How Social Security Benefits Are Computed: In Brief. Noah P. Meyerson, Analyst in Income Security, May 12, 2014

“Social Security, which paid $812 billion in benefits in 2013, is the largest program in the federal budget. There are currently about 58 million Social Security beneficiaries. Most Social Security beneficiaries are retired and disabled workers, whose monthly benefits depend on their past earnings, their age, and other factors. Benefits are also paid to workers’ dependents and survivors. Dependent and survivors benefits are based on the earnings of the  workers upon whose work record they claim. Social Security has an important impact on beneficiaries, both young and old, in terms of income support and poverty reduction. However, under current law, Social Security’s revenues are projected to be insufficient to pay full scheduled benefits after 2033. For both of those reasons, is an issue of ongoing interest to policy makers. Most proposals to change Social Security outlays would change the benefit computation rules. Evaluating such proposals requires an understanding of how benefits are computed under current law.”