ACTUARIAL NOTE

SOCIAL SECURITY ADMINISTRATION
Number 2012.3
November 2012
Office of the Chief Actuary
Baltimore, Maryland

Scaled Factors for Hypothetical Earnings Examples under the 2012 Trustees Report Assumptions

by Michael Clingman and Kyle Burkhalter

1. Introduction

The Office of the Chief Actuary (OCACT) has traditionally used hypothetical earnings histories to illustrate a range of benefit levels, replacement rates, money's worth measures, and internal rates of return under the Social Security program. OCACT has long used these illustrations to evaluate the program under present law. In addition, in recent years, these hypothetical earnings histories have formed the basis for illustrating possible program changes on benefit levels.1

OCACT developed scaled worker hypothetical earnings patterns starting in 2001. These patterns express earnings at levels relative to the AWI by age. These earnings levels reflect the average patterns of work and earnings of actual insured workers over their careers.

This note presents the three sets of scaled worker factors recently updated for the hypothetical low, medium, and high lifetime earnings examples used in table V.C7 of the 2012 Trustees Report. In addition, this note presents a set of scaled worker factors for a hypothetical worker with "very low" lifetime earnings. Table 6 shows these final scaled factors.

Prior to the development of scaled factors, OCACT generally used hypothetical steady workers, who earn a constant percentage of SSA's national average wage index (AWI)2 throughout their careers. These hypothetical steady earnings patterns tended to over-represent the proportion of actual lifetime earnings received at younger ages and under-represent the proportion received at prime working ages for most workers. Over-representing early earnings tends to bias downward estimates of the internal rate of return of the present-law program.

In developing these four sets of factors, we initially developed one set of raw scaled factors using earnings from the Continuous Work History Sample (CWHS). We made a preliminary adjustment to these raw factors for ages 62 and over to account for the select nature of these workers who continue working at such ages. Then, these preliminary adjusted scaled factors are further adjusted so that the resulting career-average earnings levels3 are 25 percent, 45 percent, 100 percent, and 160 percent of the AWI for the very low, low, medium, and high hypothetical workers, respectively. We selected these career-average earnings levels in order to provide both a useful range of examples and continuity with previous estimates for hypothetical workers. This note also includes a final hypothetical "maximum" earner with earnings equal to the OASDI maximum taxable earnings level for each year, in order to provide a fuller range of career taxable earnings levels under the Social Security program.

Table 1 compares overall earnings for these hypothetical workers to those of actual retiring workers. We use the Average Indexed Monthly Earnings4 (AIME), which is based on a worker's earnings, as a measure of overall earnings. We develop the distribution of actual workers retiring in 2011, from a 1 percent sample of Social Security administrative records.

Table 1.—Distribution of AIMEs of Actual Workers Retiring in 2011, Relative to AIMEs
for Hypothetical Workers Retiring in 2011
Hypothetical worker1
(Career-average earnings)2
Percent with AIME less than AIME
for hypothetical case
Percent with AIME closest to AIME
for hypothetical case3
All
males
All
females
Total,
all
workers
All
males
All
females
Total,
all
workers
Very Low ($10,413)
7.1
17.6
12.2
11.5
27.0
18.9
Low ($18,744)
15.4
35.7
25.2
15.0
31.1
22.7
Medium ($41,655)
39.4
74.7
56.4
28.7
28.6
28.7
High ($66,648)
69.8
93.8
81.3
29.5
11.5
20.8
Maximum ($97,322)
100.0
100.0
100.0
15.4
1.9
8.9

1See text for definition of hypothetical workers.

2 Career-average earnings of hypothetical scaled workers retiring at age 62 in 2011. Earnings are wage indexed to 2010 in this calculation.

3Rounded values do not necessarily sum to 100 percent. The percentage of workers with AIME values closest to that of the hypothetical maximum worker is expected to decline in future years. This is due to a significant increase in the OASDI maximum taxable earnings, relative to the AWI, in 1981 and a smaller increase in 1990.

Note: Worker distributions include individuals who are dually entitled, or may become dually entitled to a higher benefit in the future, based on another worker's account. A significant proportion of entitled female workers, especially those with lower earnings, will receive higher benefits as aged spouse or aged widow beneficiaries. If such dually entitled workers were excluded from this analysis the distributions would skew more toward the higher-level hypothetical workers.

Table 1 shows that 35.7 percent of female workers retiring in 2011 have AIMEs below that of a hypothetical low wage scaled worker and that about 42 percent of all workers retiring in 2011 have AIMEs closest to that of hypothetical low or very low wage scaled workers. OCACT first included the level of earnings corresponding to the very low scaled factors in 2004 and chose this level of earnings so that approximately half the retirees who were previously best-represented by the hypothetical low scaled worker would now be best-represented by the hypothetical very low scaled worker.

Dually entitled workers, though still insured for worker benefits, receive a larger benefit as a dependent on another worker's account (generally as a spouse or widow(er)) than they would as a worker beneficiary only. A significant proportion of entitled female workers, especially those with lower earnings, will receive higher benefits as aged spouse or aged widow beneficiaries. If we excluded such dually entitled workers from this analysis, a higher percentage of the remaining workers would have earnings closer to the higher-level hypothetical workers.

2. Developing Raw Scaled Factors from Earnings in the CWHS

Development of the raw scaled factors occurs in three steps:

    a. Select workers in the CWHS for computing the factors;

    b. Tabulate the earnings for these workers; and

    c. Develop the raw scaled factors from the tabulated earnings.

a. Select Workers in the CWHS for Computing the Factors

The CWHS is a 1-percent sample of workers with some OASDI taxable earnings during their lifetime. The Office of Systems updates it annually based on specifications from the Office of Research, Evaluation, and Statistics. We develop the factors in this actuarial note using the CWHS containing earnings data through 2009. The CWHS contains earnings for all the workers in the sample. It is important to limit analysis only to workers who are likely either to be eligible for retirement or disability benefits, or to have dependents eligible for survivors benefits. To include only those workers, we used the status of fully insured. A worker is considered fully insured if he or she has a total number of quarters of coverage (QCs)5 at least equal to the number of years after attainment of age 21 through the last year considered in the analysis (in this case 2008). A further requirement is that the worker must have a minimum of 6 QCs. Since a worker achieves permanent insured status with 40 QCs, any worker with 40 QCs is fully insured no matter how many years have elapsed since age 21. Any fully insured worker is likely to become eligible for a Social Security retirement benefit if he or she survives to eligibility age.

b. Tabulate Earnings for These Workers

The updated CWHS file contains taxable earnings for years 1951 through 2009. Due to posting delays, the earnings for 2009 in this file are less complete than for earlier years and were not used in our analysis. For each of the workers classified as fully insured as of 2008 (based on all earnings after 1950), our analysis includes earnings for the most recent 18-year period (1991 through 2008) for ages 21 and over. We classify earnings by age of worker, and express earnings as their ratio to the AWI for the specific year.

OCACT developed scaled factors taking into account both the variations in earnings by age and the probabilities that workers may have years with zero earnings. The earnings records selected include years with zero earnings, but not years in which the worker was deceased6 or receiving a retired worker or disabled worker Social Security benefit.

c. Develop Raw Scaled Factors from the Tabulated Earnings

To normalize earnings from different years, annual earnings amounts for each year are divided by the AWI for that year. For each fully insured worker, normalized earnings are tabulated by age for each age 21 and over for years 1991-2008, as described in the preceding paragraph. The normalized earnings are summed by age and a corresponding worker count is kept. The raw scaled factors are determined by dividing the tabulated sum for each age, including years at zero earnings, by the corresponding numbers of workers. Table 2 displays the results.

Table 2.—Raw Scaled Worker Factors
for the 2012 Trustees Report
Age
Factor
21
0.271
22
0.325
23
0.403
24
0.474
25
0.532
26
0.582
27
0.627
28
0.666
29
0.701
30
0.730
31
0.756
32
0.777
33
0.795
34
0.812
35
0.827
36
0.840
37
0.852
38
0.863
39
0.873
40
0.882
41
0.891
42
0.900
43
0.907
44
0.915
45
0.922
46
0.926
47
0.930
48
0.931
49
0.931
50
0.929
51
0.924
52
0.916
53
0.905
54
0.892
55
0.874
56
0.846
57
0.817
58
0.787
59
0.755
60
0.715
61
0.665
62
0.842
63
0.864
64
0.846

3. Adjust Raw Scaled Factors to Match Selected Career-Average Earnings Levels

Adjustment of the raw scaled factors occurs in three steps:

    a. Calculate preliminary adjusted scaled factors from the raw scaled factors by overriding the scaled factors at ages 62-64;

    b. Construct the earnings pattern and calculate the career-average earnings for a hypothetical scaled worker using the preliminary adjusted scaled factors; and

    c. Calculate very low, low, medium, and high final scaled factors from the preliminary adjusted scaled factors such that the career-average earnings for these hypothetical workers match the selected percentages of the AWI in the year prior to entitlement (25, 45, 100 and 160 percent) .

a. Calculate Preliminary Adjusted Scaled Factors from Raw Scaled Factors

The following values, based on table 2, show that there is an accelerating decline in raw factors at ages 60 and 61, followed by increases at ages 62 and 63:

Age
Raw Scaled Factor
Difference
55
0.874
---
56
0.846
-0.028
57
0.817
-0.029
58
0.787
-0.030
59
0.755
-0.032
60
0.715
-0.040
61
0.665
-0.050
62
0.842
+0.177
63
0.864
+0.022
64
0.846
-0.018

We do not have definitive information on the reasons for these changes after age 59. However, it seems reasonable to assume that some of the decline in the raw factors at ages 60 and 61 is due to the retirement (total or partial) of some workers before they became entitled to their OASDI retirement benefits at age 62. The increases in the raw factors at ages 62 and 63 may well occur because healthier, higher-wage workers, and workers who have maintained consistent employment at older ages, are more likely to delay entitlement to OASDI benefits until after age 62. Our methodology removed the earnings of many non-workers, low-wage workers, or less-healthy workers from the tabulated group starting at age 62 because they started to receive Social Security retirement benefits.

Due to the differences between the groups of workers represented in data for ages just-before versus just-after reaching age 62, we develop a smoother set of "adjusted" raw factors for ages 62-64. Here we assume that earnings for workers over age 61 will stay constant in nominal dollars, thus decreasing relative to the AWI.

The preliminary adjusted scaled factors equal the raw scaled factors for ages up to 61. Table 3 calculates factors for ages 62 and over so that earnings in nominal dollars stay constant at the level for age 61. For example, we calculate the preliminary adjusted factor for age 62 by dividing the factor for age 61 by the ultimate assumed annual increase in average wages under the intermediate assumptions of the 2012 Trustees Report. Table 3 shows the calculation of the preliminary adjusted scaled factors for ages 62-64.

Though it provides an imperfect approximation for all types of workers, we adopted this approach in order to avoid having different scaled factors for workers who become entitled to OASDI benefits at different ages.

Table 3.—Scaled Factor Adjustments
Made for Ages After 61
Age
61
62
63
64
Raw scaled factor
0.665
0.842
0.864
0.846
Ultimate AWI increase since age 61, based on
2012 Trustees Report, Intermediate Assumptions
1.000
1.0392
(1.0392)2
(1.0392)3
Preliminary adjusted scaled factor
(age 61 raw scaled factor) / (Ultimate AWI increase)
0.665
0.640
0.616
0.593

b. Construct the Earnings Pattern and Calculate the Career-Average Earnings for a Selected Hypothetical Scaled Worker Using the Preliminary Adjusted Scaled Factors

The selected hypothetical scaled worker (referred to as the 1960-born preliminary scaled worker) was born on January 2, 1960, has earnings from age 21 through 64, and retires at age 65. We calculate earnings for each year by multiplying the preliminary adjusted scaled factor for that age by the AWI value for the corresponding year. This worker turns age 22 in 1982, so the age 22 preliminary adjusted factor of 0.325 is multiplied by the 1982 AWI of $14,531.34 to obtain annual earnings of $4,722.69. Table 4 shows the preliminary adjusted scaled factors, AWI amounts, and corresponding hypothetical earnings for the 1960-born preliminary scaled worker.

The last line of table 4 shows career-average earnings of $61,929 (wage indexed to 2024) for the 1960-born preliminary scaled worker. This is a slightly different calculation than the AIME because (1) earnings are indexed to the year prior to entitlement rather than to two years prior to eligibility, and (2) earnings are averaged on an annual basis instead of a monthly one. For the 1960-born preliminary scaled worker, who retires at age 65 in 2025, the indexing year used to compute career-average earnings is 2024.

Table 4.—Computation of the Earnings Record and the Career-Average Earnings for the 1960-Born Preliminary Scaled Worker Based on the Preliminary Adjusted Scaled Factors and the AWI Series
Year
Age
Preliminary adjusted
scaled factors
AWI for
current year
Estimated earnings
for current year
(1)*(2)
Earnings wage
indexed to
2024
(1)
(2)
(3)
(4)
1981
21
0.271
$13,773.10
$3,732.51
$20,053.51
1982
22
0.325
14,531.34
4,722.69
24,049.43
1983
23
0.403
15,239.24
6,141.41
29,821.25
1984
24
0.474
16,135.07
7,648.02
35,075.13
1985
25
0.532
16,822.51
8,949.58
39,367.06
1986
26
0.582
17,321.82
10,081.30
43,066.95
1987
27
0.627
18,426.51
11,553.42
46,396.86
1988
28
0.666
19,334.04
12,876.47
49,282.79
1989
29
0.701
20,099.55
14,089.78
51,872.71
1990
30
0.730
21,027.98
15,350.43
54,018.69
1991
31
0.756
21,811.60
16,489.57
55,942.63
1992
32
0.777
22,935.42
17,820.82
57,496.59
1993
33
0.795
23,132.67
18,390.47
58,828.55
1994
34
0.812
23,753.53
19,287.87
60,086.54
1995
35
0.827
24,705.66
20,431.58
61,196.50
1996
36
0.840
25,913.90
21,767.68
62,158.49
1997
37
0.852
27,426.00
23,366.95
63,046.45
1998
38
0.863
28,861.44
24,907.42
63,860.43
1999
39
0.873
30,469.84
26,600.17
64,600.42
2000
40
0.882
32,154.82
28,360.55
65,266.40
2001
41
0.891
32,921.92
29,333.43
65,932.39
2002
42
0.900
33,252.09
29,926.88
66,598.37
2003
43
0.907
34,064.95
30,896.91
67,116.36
2004
44
0.915
35,648.55
32,618.42
67,708.34
2005
45
0.922
36,952.94
34,070.61
68,226.33
2006
46
0.926
38,651.41
35,791.21
68,522.33
2007
47
0.930
40,405.48
37,577.10
68,818.32
2008
48
0.931
41,334.97
38,482.86
68,892.32
2009
49
0.931
40,711.61
37,902.51
68,892.32
2010
50
0.929
41,673.83
38,714.99
68,744.32
2011
51
0.924
43,008.96
39,740.28
68,374.33
2012
52
0.916
44,644.06
40,893.96
67,782.34
2013
53
0.905
46,496.20
42,079.06
66,968.36
2014
54
0.892
48,595.38
43,347.08
66,006.39
2015
55
0.874
50,892.59
44,480.12
64,674.41
2016
56
0.846
53,317.30
45,106.44
62,602.47
2017
57
0.817
55,988.97
45,742.99
60,456.52
2018
58
0.787
58,698.31
46,195.57
58,236.58
2019
59
0.755
61,178.72
46,189.93
55,868.63
2020
60
0.715
63,675.71
45,528.13
52,908.70
2021
61
0.665
66,160.67
43,996.85
49,208.80
2022
62
0.640
68,675.12
43,946.26
47,352.57
2023
63
0.616
71,287.30
43,897.07
45,566.37
2024
64
0.593
73,998.19
43,847.55
43,847.55
Career-Average Earnings
$61,929.00

Note: We base career-average earnings on the highest 35 years of indexed earnings (column 4). Years 1981-87 and 2023-2024 are excluded because they are not among the highest 35 years of indexed earnings.

c. Calculate Very Low, Low, Medium, and High Final Scaled Factors from the Preliminary Adjusted Scaled Factors such that Selected Hypothetical Scaled Workers with Earnings Based on These Factors Would Have Career-Average Earnings Equal to Selected Percentages of the AWI in the Year Prior to Entitlement

The selected career-average earnings level for the medium scaled worker is the AWI in the year prior to entitlement. Similarly, the selected career-average earnings levels for the very low, low, and high scaled workers are 25 percent, 45 percent and 160 percent of the AWI in the year prior to entitlement, respectively. As noted earlier, the career-average earnings for the 1960-born preliminary scaled worker equals $61,929, wage indexed to 2024 (see table 4). By comparison, the average wage index for 2024 is $73,998.197. Corresponding career-average earnings levels for a very low, low, and high earner are $18,500, $33,299, and $118,397, respectively. Table 5 summarizes this information, and provides the ratio of the selected career-average earnings levels to the career-average earnings for the 1960-born preliminary scaled worker.

Two primary reasons for choosing the year prior to entitlement as the indexing year in computing the career-average earnings are:

Furthermore, career-average earnings provide a reasonable denominator for replacement rate calculations that allow hypothetical scaled worker replacement rates to maintain consistency with the prior hypothetical steady worker replacement rates.

Table 5.—Table of Key Ratios Used to Finalize Scaled Worker Calculations
Case
Selected career-average earnings levels
for hypothetical scaled workers
(1)
Career-average earnings of the 1960-born
preliminary selected scaled worker
(2)
Ratio
(1) / (2)
(3)
Very low earner
$18,500
$61,929
0.299
Low earner
33,299
61,929
0.538
Medium earner
73,998
61,929
1.195
High earner
118,397
61,929
1.912

The last step is to apply the ratios from table 5 to the preliminary adjusted scaled factors. This step requires four separate calculations, one each for the very low, low, medium, and high scaled worker cases. For example, we determine the scaled factors for the hypothetical medium scaled worker by multiplying:

Table 6 shows the calculation of the final scaled factors, combining the preliminary adjusted scaled factors with the adjustment factors.

Table 6.—Calculation of Final Scaled Factors 
Adjustment factors
Final Scaled Factors by Earnings level
Very low
Low
Medium
High
Age
Preliminary adjusted
scaled factors
0.299
0.538
1.195
1.912
21
0.271
0.081
0.146
0.324
0.518
22
0.325
0.097
0.175
0.388
0.621
23
0.403
0.120
0.217
0.482
0.770
24
0.474
0.142
0.255
0.566
0.906
25
0.532
0.159
0.286
0.636
1.017
26
0.582
0.174
0.313
0.695
1.113
27
0.627
0.187
0.337
0.749
1.199
28
0.666
0.199
0.358
0.796
1.273
29
0.701
0.209
0.377
0.838
1.340
30
0.730
0.218
0.393
0.872
1.396
31
0.756
0.226
0.407
0.903
1.445
32
0.777
0.232
0.418
0.928
1.485
33
0.795
0.237
0.427
0.950
1.520
34
0.812
0.243
0.437
0.970
1.552
35
0.827
0.247
0.445
0.988
1.581
36
0.840
0.251
0.452
1.004
1.606
37
0.852
0.255
0.458
1.018
1.629
38
0.863
0.258
0.464
1.031
1.650
39
0.873
0.261
0.469
1.043
1.669
40
0.882
0.263
0.474
1.054
1.686
41
0.891
0.266
0.479
1.065
1.703
42
0.900
0.269
0.484
1.075
1.721
43
0.907
0.271
0.488
1.084
1.734
44
0.915
0.273
0.492
1.093
1.749
45
0.922
0.275
0.496
1.102
1.763
46
0.926
0.277
0.498
1.106
1.770
47
0.930
0.278
0.500
1.111
1.778
48
0.931
0.278
0.501
1.112
1.780
49
0.931
0.278
0.501
1.112
1.780
50
0.929
0.278
0.500
1.110
1.776
51
0.924
0.276
0.497
1.104
1.767
52
0.916
0.274
0.493
1.095
1.751
53
0.905
0.270
0.487
1.081
1.730
54
0.892
0.266
0.480
1.066
1.705
55
0.874
0.261
0.470
1.044
1.671
56
0.846
0.253
0.455
1.011
1.617
57
0.817
0.244
0.439
0.976
1.562
58
0.787
0.235
0.423
0.940
1.505
59
0.755
0.226
0.406
0.902
1.443
60
0.715
0.214
0.384
0.854
1.367
61
0.665
0.199
0.358
0.795
1.271
62
0.640
0.191
0.344
0.765
1.223
63
0.616
0.184
0.331
0.736
1.177
64
0.593
0.177
0.319
0.708
1.133

4. Developing Hypothetical Worker Earnings from Factors

Given a year of birth, and an earnings level for scaled workers, classified as either very low, low, medium, or high, one can obtain annual earnings by multiplying the relevant set of scaled factors by the AWIs in the corresponding years. Consider as an example a low earnings worker born in 1970. To determine earnings for this worker at age 22, multiply the scaled factor for the low scaled worker at age 22 by the AWI in 1992, the year in which the worker turns 22. Because the hypothetical workers are born in January, a year of age corresponds to a calendar year. Therefore, a worker born on January 2, 1970 would be age 22 throughout 1992. In this way, one can develop a series of very low, low, medium, and high scaled earnings for any age and hypothetical year of birth. Table 7 carries out the calculation of hypothetical scaled worker earnings for high earnings workers for the selected years of birth 1930, 1949, and 1997.

Table 7.—Example: Developing Earnings for the Hypothetical High Earners Born in 1930, 1949, and 1997
Year of birth
1930
1949
1997
Age
Final scaled
factors for
high earner
(1)
AWI
(2)
Age-scaled
earnings
(1)*(2)
(3)
AWI
(4)
Age-scaled
earnings
(1)*(4)
(5)


AWI
(6)
Age-scaled
earnings
(1)*(6)
(7)
21
0.518
$2,799.16
$1,450.25
$6,186.24
$3,205.11
$58,698.31
$30,411.78
22
0.621
2,973.32
1,847.45
6,497.08
4,036.91
61,178.72
38,012.88
23
0.770
3,139.44
2,418.82
7,133.80
5,496.33
63,675.71
49,059.81
24
0.906
3,155.64
2,859.65
7,580.16
6,869.16
66,160.67
59,954.98
25
1.017
3,301.44
3,357.86
8,030.76
8,167.99
68,675.12
69,848.66
26
1.113
3,532.36
3,930.38
8,630.92
9,603.45
71,287.30
79,319.90
27
1.199
3,641.72
4,365.37
9,226.48
11,059.88
73,998.19
88,702.46
28
1.273
3,673.80
4,677.75
9,779.44
12,451.89
76,830.87
97,826.61
29
1.340
3,855.80
5,167.49
10,556.03
14,147.04
79,833.62
106,991.89
30
1.396
4,007.12
5,592.45
11,479.46
16,021.06
83,005.94
115,845.47
31
1.445
4,086.76
5,906.74
12,513.46
18,086.15
86,272.41
124,692.62
32
1.485
4,291.40
6,374.81
13,773.10
20,459.72
89,664.62
133,195.37
33
1.520
4,396.64
6,682.44
14,531.34
22,086.14
93,192.94
141,643.66
34
1.552
4,576.32
7,104.27
15,239.24
23,657.36
96,871.57
150,383.22
35
1.581
4,658.72
7,365.79
16,135.07
25,510.76
100,723.91
159,252.07
36
1.606
4,938.36
7,930.65
16,822.51
27,015.75
104,736.06
168,198.66
37
1.629
5,213.44
8,492.02
17,321.82
28,215.00
108,906.36
177,394.38
38
1.650
5,571.76
9,192.85
18,426.51
30,401.91
113,227.81
186,814.64
39
1.669
5,893.76
9,836.80
19,334.04
32,268.88
117,727.94
196,490.16
40
1.686
6,186.24
10,431.39
20,099.55
33,892.37
122,419.46
206,426.79
41
1.703
6,497.08
11,067.33
21,027.98
35,819.73
127,303.16
216,852.23
42
1.721
7,133.80
12,274.69
21,811.60
37,529.87
132,380.76
227,779.37
43
1.734
7,580.16
13,144.16
22,935.42
39,770.50
137,642.06
238,674.19
44
1.749
8,030.76
14,048.33
23,132.67
40,466.33
143,104.71
250,335.27
45
1.763
8,630.92
15,213.71
23,753.53
41,870.30
148,779.50
262,253.34
46
1.770
9,226.48
16,334.06
24,705.66
43,737.55
154,657.19
273,796.64
47
1.778
9,779.44
17,387.77
25,913.90
46,074.72
160,756.57
285,824.00
48
1.780
10,556.03
18,788.72
27,426.00
48,815.66
167,075.91
297,379.16
49
1.780
11,479.46
20,432.34
28,861.44
51,370.61
173,626.98
309,039.44
50
1.776
12,513.46
22,224.92
30,469.84
54,116.90
180,427.93
320,454.59
51
1.767
13,773.10
24,330.48
32,154.82
56,802.19
187,489.27
331,203.87
52
1.751
14,531.34
25,447.68
32,921.92
57,653.76
194,827.39
341,187.02
53
1.730
15,239.24
26,366.89
33,252.09
57,532.67
202,452.23
350,282.27
54
1.705
16,135.07
27,515.84
34,064.95
58,092.44
210,369.25
358,751.83
55
1.671
16,822.51
28,109.25
35,648.55
59,566.26
218,592.36
365,252.69
56
1.617
17,321.82
28,016.31
36,952.94
59,767.68
227,132.54
367,364.12
57
1.562
18,426.51
28,781.42
38,651.41
60,371.84
235,993.61
368,611.87
58
1.505
19,334.04
29,090.04
40,405.48
60,794.18
245,183.63
368,903.87
59
1.443
20,099.55
29,012.18
41,334.97
59,663.89
254,715.16
367,662.01
60
1.367
21,027.98
28,744.23
40,711.61
55,650.79
264,606.99
361,704.88
61
1.271
21,811.60
27,730.40
41,673.83
52,982.45
274,892.58
349,487.52
62
1.223
22,935.42
28,059.26
43,008.96
52,617.29
285,598.01
349,401.44
63
1.177
23,132.67
27,233.04
44,644.06
52,557.42
296,734.92
349,332.54
64
1.133
23,753.53
26,909.11
46,496.20
52,673.08
308,305.71
349,263.19

1 Refer to the February 2, 2011 letter from Stephen C. Goss for an example of this illustrative benefits analysis. This letter is located at:
http://www.socialsecurity.gov/OACT/solvency/BowlesSimpsonRivlinDomenici_20110202.pdf

2 For more information on the national average wage index, including historical values, see:
http://www.socialsecurity.gov/OACT/COLA/AWI.html.

3 We define career-average earnings as the average of the highest 35 years of earnings, indexed for growth in average wages to the year prior to benefit entitlement. See further discussion under subsection 3.b. We introduced this revision with the 2003 Trustees Report.

4 See http://www.socialsecurity.gov/OACT/COLA/Benefits.html#aime for more details on how to calculate the AIME.

5 The QC is the basic unit for determining whether a worker is insured for Social Security benefits. In 2012, for example, a worker needed to have $1,130 in covered earnings to obtain a QC. Workers can earn up to 4 QCs per calendar year. Since 1978 the amount of covered earnings required to obtain a QC has been automatically indexed each year with the growth in SSA's national average wage index.
See http://www.socialsecurity.gov/OACT/COLA/QC.html for more information, including a list of historical QC amounts.

6 Data concerning worker deaths appears in the CWHS. However, death data in the CWHS does not include all state-reported death data. Therefore, we also used Social Security's NUMIDENT file to identify deaths of individuals in the CWHS. The NUMIDENT file contains, among other things, death data including state-reported deaths.

7 The projected AWI value for 2024 is taken from the 2012 Trustees Report.
See http://www.socialsecurity.gov/OACT/TR/2012/lr6f6.html.

8 Prior to 2001, the hypothetical workers used were all "steady" workers. Today, we retain only the "steady maximum" worker. "Steady" workers were assumed to work beginning at age 22 until retirement, death, or disability, and to have a steady amount of earnings relative to the AWI each year. For example, the "steady average" worker earns the AWI for every working year. Similarly, the "steady low" worker earns 45 percent of the AWI for every working year, and the "steady high" worker earns 160 percent of the AWI for every working year.