" itemprop="item"><span itemprop="name">Annual Statistical Supplement, 2023</span></a><meta itemprop="position" content="3" /></span></div>
|
|
<div id="rspaUtil"><ul><li id="mail"><a class="js-ga-event" href="#" rel="nofollow" data-event="outbound-link" data-event-action="click" data-event-label="email-this">Email</a></li><li id="print"><a href="#" rel="nofollow">Save/Print</a></li></ul></div>
|
|
</nav>
|
|
<div class="innards">
|
|
<h1>Social Security <span class="nobr">(Old-Age,</span> Survivors, and Disability Insurance) Program Description and Legislative History</h1>
|
|
<p>The <span class="nobr">Old-Age,</span> Survivors, and Disability Insurance (<abbr class="spell">OASDI</abbr>) program provides monthly benefits to qualified retired and disabled workers and their dependents and to survivors of insured workers. Eligibility and benefit amounts are determined by the worker's contributions to Social Security. There is no means test to qualify for benefits, although there is a limit on income earned from working that applies to those under the full retirement age.</p>
|
|
<p>Social Security benefits are essential to the economic well-being of millions of individuals. At the end of December 2022, about 66 million people were receiving benefits that totaled approximately $111 billion for the month. Beneficiaries were paid approximately $1.2 trillion in calendar year 2022. During that year, approximately 180 million employees and self-employed workers, along with employers, contributed $1.1 trillion to the <abbr class="spell">OASDI</abbr> trust funds—through which contributions are credited and benefits are paid.</p>
|
|
<h2>Contributions and Trust Funds</h2>
|
|
<p>A person contributes to Social Security through either payroll taxes or self-employment taxes under the Federal Insurance Contributions Act (<abbr>FICA</abbr>) or the Self-Employment Contributions Act (<abbr>SECA</abbr>). Employers match the employee contribution, while self-employed workers pay an amount equal to the combined employer-employee contributions. (Self-employed workers receive a special tax deduction to ease the impact of paying the higher rate.) There is a maximum yearly amount of earnings subject to <abbr class="spell">OASDI</abbr> taxes—$160,200 in 2023. There is no upper limit on taxable earnings for Medicare Hospital Insurance. Employees whose earnings exceed the maximum taxable amount because they worked for more than one employer can receive refunds of excess <abbr>FICA</abbr> payments when they file their tax returns.</p>
|
|
<p>Taxes are allocated to three trust funds: the <span class="nobr">Old-Age</span> (retirement) and Survivors Insurance (<abbr class="spell">OASI</abbr>), the Disability Insurance (<abbr class="spell">DI</abbr>), and the Medicare Hospital Insurance (<abbr class="spell">HI</abbr>) Trust Funds. In addition to the taxes on <abbr>FICA</abbr>- and <abbr>SECA</abbr>-covered earnings, <abbr class="spell">OASI</abbr> and <abbr class="spell">DI</abbr> Trust Fund revenues include interest on trust fund securities, income from taxation of <abbr class="spell">OASI</abbr> and <abbr class="spell">DI</abbr> benefits, certain technical transfers, and gifts or bequests. By law, the <abbr class="spell">OASI</abbr> and <abbr class="spell">DI</abbr> Trust Funds may only be disbursed for</p>
|
|
<ul>
|
|
<li>monthly benefits for workers and their families,</li>
|
|
<li>vocational rehabilitation services for disabled beneficiaries,</li>
|
|
<li>administrative costs (currently less than 1 percent of expenditures), and</li>
|
|
<li>the <span class="nobr">lump-sum</span> death payment to eligible survivors.</li>
|
|
</ul>
|
|
<p>Revenue received from <abbr>FICA</abbr> and <abbr>SECA</abbr> payments is transferred to the <abbr>U.S.</abbr> Treasury. Revenue in excess of outlays is used to purchase special interest-bearing Treasury bonds. These securities remain assets of the trust funds until needed to cover Social Security costs.</p>
|
|
<h2>Structure and Organization</h2>
|
|
<p>The <abbr class="spell">OASDI</abbr> program is administered by the Social Security Administration (<abbr class="spell">SSA</abbr>), which became an independent agency in 1995. The commissioner of Social Security serves a <span class="nobr">6-year</span> term following appointment by the president and confirmation by the Senate. A bipartisan Social Security Advisory Board serves to review existing laws and policies, commission studies, and issue recommendations intended to anticipate changing circumstances. The president appoints three of the seven board members, and Congress appoints the other four members.</p>
|
|
<p>The Social Security Administration's organization is centrally managed, with a nationwide network of over 1,500 offices, which includes Field Offices, Regional Offices, Teleservice (800-Number) Centers, Processing Centers, Hearings Offices, and State Disability Determination Services. The organizational structure is designed to provide timely, accurate, and responsive service to the public. By integrating support services for all programs, the Agency enhances efficiency, avoids duplication of effort, and increases opportunities to provide <span class="nobr">one-stop</span> service to the public.</p>
|
|
<p>The Social Security Administration is headquartered in Baltimore, Maryland. Major headquarter components include the National Computer Center, which contains the mainframe computers that drive <abbr class="spell">SSA</abbr> systems; much of the executive staff for policy, programs, operations, and systems; and field support components.</p>
|
|
<p><abbr class="spell">SSA</abbr>'s field structure is divided into 10 geographic regions containing about 1,230 field offices in communities throughout the country. Field offices are the primary setting for personal contact with the public. Office sizes range from large urban offices with 50 or more employees to remote resident stations staffed by one or two individuals. Each region is headed by a regional commissioner and staffed with specialists to handle regional administrative tasks and to assist field offices with operational issues. In addition, there are teleservice centers providing national <span class="nobr">toll-free</span> service <span class="nobr">(1-800-772-1213).</span> Although physically located within the various regions, each teleservice center manages the public's Social Security business from throughout the nation using state-of-the-art communications systems.</p>
|
|
<p>Six processing centers handle a variety of workloads involving disability cases, international claimants, earnings records, and ongoing eligibility for Supplemental Security Income payments, as well as providing service and support for the field offices and answering calls to the <span class="nobr">toll-free</span> number. The Hearings Offices and Appeals Council make decisions on appeals of Social Security determinations in claims for benefits.</p>
|
|
<div class="textBox">Tables 2.F1–2.F11 provide <abbr class="spell">SSA</abbr> administrative data on the agency's national offices and workforce (<a href="2f1-2f3.html">Tables 2.F1–2.F3</a>), claims workloads (<a href="2f4-2f6.html">Tables 2.F4–2.F6</a>), delivery of services (<a href="2f7.html">Table 2.F7</a>), and hearings and appeals operations (<a href="2f8-2f11.html">Tables 2.F8–2.F11</a>). </div>
|
|
<h2>Program Changes</h2>
|
|
<p>Program changes occur through legislation or (in areas where authority is delegated to the commissioner) through regulation. Changes are often implemented in phases and may entail recurring annual changes beyond the initial enactment date or year of first implementation.</p>
|
|
<h2>Coverage and Financing</h2>
|
|
<p>In 2023, about 183 million people will work in employment or self-employment that is covered under the <abbr class="spell">OASDI</abbr> program. In recent years, coverage has become nearly universal for work performed in the United States, including American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, and the <abbr>U.S.</abbr> Virgin Islands. Approximately 94 percent of the <abbr>U.S.</abbr> workforce is covered by <abbr class="spell">OASDI</abbr>. Workers excluded from coverage fall into five major categories:</p>
|
|
<ol>
|
|
<li>Civilian federal employees hired before January 1, 1984;</li>
|
|
<li>Railroad workers (who are covered under the railroad retirement system, which is coordinated with Social Security);</li>
|
|
<li>Certain employees of state and local governments who are covered under their employers' retirement systems;</li>
|
|
<li>Domestic workers and farm workers whose earnings do not meet certain minimum requirements (workers in industry and commerce are covered regardless of the amount of earnings); and</li>
|
|
<li>Persons with very low net earnings from self-employment, generally under $400 annually.</li>
|
|
</ol>
|
|
<div class="textBox"><a href="2a1-2a7.html#table2.a1">Table 2.A1</a> outlines the history of coverage provisions and <a href="2a1-2a7.html#table2.a2">Table 2.A2</a> provides a history of provisions regarding noncontributory wage credits, mostly for military service.</div>
|
|
<p>For most employees, taxes are withheld from wages beginning with the first dollar earned. The exceptions are domestic employees, election workers, and agricultural workers. In 2023, a domestic employee must earn $2,600 from any single employer in a calendar year before <abbr>FICA</abbr> tax is withheld. Most election workers must earn $2,200 in 2023 before <abbr>FICA</abbr> tax is withheld. Most agricultural workers' wages are covered if the employer pays more than $2,500 in total wages in a year or if the individual worker earns over $150 in a year from a single employer.</p>
|
|
<p>Employees, their employers, and the self-employed pay taxes on earnings in covered employment up to an annual maximum taxable amount for <abbr class="spell">OASDI</abbr>. There is no upper limit on taxable earnings for Medicare Hospital Insurance (<abbr class="spell">HI</abbr>). The <abbr class="spell">OASDI</abbr> maximum taxable amount—$160,200 in 2023—is updated automatically each year in relation to increases in the national average annual wage. The current <abbr>FICA</abbr> tax rate applicable to both employees and employers is 6.2 percent for <abbr class="spell">OASDI</abbr> (5.015 percent for <abbr class="spell">OASI</abbr> and 1.185 percent for <abbr class="spell">DI</abbr>) and 1.45 percent for <abbr class="spell">HI</abbr>. Those who are self-employed pay the combined employee-employer rate of 12.4 percent for <abbr class="spell">OASDI</abbr> and 2.9 percent for <abbr class="spell">HI</abbr> under <abbr>SECA</abbr>.</p>
|
|
<div class="textBox">See <a href="2a1-2a7.html#table2.a3">Table 2.A3</a> for annual amounts of maximum taxable earnings and contribution rates. <a href="2a1-2a7.html#table2.a4">Table 2.A4</a> shows historical annual maximum amounts of contributions by employees and self-employed individuals.</div>
|
|
<p>Two deduction provisions reduce the <abbr>SECA</abbr> and income tax liability of self-employed persons. The intent of these provisions is to treat the self-employed in much the same manner as employees and employers are treated for purposes of <abbr>FICA</abbr> and income taxes. The first provision allows a deduction from net earnings from self-employment equal to the amount of net earnings before the deduction multiplied by <span class="nobr">one-half</span> the <abbr>SECA</abbr> tax rate. The effect of this deduction is intended to be analogous to the treatment of the <abbr>FICA</abbr> tax paid by the employer, which is disregarded as remuneration to the employee for <abbr>FICA</abbr> and income tax purposes. The second provision allows an income tax deduction equal to <span class="nobr">one-half</span> of the amount of the <abbr>SECA</abbr> tax paid, which is designed to reflect the income tax deductibility of the employer's share of the <abbr>FICA</abbr> tax.</p>
|
|
<div class="textBox"><a href="2a1-2a7.html#table2.a5">Table 2.A5</a> describes income tax credits for <span class="nobr">1984–1989</span> intended to cushion the impact of increases in <abbr>FICA</abbr> and <abbr>SECA</abbr> taxes enacted in 1983. The <abbr>SECA</abbr> tax credits were replaced, effective 1990, by the deduction provisions described above. <a href="2a1-2a7.html#table2.a6">Table 2.A6</a> outlines the history of provisions regarding appropriations from general revenues and interfund borrowing.</div>
|
|
<h2>Insured Status</h2>
|
|
<p>Workers attain insured status upon earning the minimum number of credits needed to become eligible for Social Security benefits. Insured status is also required to establish benefit eligibility for the worker's family members or survivors. The requirements for insured status differ depending on the type of benefit involved.</p>
|
|
<p>To determine a worker's insured status, Social Security looks at the amount of the worker's earnings (employment or self-employment) covered under Social Security and assigns “credits” for those earnings. These credits are called quarters of coverage. In 2023, one quarter of coverage (<abbr class="spell">QC</abbr>) is credited for each $1,640 in annual covered earnings, up to a maximum of four <abbr class="spell">QC</abbr>s for the year. Earnings of $6,560 or more in 2023 will give the worker the maximum four <abbr class="spell">QC</abbr>s for the year regardless of when the money is actually paid during the year. The amount of earnings required for a <abbr class="spell">QC</abbr> is adjusted automatically each year in proportion to increases in the average wage level.</p>
|
|
<h3>Fully Insured</h3>
|
|
<p>Eligibility for most types of benefits requires that the worker be fully insured. To be fully insured, a worker must have a number of <abbr class="spell">QC</abbr>s at least equal to the number of calendar years elapsing between the year in which the worker is age 21 (or 1950, if later) and the year in which he or she reaches age 62, becomes disabled, or dies—whichever occurs first. To compute “elapsed” years, Social Security does not count the year in which the worker attains age 21 (or 1950, if later) or the year in which the worker attains age 62, becomes disabled, or dies. If the resulting number of elapsed years is less than 6, the number is raised to 6. All workers need at least 6 <abbr class="spell">QC</abbr>s to be insured. Workers who reach age 62 in 1991 or later need 40 <abbr class="spell">QC</abbr>s to be fully insured. Special rules may apply if the worker had a prior period of disability. For workers who become disabled or die before age 62, the number of <abbr class="spell">QC</abbr>s needed for fully insured status depends on their age at the time of disability or death.</p>
|
|
<h3>Currently Insured</h3>
|
|
<p>Generally, if a worker dies before meeting fully insured status, benefits can still be paid to certain survivors if the worker was “currently insured” at the time of death. Survivors benefits are potentially payable to a worker's children and to a <span class="nobr">widow(er)</span> (or a surviving divorced <span class="nobr">ex-spouse)</span> who takes care of the deceased's child who is under age 16 or disabled and receiving Social Security benefits. To be currently insured, the worker must have earned 6 <abbr class="spell">QC</abbr>s in the 13 quarters ending with the quarter of death.</p>
|
|
<h3>Additional Insured Status Requirements for Noncitizens</h3>
|
|
<p>The Social Security Protection Act of 2004 (Public Law <span class="nobr">108-203)</span> was signed into law on March 2, 2004. Section 211 of this law imposed additional requirements for determining fully and currently insured status. These additional requirements affect noncitizen workers to whom Social Security did not assign a Social Security number (<abbr class="spell">SSN</abbr>) before January 1, 2004. A noncitizen worker must meet one of two additional requirements under section 211 in order for anyone to qualify for an <abbr class="spell">OASDI</abbr> benefit based on the earnings record of the noncitizen worker. These benefits include retirement or disability insurance benefits, dependents or survivors insurance benefits, the <span class="nobr">lump-sum</span> death payment, and Medicare based on end-stage renal disease.</p>
|
|
<p>For purposes of the above paragraph:</p>
|
|
<ol>
|
|
<li>The noncitizen worker must have been assigned an <abbr class="spell">SSN</abbr> for work purposes at any time on or after January 1, 2004; or</li>
|
|
<li>The noncitizen worker must have been admitted to the United States at any time as a nonimmigrant visitor for business <span class="nobr">(B-1)</span> or as an alien crewman <span class="nobr">(D-1</span> or <span class="nobr">D-2).</span></li>
|
|
</ol>
|
|
<p>If a noncitizen worker who was not assigned an <abbr class="spell">SSN</abbr> before January 1, 2004, does not meet one of these additional requirements, then he or she cannot be fully or currently insured. No one would qualify for <abbr class="spell">OASDI</abbr> benefits based on the noncitizen worker's earnings. This is true even if the noncitizen worker appears to have the required number of quarters of coverage (<abbr class="spell">QC</abbr>s) in accordance with the regular insured status provisions.</p>
|
|
<h3>Disability Insured</h3>
|
|
<p>To qualify for disability benefits, a nonblind worker must have recent work activity in addition to being fully insured. Under the requirement involving recent work, a nonblind worker who is age 31 or older must have earned at least 20 <abbr class="spell">QC</abbr>s during the 40-calendar-quarter period ending with the quarter in which the disability began. In general, workers disabled at ages 24 through 30 must have earned <abbr class="spell">QC</abbr>s in <span class="nobr">one-half</span> of the calendar quarters beginning with the quarter after the quarter in which age 21 is attained and ending with the calendar quarter in which the disability began. In this case, the quarters counted will go back before the quarter in which the worker turned age 21. Workers under age 24 need 6 <abbr class="spell">QC</abbr>s in the <span class="nobr">12-quarter</span> period ending with the quarter in which the disability began. Workers who qualify for benefits based on blindness need only be fully insured. Special rules may apply if the worker had a prior period of disability.</p>
|
|
<div class="textBox"><a href="2a1-2a7.html#table2.a7">Table 2.A7</a> summarizes the basic provisions concerning insured status.</div>
|
|
<h2>International Agreements</h2>
|
|
<p>The president is authorized to enter into international Social Security agreements (also called <i>totalization agreements</i>) to coordinate the <abbr>U.S.</abbr> <span class="nobr">Old-Age,</span> Survivors, and Disability Insurance (<abbr class="spell">OASDI</abbr>) program with comparable programs of other countries. The United States currently has Social Security agreements in effect with 30 countries.</p>
|
|
<p>International Social Security agreements have two main purposes. First, they eliminate dual Social Security coverage, the situation that occurs when a person from one country works in another country and is required to pay Social Security taxes to both countries on the same earnings. Each agreement includes rules that assign a worker's coverage to only one country.</p>
|
|
<p>The second goal of the agreement is to help fill gaps in benefit protection for workers who have divided their careers between the United States and another country. Such workers may fail to qualify for Social Security benefits from one or both countries because they have not worked long enough to meet minimum eligibility requirements. Under an agreement, these workers and their family members may qualify for a partial <abbr>U.S.</abbr> benefit based on <i>totalized</i> (that is, combined) credits from both countries. Similarly, workers may qualify for partial benefits from the foreign country on the basis of totalized credits.</p>
|
|
<div class="table">
|
|
<table class="textTable">
|
|
<caption>Social Security agreements and supplementary agreements, by effective dates</caption>
|
|
<colgroup span="1" style="width:15em"></colgroup>
|
|
<colgroup span="1" style="width:15em"></colgroup>
|
|
<thead>
|
|
<tr>
|
|
<th class="stubHeading" scope="col">Country</th>
|
|
<th scope="col">Effective dates</th>
|
|
</tr>
|
|
</thead>
|
|
<tbody>
|
|
<tr>
|
|
<th class="stub0" scope="row">Australia</th>
|
|
<td class="right">2002</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">Austria</th>
|
|
<td class="right">1991, 1997</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">Belgium</th>
|
|
<td class="right">1984</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">Brazil</th>
|
|
<td class="right">2018</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">Canada</th>
|
|
<td class="right">1984, 1997</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">Chile</th>
|
|
<td class="right">2001</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">Czechia</th>
|
|
<td class="right">2009, 2016</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">Denmark</th>
|
|
<td class="right">2008</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">Finland</th>
|
|
<td class="right">1992</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">France</th>
|
|
<td class="right">1988</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">Germany</th>
|
|
<td class="right">1979, 1988, 1996</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">Greece</th>
|
|
<td class="right">1994</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">Hungary</th>
|
|
<td class="right">2016</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">Iceland</th>
|
|
<td class="right">2019</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">Ireland</th>
|
|
<td class="right">1993</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">Italy</th>
|
|
<td class="right">1978, 1986</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">Japan</th>
|
|
<td class="right">2005</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">Korea (South)</th>
|
|
<td class="right">2001</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">Luxembourg</th>
|
|
<td class="right">1993</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">Netherlands</th>
|
|
<td class="right">1990, 2003</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">Norway</th>
|
|
<td class="right">1984, 2003</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">Poland</th>
|
|
<td class="right">2009</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">Portugal</th>
|
|
<td class="right">1989</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">Slovakia</th>
|
|
<td class="right">2014</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">Slovenia</th>
|
|
<td class="right">2019</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">Spain</th>
|
|
<td class="right">1988</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">Sweden</th>
|
|
<td class="right">1987, 2007</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">Switzerland</th>
|
|
<td class="right">1980, 1989, 2014</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">United Kingdom</th>
|
|
<td class="right">1985, 1997</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">Uruguay</th>
|
|
<td class="right">2018</td>
|
|
</tr>
|
|
</tbody>
|
|
<tfoot>
|
|
<tr>
|
|
<td class="noNotes" colspan="2"> </td>
|
|
</tr>
|
|
</tfoot>
|
|
</table>
|
|
</div>
|
|
<div class="textBox"><a href="5m.html#table5.m1">Table 5.M1</a> shows the number of beneficiaries receiving totalization payments and their average benefits.</div>
|
|
<h2>Benefit Computation and Automatic Adjustment Provisions</h2>
|
|
<h3><abbr class="spell">PIA</abbr> Computation</h3>
|
|
<p>The primary insurance amount (<abbr class="spell">PIA</abbr>) is the monthly benefit amount payable to the worker upon initial entitlement at full retirement age (<abbr class="spell">FRA</abbr>) or upon entitlement to unreduced disability benefits. (<abbr class="spell">FRA</abbr> is the age at which unreduced retirement benefits may be paid.) The <abbr class="spell">PIA</abbr> is also the base figure from which monthly benefit amounts are determined for early retirement, delayed retirement, and for the worker's family members or survivors. The <abbr class="spell">PIA</abbr> is derived from the worker's annual taxable earnings from covered wages and self-employment, averaged over a period that encompasses most of the worker's adult years. </p>
|
|
<p>For workers first eligible for benefits before 1979, <abbr class="spell">PIA</abbr> computations generally used the average monthly wage (<abbr class="spell">AMW</abbr>) as the earnings measure. The <abbr class="spell">AMW</abbr>-to-<abbr class="spell">PIA</abbr> conversion tables from 1959 to present are available at <a href="/OACT/ProgData/tableForm.html#OldLaw">https://www.ssa.gov/OACT/ProgData/tableForm.html#OldLaw</a>.</p>
|
|
<p>For workers first eligible for benefits in or after 1979, average indexed monthly earnings (<abbr>AIME</abbr>) have replaced the <abbr class="spell">AMW</abbr> as the earnings measure that typically applies. The <abbr class="spell">PIA</abbr> computation based on <abbr>AIME</abbr> currently involves the following three steps:</p>
|
|
<ol>
|
|
<li>Indexing of earnings. The worker's annual taxable earnings after 1950 are updated, or indexed, to reflect the general earnings level in the indexing year—the second calendar year before the year in which the worker is first eligible; that is, first reaches age 62, becomes disabled, or dies. Earnings in years after the indexing year are not indexed; they are counted at their actual value. A worker's earnings for a given year are indexed by multiplying them by the following ratio (indexing factor): the average wage in the national economy for the indexing year, divided by the corresponding average wage figure for the year to be indexed.
|
|
<div class="textBox"><a href="2a8-2a19.html#table2.a8">Table 2.A8</a> shows the indexing factors applicable to the earnings of workers who were first eligible from 2008 through 2023. <a href="2a8-2a19.html#table2.a9">Table 2.A9</a> shows indexed earnings for workers first eligible from 2016 through 2023 who had maximum taxable earnings in each year after 1950. For a detailed description of an <abbr>AIME</abbr> computation, see <a href="apnd.html">Appendix D, “Computing a Retired-Worker Benefit.”</a></div>
|
|
</li>
|
|
<li>Determining <abbr>AIME</abbr>. The number of years used in the computation is determined by subtracting the number of dropout years from the number of elapsed years. Elapsed years are the full calendar years between age 21 (or 1950, if later) and the year of first eligibility. Years within an established period of disability may be excluded from elapsed years. Years with the lowest earnings are dropped out of the computation. There are 5 dropout years for retirement and survivor computations and for many disability insurance benefit computations; workers disabled before age 47 have 0 to 4 dropout years (<span class="nobr">one-fifth</span> the number of elapsed years). If the resulting number of computation years is less than 2, the number is automatically raised to 2. The number of years required for computing retirement benefits is 35 for workers who were born after 1928, unless it is lowered by an established period of disability.
|
|
<div class="topmargin025">The actual years used in the computation (the <i>computation years</i>) are the years of highest indexed earnings after 1950, including any years before age 22 or after age 61 as well as the year of disability or death. <abbr>AIME</abbr> is calculated as the sum of indexed earnings in the computation period, divided by the number of months in that period.</div>
|
|
<div class="textBox"><a href="2a8-2a19.html#table2.a10">Table 2.A10</a> provides a historical outline of provisions related to <abbr>AIME</abbr> and <abbr class="spell">AMW</abbr> and describes variations in the number of dropout years.</div>
|
|
</li>
|
|
<li>Computing the <abbr class="spell">PIA</abbr>. The computation involves several steps. The first step uses a formula that is weighted to provide a higher <abbr class="spell">PIA</abbr>-to-<abbr>AIME</abbr> ratio for workers with comparatively low earnings. The formula applies declining percentage conversion rates to three <abbr>AIME</abbr> brackets. For workers who reach age 62, become disabled, or die in 2023, the result of the formula is the sum of
|
|
<p class="indent2">90 percent of the first $1,115 of <abbr>AIME</abbr>, plus <br>32 percent of the next $5,606 of <abbr>AIME</abbr>, plus <br>15 percent of <abbr>AIME</abbr> over $6,721.</p>
|
|
<p>This computation is then increased by cost-of-living adjustments (<abbr>COLA</abbr>s) beginning with the payment for December of the first year of eligibility, which the beneficiary receives in January of the following year. The <abbr>COLA</abbr> for 2023 took effect in December 2022.</p>
|
|
<div class="textBox"><a href="2a8-2a19.html#table2.a11">Table 2.A11</a> shows the <abbr class="spell">PIA</abbr> formula and first applicable <abbr>COLA</abbr> for workers first eligible in 1979 or later.</div>
|
|
</li>
|
|
</ol>
|
|
<p>The dollar amounts defining the <abbr>AIME</abbr> brackets are referred to as <i>bend points</i>. Bend points (shown in <a href="2a8-2a19.html#table2.a11">Table 2.A11</a>) are updated automatically each year in proportion to increases in the national average wage level. This automatic adjustment ensures that benefit levels for successive generations of eligible workers will keep up with rising earnings levels, thereby assuring consistent rates of earnings replacement from one generation of beneficiaries to the next.</p>
|
|
<p>The bend points applicable to a worker depend on the year of eligibility (or death) rather than on the year benefits are first received. The year of eligibility for retirement benefits is the year the worker attains age 62. Thus, the formula for workers born in 1960 uses the 2022 bend points and the result is increased by annual <abbr>COLA</abbr>s beginning with the one taking effect in December 2022. Subsequent recomputations of the worker's benefit, including additional earnings not originally considered, delayed retirement credits, or additional <abbr>COLA</abbr> increases, all refer to the computation of the formula that originally applied on the basis of the year of eligibility. The <abbr class="spell">FRA</abbr> for workers born in 1960 is 67 years.</p>
|
|
<p><abbr class="spell">PIA</abbr> calculations are rounded to the next lower 10 cents at each computation step. After any applicable adjustments (such as those for early or delayed claiming), the result is generally rounded down to the next lower dollar (if not already a whole dollar) to establish the monthly benefit amount. In some less-common cases, further adjustments can result in a benefit amount that is not dollar-rounded.</p>
|
|
<p>A cost-of-living increase in benefits generally is established each year if the Consumer Price Index for Urban Wage Earners and Clerical Workers <span class="nobr">(<abbr class="spell">CPI</abbr>-W),</span> prepared by the Department of Labor, indicates an increase of at least 0.1 percent (after rounding) between two specified quarters. The arithmetical mean of the <span class="nobr"><abbr class="spell">CPI</abbr>-W</span> for July, August, and September in the year of determination is compared with the arithmetical mean of the <span class="nobr"><abbr class="spell">CPI</abbr>-W</span> for the later of (a) July, August, and September in the year in which the last effective cost-of-living increase was established or (b) the 3 months of the calendar quarter in which the effective month of the last general benefit increase occurred. The percentage increase in the <span class="nobr"><abbr class="spell">CPI</abbr>-W,</span> rounded to the nearest 0.1 percent, represents the size of the increase in benefits, effective in December of the year in which the determination is made.</p>
|
|
<p>Under certain conditions, depending on the size of the combined <abbr class="spell">OASDI</abbr> trust funds relative to estimated disbursements, the applicability and size of a cost-of-living adjustment may be determined under an alternative method, called the <i>stabilizer provision</i>. In no case, however, are benefits reduced below the level of benefits in the year of determination. Historically, this provision has never been triggered.</p>
|
|
<div class="textBox"><a href="2a8-2a19.html#table2.a18">Table 2.A18</a> presents a history of provisions relating to the automatic adjustment of benefits, including a description of the stabilizer provision. In addition, the table includes a summary history and description of provisions relating to the annual automatic adjustment of (1) the maximum amount of taxable and creditable earnings, (2) the dollar amount needed to establish a quarter of coverage, (3) the bend points defining the <abbr>AIME</abbr> brackets in the <abbr class="spell">PIA</abbr> formula and the <abbr class="spell">PIA</abbr> brackets in the maximum family benefit formula, and (4) the exempt amounts under the earnings (retirement) test. All of these adjustments are linked to increases in the level of the national average annual wage, rather than to increases in the <abbr class="spell">CPI</abbr>. <a href="2a8-2a19.html#table2.a19">Table 2.A19</a> illustrates the cumulative effect of statutory and automatic increases in benefits for workers who have been in benefit status over varying time periods.</div>
|
|
<h3>Alternative <abbr class="spell">PIA</abbr> Computation Provisions</h3>
|
|
<p><span class="h4">Special minimum <abbr class="spell">PIA</abbr>.</span> Workers with low earnings but steady attachment to the workforce over most of their adult years may qualify for monthly benefits based on the special minimum <abbr class="spell">PIA</abbr> computation. This computation does not depend on the worker's average earnings but on the number of coverage years—years in which the worker had earnings equal to or above a specified amount. The level of the special minimum <abbr class="spell">PIA</abbr> is the same for workers having the same number of coverage years, regardless of age or year of first eligibility. Increases in the special minimum <abbr class="spell">PIA</abbr> are linked to cost-of-living adjustments.</p>
|
|
<div class="textBox">See <a href="2a8-2a19.html#table2.a12a">Tables 2.A12a</a> and <a href="2a8-2a19.html#table2.a12b">2.A12b</a> for additional information on the special minimum <abbr class="spell">PIA</abbr>.</div>
|
|
<p><span class="h4">Windfall Elimination Provision (<abbr>WEP</abbr>).</span> The <abbr>WEP</abbr> affects workers who receive Social Security benefits based on their own work and are also entitled to a pension based on noncovered work after 1956. First eligibility for the noncovered pension and for Social Security benefits must be after December 31, 1985, for <abbr>WEP</abbr> to apply. <abbr>WEP</abbr> reduces the Social Security <abbr class="spell">PIA</abbr> upon which <abbr class="spell">OASDI</abbr> benefits are based and affects all benefits paid on that record except those for survivors. The <abbr>WEP</abbr> reduction ceases when entitlement to the pension payment ends, the wage earner dies, or the wage earner earns a total of 30 years of substantial Social Security earnings. The <abbr>WEP</abbr> reduction amount is limited to no more than <span class="nobr">one-half</span> the amount of the noncovered pension.</p>
|
|
<p>The <abbr>WEP</abbr> modifies the <abbr class="spell">PIA</abbr> computation formula; it is generally based on 40 percent of the first bend point instead of the 90 percent figure used to calculate the regular <abbr class="spell">PIA</abbr>. The maximum amount of the reduction is half the amount of the first bend point for the applicable eligibility year. The maximum reduction for <abbr>WEP</abbr> for the 2023 eligibility year is $557.50 (not to exceed <span class="nobr">one-half</span> of the pension from noncovered employment). <abbr class="spell">SSA</abbr>'s online resources include a benefit calculator that accounts for <abbr>WEP</abbr> adjustments (<a href="/benefits/retirement/planner/anyPiaWepjs04.html">https://www.ssa.gov/benefits/retirement/planner/anyPiaWepjs04.html</a>).</p>
|
|
<p class="indent2">Example: A retired worker with a noncovered pension of $2,000 a month and fewer than 21 years of covered employment attains age 62 in 2023.</p>
|
|
<p class="indent4">Regular <abbr class="spell">PIA</abbr> formula, based on <abbr>AIME</abbr> of $3,000. <br>$1,115 × .90 = $1,003.50 <br>$1,885 × .32 = $603.20 <br>Result is $1,606.70, rounded to $1,606.70</p>
|
|
<p class="indent4"><abbr>WEP</abbr> <abbr class="spell">PIA</abbr> formula, based on <abbr>AIME</abbr> of $3,000. <br>$1,115 × .40 = $446.00 <br>$1,885 × .32 = $603.20 <br>Result is $1,049.20, rounded to $1,049.20</p>
|
|
<p>If a worker has more than 20 years of substantial covered earnings, the multiplier in the <abbr>WEP</abbr> <abbr class="spell">PIA</abbr> formula begins to increase. With the 21st year of substantial covered earnings, the first bend point percentage is increased by 5 percentage points. This rate of increase applies for each additional year of substantial covered earnings, through the 30th year of substantial earnings, at which point <abbr>WEP</abbr> no longer applies. After 23 years of substantial coverage, for example, the first bend point percentage would be 55 percent. Thirty years of substantial earnings would yield a first bend point percentage of 90 percent (the non-<abbr>WEP</abbr> percentage of the first bend point).</p>
|
|
<p>Examples of pensions subject to <abbr>WEP</abbr> are <abbr>U.S.</abbr> Civil Service Retirement System annuities, retirement benefits based on foreign earnings, and state and local government pensions based on noncovered earnings.</p>
|
|
<div class="textBox"><a href="2a8-2a19.html#table2.a11.1">Table 2.A11.1</a> provides more detail about the <abbr>WEP</abbr> computation and contains the amounts of substantial earnings for years after 1990. Substantial earnings for earlier years are listed in <a href="2a8-2a19.html#table2.a12a">Table 2.A12a</a>.</div>
|
|
<p><span class="h4">Family maximum provisions.</span> Monthly benefits payable to the worker and family members or to the worker's survivors are subject to a maximum family benefit amount. The family maximum level for retired-worker families or survivor families usually ranges from 150 percent to 188 percent of the worker's <abbr class="spell">PIA</abbr>. The maximum benefit for disabled-worker families is the smaller of (1) 85 percent of <abbr>AIME</abbr> (or 100 percent of the <abbr class="spell">PIA</abbr>, if larger) or (2) 150 percent of the <abbr class="spell">PIA</abbr>.</p>
|
|
<p>Like the formula for determining the <abbr class="spell">PIA</abbr>, the maximum family benefit formula applicable to a worker depends on the year of first eligibility (that is, the year of attainment of age 62, onset of disability, or death). Once the worker's maximum family benefit amount for the year of first eligibility is determined, it is updated in line with the <abbr>COLA</abbr>s.</p>
|
|
<div class="textBox">For information on family maximum provisions, as described here, see <a href="2a8-2a19.html#table2.a13">Table 2.A13</a> (comparison of family maximums to the <abbr class="spell">PIA</abbr>s on which they are based) and <a href="2a8-2a19.html#table2.a14">Table 2.A14</a> (disability family maximums). <a href="2a8-2a19.html#table2.a17">Table 2.A17</a> shows the maximum family benefit amounts applicable in cases of first eligibility before 1979.</div>
|
|
<h2>Benefit Types and Levels</h2>
|
|
<h3>Retired and Disabled Workers</h3>
|
|
<p>The full retirement age (<abbr class="spell">FRA</abbr>) is the earliest age at which an unreduced retirement benefit is payable (sometimes referred to as the <i>normal retirement age</i>). The age for full retirement benefits varies from age 65 to age 67 depending on an individual's birth year; the first incremental increase in <abbr class="spell">FRA</abbr> affected workers who reached age 62 in 2000. Workers who reached age 62 in 2022 are in the first birth cohort for whom the <abbr class="spell">FRA</abbr> is 67.</p>
|
|
<p>Reduced retirement benefits are available as early as age 62. The monthly rate of reduction from the full retirement benefit (that is, the <abbr class="spell">PIA</abbr>) is <sup>5</sup>⁄<sub>9</sub> of 1 percent a month for the 36 months immediately preceding <abbr class="spell">FRA</abbr>. The reduction rate is <sup>5</sup>⁄<sub>12</sub> of 1 percent a month for any prior months. The maximum overall reduction for early retirement rose as the <abbr class="spell">FRA</abbr> increased across birth cohorts, from 20 percent for workers who reached age 62 in 1999 or earlier (whose <abbr class="spell">FRA</abbr> is 65), to 30 percent for workers who reached age 62 in 2022 (whose <abbr class="spell">FRA</abbr> is 67).</p>
|
|
<div class="textBox"><a href="2a8-2a19.html#table2.a17.1">Table 2.A17.1</a> shows the <abbr class="spell">FRA</abbr> and maximum reduction of retired-worker benefits by year of birth.</div>
|
|
<p>If a disabled worker receives a reduced retirement benefit for months before disability entitlement, the disability benefit is reduced by the number of months for which he or she received the reduced benefit.</p>
|
|
<p>For insured workers who postpone their retirement beyond <abbr class="spell">FRA</abbr>, benefits are increased for each month of nonpayment beyond that <abbr class="spell">FRA</abbr> up to age 70. This increase is called a <i>delayed retirement credit</i> and is potentially available for any or all months following attainment of <abbr class="spell">FRA</abbr> (maximum of 60 months for workers who attained age 65 before 2003). The total credit possible per year for delayed retirement credits is 8 percent for workers who reach age 62 in 2005 or later.</p>
|
|
<div class="textBox"><a href="2a8-2a19.html#table2.a17.3">Table 2.A17.3</a> shows the maximum delayed retirement credit percentages by year of birth. <a href="2a20-2a28.html#table2.a20">Table 2.A20</a> shows a history of provisions to increase benefits for delayed retirement.</div>
|
|
<h3>Spouses and Children of Workers</h3>
|
|
<p>Spouses receive 50 percent of the worker's <abbr class="spell">PIA</abbr> (regardless of the worker's actual benefit amount), if the spouse has attained <abbr class="spell">FRA</abbr> at entitlement to spousal benefits. The spouse of a retired or disabled worker can elect monthly benefits as early as age 62. These benefits are reduced at the rate of <sup>25</sup>⁄<sub>36</sub> of 1 percent a month for the 36 months immediately preceding <abbr class="spell">FRA</abbr> and <sup>5</sup>⁄<sub>12</sub> of 1 percent for any prior month. The maximum overall reduction for early retirement rose from 25 percent in 1999 and prior years to 35 percent in 2022, when age 67 became the <abbr class="spell">FRA</abbr> for spouses attaining age 62 in that year.</p>
|
|
<p>Children of retired or disabled workers are also eligible to receive monthly benefits. The term <i>child</i> refers to an unmarried child under age 18, a child aged 18 to 19 attending elementary or secondary school full time, or an adult child aged 18 or older who was disabled before age 22. In addition, young spouses (that is, those under age 62) who care for a worker's entitled child may also be eligible. For purposes of defining young spouses' benefits, the term <i>child</i> refers to an entitled child under age 16 or to a child of the worker aged 16 or older and disabled before age 22. Children of retired or disabled workers can receive up to 50 percent of the worker's <abbr class="spell">PIA</abbr>, as can young spouses. (The benefit of a young spouse is not reduced for age.) Monthly benefits payable to the spouse and children of a retired or disabled worker are limited to a family maximum amount, as discussed earlier.</p>
|
|
<p>Benefits are payable to unmarried divorced spouses of retirement age who were married at least 10 years to the worker. A divorced spouse benefit is excluded from family maximum provisions. Divorced spouses aged 62 or older and divorced for 2 or more years (after marriage of 10 or more years) may be independently entitled on the record of the ex-spouse who is not yet entitled to benefits, if the ex-spouse could be entitled to retirement benefits if he or she applied.</p>
|
|
<h3>Survivors Benefits</h3>
|
|
<p>Widows and widowers of fully insured workers are eligible for unreduced benefits at <abbr class="spell">FRA</abbr>. As with retired workers and spouses, <span class="nobr">widow(er)s'</span> <abbr class="spell">FRA</abbr> varies from age 65 to age 67 depending on birth year, but on a different schedule. Widows and widowers can elect reduced monthly benefits at age 60 or, if disabled, as early as age 50. Surviving divorced <span class="nobr">ex-spouses</span> can also receive <span class="nobr">widow(er)</span> benefits if they were married to the worker for at least 10 years and were not remarried before age 60 (age 50 if disabled).</p>
|
|
<p>For survivors whose full benefit retirement age is 65, the monthly rate of reduction for the first 60 months immediately preceding <abbr class="spell">FRA</abbr> is <sup>19</sup>⁄<sub>40</sub> of 1 percent of the worker's <abbr class="spell">PIA</abbr>, with a maximum reduction of 28.5 percent at age 60. For survivors whose <abbr class="spell">FRA</abbr> is after 65, the amount of reduction for each month prior to <abbr class="spell">FRA</abbr> is adjusted accordingly to ensure that the maximum reduction at age 60 remains 28.5 percent of the worker's <abbr class="spell">PIA</abbr>.</p>
|
|
<div class="textBox"><a href="2a8-2a19.html#table2.a17.2">Table 2.A17.2</a> shows the <abbr class="spell">FRA</abbr> and maximum reduction of <span class="nobr">widow(er)'s</span> benefits by year of birth.</div>
|
|
<p>Benefits for widows and widowers are increased if the deceased worker delayed receiving retirement benefits beyond the <abbr class="spell">FRA</abbr>. In these cases, the survivor benefits include any delayed retirement credits the deceased worker earned. Conversely, if the worker had elected early retirement, <span class="nobr">widow(er)s'</span> benefits are limited for <span class="nobr">widow(er)s</span> first entitled to survivors benefits at age 62 or later. For these beneficiaries, the benefit is the higher of 82.5 percent of the worker's <abbr class="spell">PIA</abbr> or the amount the worker would be receiving if still alive. Disabled <span class="nobr">widow(er)s</span> aged 50 to 60 receive the rate of reduction set for <span class="nobr">widow(er)s</span> aged 60 (71.5 percent of <abbr class="spell">PIA</abbr>) regardless of their age at the time of entitlement.</p>
|
|
<p>Children of deceased workers and mother and father beneficiaries under <abbr class="spell">FRA</abbr> are eligible to receive monthly benefits up to 75 percent of the worker's <abbr class="spell">PIA</abbr> if the worker dies either fully or currently insured. Mother and father beneficiaries must be caring for the worker's entitled child who is either under age 16 or disabled. A dependent parent aged 62 or older is eligible for monthly benefits equal to 82.5 percent of the worker's <abbr class="spell">PIA</abbr>. When two dependent parents qualify for benefits, the monthly benefit for each is equal to 75 percent of the deceased worker's <abbr class="spell">PIA</abbr>. Monthly benefits payable to survivors are reduced to conform to the family maximum payable on the deceased worker's account. Benefits for a surviving divorced spouse, however, do not affect the maximum benefit to the family.</p>
|
|
<div class="textBox">See <a href="2a20-2a28.html#table2.a20">Table 2.A20</a> for more information on the full (or normal) retirement ages for workers. <a href="2a20-2a28.html#table2.a21">Table 2.A21</a> describes age-related reductions for dependent beneficiaries, as does <a href="2a20-2a28.html#table2.a22">Table 2.A22</a> for <span class="nobr">widow(er)s.</span> Additionally, <a href="2a20-2a28.html#table2.a23">Tables 2.A23</a> and <a href="2a20-2a28.html#table2.a24">2.A24</a> show the history of legislation relating to special monthly benefits payable to certain persons born before January 2, 1900. <a href="2a20-2a28.html#table2.a25">Table 2.A25</a> summarizes the history of certain <abbr class="spell">OASDI</abbr> benefits other than monthly benefit payments. <a href="2a20-2a28.html#table2.a26">Table 2.A26</a> presents illustrative monthly benefit amounts for selected beneficiary families, based on hypothetical earnings histories representing five different earnings levels. <a href="2a20-2a28.html#table2.a27">Table 2.A27</a> shows minimum and maximum monthly benefits payable to retired workers retiring at age 62 in various years beginning with 1957 (the first full year benefits became available at age 62). <a href="2a20-2a28.html#table2.a28">Table 2.A28</a> shows minimum and maximum monthly benefits payable to retired workers retiring at age 65 in the years 1940 through 2002. Tables <a href="2a20-2a28.html#table2.a28.1">2.A28.1</a> and <a href="2a20-2a28.html#table2.a28.2">2.A28.2</a> show the maximum monthly benefit for workers retiring at their <abbr class="spell">FRA</abbr> in 2003 or later, and for workers retiring at age 70 in 1987 or later, respectively.</div>
|
|
<h3>Provisions for Railroad Retirement Board Beneficiaries</h3>
|
|
<p>The <abbr class="spell">OASDI</abbr> tables do not include a number of persons receiving Railroad Retirement benefits who would be eligible for Social Security benefits had they applied. The reason they have not applied is that receipt of a Social Security benefit would reduce their Railroad Retirement benefit by a like amount.</p>
|
|
<p>The Railroad Retirement Act of 1974, effective January 1, 1975, provided that the regular annuity for employees with 10 or more years of railroad service who retired after December 31, 1974, would consist of two components.</p>
|
|
<ul>
|
|
<li>Tier 1. A basic Social Security component equivalent to what would be paid under the Social Security Act on the basis of the employee's combined railroad and nonrailroad service, reduced by the amount of any monthly benefit under <abbr class="spell">OASDI</abbr> actually paid on the basis of nonrailroad work; and</li>
|
|
<li>Tier 2. A “private pension” component payable over and above the Social Security equivalent, calculated on the basis of the number of years of railroad service.</li>
|
|
</ul>
|
|
<p>Public Law <span class="nobr">107-90</span> (the 2001 amendments to the Railroad Retirement Act of 1974), effective January 1, 2002, revised the railroad service work requirement. The railroad service work requirement is 10 or more years of railroad service or, effective January 1, 2002, at least 5 years of railroad service after December 31, 1995. The two components are unchanged.</p>
|
|
<h2>Effect of Current Earnings on Benefits</h2>
|
|
<h3>Annual Earnings Test</h3>
|
|
<p>Individuals may receive Social Security retirement, dependent, or survivor benefits and work at the same time. However, under the law, those benefits could be reduced if earnings exceed certain amounts.</p>
|
|
<p>Under the annual earnings test provisions of the Social Security Act, beneficiaries who are younger than full retirement age and have earnings in excess of certain exempt amounts may have all or part of their benefits withheld. The annual earnings test exempt amount for nondisabled beneficiaries is pegged to increases in the average wage. Different rules on earnings apply to beneficiaries who receive disability benefits, and are described in a subsequent section.</p>
|
|
<p>For beneficiaries who are younger than <abbr class="spell">FRA</abbr> throughout the year:</p>
|
|
<ul>
|
|
<li>The earnings test exempt amount is $21,240 in 2023.</li>
|
|
<li>Benefits are withheld at the rate of $1 for each $2 of earnings above the exempt amount.</li>
|
|
</ul>
|
|
<p>For beneficiaries who attain <abbr class="spell">FRA</abbr> in 2023, the annual earnings test is significantly higher.</p>
|
|
<ul>
|
|
<li>This earnings test exempt amount is $56,520 in 2023. Only earnings before the month of attainment of <abbr class="spell">FRA</abbr> are counted for purposes of this portion of the annual earnings test.</li>
|
|
<li>Benefits are withheld at the rate of $1 for every $3 of earnings above the exempt amount.</li>
|
|
</ul>
|
|
<p>Individuals have the option to receive benefits under a monthly earnings test if it is to their advantage to do so. This option is usually exercised in the first year of entitlement, because the monthly test permits payment for some months even if the annual earnings limit is greatly exceeded. Under the monthly test, beneficiaries receive a full monthly benefit for months in which they do not earn an amount equal to more than <sup>1</sup>⁄<sub>12</sub> the annual earnings test. The monthly earnings test is applied to the self-employed on the basis of the number of hours worked instead of monthly earnings. Generally, beneficiaries are eligible for the monthly earnings test in only 1 year.</p>
|
|
<p>A foreign work test applies to work outside the United States in employment or self-employment that is not subject to <abbr>U.S.</abbr> Social Security taxes. Benefits are withheld for each month a beneficiary younger than <abbr class="spell">FRA</abbr> works more than 45 hours.</p>
|
|
<p>The earnings test no longer applies beginning with the month a beneficiary attains <abbr class="spell">FRA</abbr>. Elimination of the earnings test at <abbr class="spell">FRA</abbr> is effective for taxable years ending after December 31, 1999 (Public Law <span class="nobr">106-182).</span> At <abbr class="spell">FRA</abbr> no benefits are withheld for earnings, regardless of the amount of earnings.</p>
|
|
<div class="textBox"><a href="2a29-2a32.html#table2.a29">Tables 2.A29</a> and <a href="2a29-2a32.html#table2.a29.1">2.A29.1</a> provide historical detail on the retirement test.</div>
|
|
<h3>Automatic Adjustments for Additional Earnings</h3>
|
|
<p>When a worker has earnings after filing for Social Security benefits, the additional earnings are credited to the worker's record. The reduction factor and the computation of the <abbr class="spell">PIA</abbr> could be affected by the additional earnings. These adjustments occur automatically; the worker does not need to request the action.</p>
|
|
<p><span class="h4">Adjusted Reduction Factor.</span> The reduction factor is based on all months of entitlement prior to <abbr class="spell">FRA</abbr>. If a full month or partial month of benefits is withheld because of the earnings test, the reduction factor is automatically adjusted at <abbr class="spell">FRA</abbr>. For widows and widowers, the automatic adjustments are effective at age 62 and at <abbr class="spell">FRA</abbr>. This adjustment of the reduction factor results in a higher ongoing monthly benefit. For example, if retirement benefits are claimed 36 months before <abbr class="spell">FRA</abbr>, a <span class="nobr">36-month</span> reduction factor is applied to the <abbr class="spell">PIA</abbr>. If the earnings test results in no payment of benefits for 6 of those months, the reduction factor is automatically adjusted at <abbr class="spell">FRA</abbr>, the ongoing reduction factor is changed to 30 months, and benefits are increased retroactively to the month of <abbr class="spell">FRA</abbr>.</p>
|
|
<p><span class="h4">Recomputation.</span> Additional earnings also have the potential to increase the <abbr class="spell">PIA</abbr>. A recomputation is automatically considered each year when earnings of the insured worker are credited to the record. A recomputation of the <abbr class="spell">PIA</abbr> is processed if the earnings result in an increase to the <abbr class="spell">PIA</abbr> of at least $1.00. The increase is retroactive to January of the year following the year of new earnings. For example, if a beneficiary's <abbr class="spell">PIA</abbr> is $955.50 effective December 2022 and the beneficiary had earnings in 2022, a recomputation would be considered for January 2023. After considering all earnings through 2022, if it is found that the <abbr class="spell">PIA</abbr> has increased to $976.50 as of January 2023, the recomputation can be allowed because the increase is at least $1.00 over the December 2022 <abbr class="spell">PIA</abbr>.</p>
|
|
<h3>Earnings and Disability Benefits</h3>
|
|
<p>Beneficiaries entitled on the basis of their own disability—disabled workers, disabled adult children, and disabled <span class="nobr">widow(er)s</span>—are not subject to the annual earnings test. Substantial earnings by disabled beneficiaries, however, may indicate that they are able to do work that constitutes substantial gainful activity (<abbr class="spell">SGA</abbr>) and therefore no longer meet the requirements for disability benefits. Although other factors are considered, numerical earnings thresholds are used to evaluate <abbr class="spell">SGA</abbr>. Disabled beneficiaries must report all earnings to <abbr class="spell">SSA</abbr> for timely evaluation of <abbr class="spell">SGA</abbr>.</p>
|
|
<p>Through 2000, <abbr class="spell">SSA</abbr> periodically changed the earnings amount for which a nonblind disabled individual was considered to be engaged in <abbr class="spell">SGA</abbr>. Effective January 1, 2001, <abbr class="spell">SGA</abbr> amounts are automatically adjusted annually on the basis of increases in the national average wage index. The <abbr class="spell">SGA</abbr> amount for nonblind individuals in calendar year 2023 is $1,470 per month.</p>
|
|
<p>A different definition of <abbr class="spell">SGA</abbr> applies to blind individuals receiving Social Security disability benefits. Increases in the <abbr class="spell">SGA</abbr> amount for blind individuals have been pegged to increases in the national average wage index since 1978. The <abbr class="spell">SGA</abbr> level for blind individuals in calendar year 2023 is $2,460 per month.</p>
|
|
<p>A <span class="nobr">9-month</span> trial work period allows beneficiaries who are still disabled to test their ability to work. During that period, beneficiaries may earn any amount and still receive full benefits. After the individual completes 9 trial work months, the <abbr class="spell">SGA</abbr> level is used to determine whether earnings are substantial.</p>
|
|
<div class="textBox"><a href="2a29-2a32.html#table2.a30">Table 2.A30</a> provides related historical data on disability program earnings guidelines.</div>
|
|
<h2>Government Pension Offset</h2>
|
|
<p>A pension from a federal, state, or local government based on work that was not covered by Social Security could reduce the amount of a spouse's or widow's or widower's Social Security benefits. Social Security benefits are reduced (offset) by <span class="nobr">two-thirds</span> of the government pension if the pension is based on noncovered work by the spouse, widow, or widower. For example, for a monthly civil service pension of $600, <span class="nobr">two-thirds</span>, or $400, would offset a Social Security spousal benefit. An individual eligible for a Social Security spousal benefit of $500 would receive $100 per month from Social Security ($500 − $400 = $100). The intent of the Government Pension Offset provision is to ensure that, when determining the amount of spousal benefits, government employees who do not pay Social Security taxes are treated in a manner similar to those who work in the private sector and pay Social Security taxes. The law requires that Social Security spousal benefits be offset dollar for dollar by the amount of a spouse's own Social Security retirement benefit. For example, if a woman worked and earned her own $600 monthly Social Security retired-worker benefit but was also eligible for a $500 spouse's benefit on her husband's Social Security record, the spousal benefit would not be paid because it would be offset by her own Social Security benefit.</p>
|
|
<p>Exceptions to the Government Pension Offset could apply if some of the work on which the pension is based was in covered employment. Specific rules apply depending on the employer and on the dates of employment. There are also exemptions for those who were eligible for the government pension before December 1982 or before July 1983, if specific criteria are met.</p>
|
|
<h2>Taxation of Benefits</h2>
|
|
<p>Up to 85 percent of Social Security benefits may be subject to federal income tax depending on the beneficiary's income, marital status, and filing status. The definition of income for this provision is as follows: adjusted gross income (before Social Security or Railroad Retirement benefits are considered), plus tax-exempt interest income, with further modification of adjusted gross income in some cases involving certain tax provisions of limited applicability among the beneficiary population, plus half the Social Security and Tier 1 Railroad Retirement benefits.</p>
|
|
<p>For married beneficiaries filing jointly with adjusted gross income (as defined above) that is $32,000 a year or less, no Social Security benefits are subject to taxation. If their adjusted gross income exceeds $32,000 but is $44,000 or less, up to 50 percent of the Social Security benefit is subject to income tax. If their income exceeds $44,000, up to 85 percent of the Social Security benefit is subject to income tax. For married beneficiaries filing separately who lived together any time during the tax year, there is no minimum threshold. Up to 85 percent of the Social Security benefit is subject to income tax.</p>
|
|
<p>For individuals in all other filing categories (single, head of household, qualifying <span class="nobr">widow(er),</span> and married filing separately but who lived apart from their spouse for the entire year), the income threshold is $25,000. Generally, up to 50 percent of benefits are taxable for income between $25,001 and $34,000, and up to 85 percent of benefits are taxable for income exceeding $34,000.</p>
|
|
<p>Like all matters dealing with tax liability, taxation of Social Security benefits falls under the jurisdiction of the Internal Revenue Service.</p>
|
|
<div class="textBox"><a href="2a29-2a32.html#table2.a31">Table 2.A31</a> shows the history of provisions related to taxation of Social Security benefits. <a href="2a29-2a32.html#table2.a32">Table 2.A32</a> offers examples to illustrate when benefits are taxable, and the amount subject to taxation.</div>
|
|
<p>CONTACT: <a href="mailto:statistics@ssa.gov">statistics@ssa.gov</a>.</p>
|
|
</div>
|
|
</article>
|
|
<nav>
|
|
<div class="docNav"><a class="previous" href="highlights.html">Previous: Highlights and Trends</a> <a class="toTop" href="#hLogo">Top of page</a> <a class="toTOC" href="index.html#fileList">Table of contents</a> <a class="next" href="ssi.html">Next: Supplemental Security Income</a></div>
|
|
</nav>
|
|
<footer><div id="footer">
|
|
<div class="important-info"><h4>Important Information:</h4>
|
|
<ul><li><a href="/agency/">About Us</a></li>
|
|
<li><a href="/accessibility/">Accessibility</a></li>
|
|
<li><a href="/foia/">FOIA</a></li>
|
|
<li><a href="/open/">Open Government</a></li>
|
|
<li><a href="/agency/glossary/">Glossary</a></li>
|
|
<li><a href="/privacy/">Privacy</a></li>
|
|
<li><a href="https://oig.ssa.gov/report/">Report Fraud, Waste or Abuse</a></li>
|
|
<li><a href="/agency/websitepolicies.html">Website Policies</a></li></ul>
|
|
</div>
|
|
<p class="align-center margin-top">This website is produced and published at U.S. taxpayer expense.</p>
|
|
</div></footer>
|
|
<!-- SSA INTERNET BODY SCRIPTS -->
|
|
<script src="/policy/js/rspa.doc.js"></script>
|
|
<script src="/policy/js/rspa-shared.js"></script>
|
|
<script src="/framework/js/ssa.internet.body.js"></script>
|
|
</body></html> |