Old-Age, Survivors, and Disability Insurance Program Reference for Statistical Publications

Introduction

The Old-Age, Survivors, and Disability Insurance (OASDI) program, commonly referred to as Social Security, 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 individuals under the full retirement age.

This page provides a foundational overview of the OASDI program for users of SSA statistical publications, including terminology, legislative provisions, eligibility requirements, and benefit calculations. This information was previously published in the OASDI Program Description and Legislative History section of the Annual Statistical Supplement, through its 2024 edition. To ensure accuracy and timeliness, this new standalone resource presents the core program framework but replaces annually updated program thresholds, rates, and parameters with direct links to the SSA web pages where that information is officially published.

Most of the tables included below and in the linked pages include both current and historical program parameters for context, but the descriptions here do not cover all historical program changes. For accurate information on program policies before 2025, refer to SSA archival publications (such as the Annual Statistical Supplement).

The latest statistical highlights for the OASDI program are in the following publications:

• Fast Facts & Figures About Social Security
• Monthly Statistical Snapshot
• Annual Statistical Supplement, Highlights and Trends

See also our new Statistical Publications Glossary.

Contents

• Contributions and Trust Funds
• Coverage and Financing
• Insured Status
• International Agreements
• Benefit Computation and Automatic Adjustment Provisions
• Benefit Types and Levels
• Effect of Current Earnings on Benefits
• Additional Information

Contributions and Trust Funds

A person contributes to Social Security through either payroll taxes or self-employment taxes under the Federal Insurance Contributions Act (FICA) or the Self-Employment Contributions Act (SECA). 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 OASDI taxes (see Annual Statistical Supplement Table 2.A3 or Actuarial Services' Contribution and Benefit Base page). Employees whose earnings exceed the maximum taxable amount because they worked for more than one employer can receive refunds of excess FICA payments when they file their tax returns.

Taxes are allocated to three trust funds: the Old-Age (retirement) and Survivors Insurance (OASI), the Disability Insurance (DI), and the Medicare Hospital Insurance (HI) Trust Funds. In addition to the taxes on FICA- and SECA-covered earnings, OASI and DI Trust Fund revenues include interest on trust fund securities, income from taxation of OASI and DI benefits, certain technical transfers, and gifts or bequests. By law, the OASI and DI Trust Funds may only be disbursed for

• monthly benefits for workers and their families,
• vocational rehabilitation services for disabled beneficiaries,
• administrative costs (currently less than 1 percent of expenditures), and
• the lump-sum death payment to eligible survivors.

Revenue received from FICA and SECA payments is transferred to the U.S. 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. (See Fast Facts & Figures About Social Security, How Social Security Is Financed.)

Coverage and Financing

OASDI coverage has become nearly universal for work performed in the United States, including American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands. Workers excluded from coverage fall into five major categories:

1. Civilian federal employees hired before January 1, 1984;
2. Railroad workers (who are covered under the railroad retirement system, which is coordinated with Social Security);
3. Certain employees of state and local governments who are covered under their employers' retirement systems;
4. 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
5. Persons with very low net earnings from self-employment, generally under $400 annually.

Table 1 outlines the history of coverage provisions and Table 2 provides a history of provisions regarding noncontributory wage credits, mostly for military service.

For most employees, taxes are withheld from wages beginning with the first dollar earned. The exceptions are domestic employees, election workers, and agricultural workers, see Actuarial Services' Employment Coverage Thresholds.

Employees, their employers, and the self-employed pay taxes on earnings in covered employment up to an annual maximum taxable amount for OASDI. The OASDI maximum taxable amount is updated automatically each year in relation to increases in the national average annual wage.

Two deduction provisions reduce the SECA 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 FICA 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 one-half the SECA tax rate. The effect of this deduction is intended to be analogous to the treatment of the FICA tax paid by the employer, which is disregarded as remuneration to the employee for FICA and income tax purposes. The second provision allows an income tax deduction equal to one-half of the amount of the SECA tax paid, which is designed to reflect the income tax deductibility of the employer's share of the FICA tax.

Table 3 describes income tax credits for 1984–1989 intended to cushion the impact of increases in FICA and SECA taxes enacted in 1983. The SECA tax credits were replaced, effective 1990, by the deduction provisions described above. Table 4 outlines the history of provisions regarding appropriations from general revenues and interfund borrowing.

Insured Status

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.

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 (QCs). A worker receives 1 quarter of coverage (up to a total of 4 per year) for a designated amount of annual earnings reported from employment or self-employment, regardless of when the money is actually paid during the year. The amount of earnings required for a QC is adjusted automatically each year in proportion to increases in the average wage level. See Actuarial Services' Quarter of Coverage.

Fully Insured

Eligibility for most types of benefits requires that the worker be fully insured. To be fully insured, a worker must have a number of QCs 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 QCs to be insured. Workers who reach age 62 in 1991 or later need 40 QCs 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 QCs needed for fully insured status depends on their age at the time of disability or death.

Currently Insured

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 widow(er) (or a surviving divorced ex-spouse) 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 QCs in the 13 quarters ending with the quarter of death.

Additional Insured Status Requirements for Noncitizens

The Social Security Protection Act of 2004 (Public Law 108-203) 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 (SSN) 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 OASDI benefit based on the earnings record of the noncitizen worker. These benefits include retirement or disability insurance benefits, dependents or survivors insurance benefits, the lump-sum death payment, and Medicare based on end-stage renal disease.

For purposes of the above paragraph:

1. The noncitizen worker must have been assigned an SSN for work purposes at any time on or after January 1, 2004; or
2. The noncitizen worker must have been admitted to the United States at any time as a nonimmigrant visitor for business (B-1) or as an alien crewman (D-1 or D-2).

If a noncitizen worker who was not assigned an SSN 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 OASDI benefits based on the noncitizen worker's earnings. This is true even if the noncitizen worker appears to have the required number of QCs in accordance with the regular insured status provisions.

Disability Insured

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 QCs 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 QCs in one-half 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 QCs in the 12-quarter 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.

Table 5 summarizes the basic provisions concerning insured status.

International Agreements

The president is authorized to enter into international Social Security agreements (also called totalization agreements) to coordinate the U.S. OASDI program with comparable programs of other countries. International Social Security agreements eliminate dual Social Security coverage and help workers who have divided their careers between the United States and another country qualify for benefits based on totalized (combined) credits from both countries. See International Programs.

Benefit Computation and Automatic Adjustment Provisions

Primary Insurance Amount (PIA) Computation

The PIA is the monthly benefit amount payable to the worker upon initial entitlement at full retirement age (FRA) or upon entitlement to unreduced disability benefits. (FRA is the age at which unreduced retirement benefits may be paid.) The PIA 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 PIA 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.

For workers first eligible for benefits before 1979, PIA computations generally used the average monthly wage (AMW) as the earnings measure. The AMW-to-PIA conversion tables from 1959 to present are available at Actuarial Services' Benefit Tables For Persons Eligible Before 1979.

For workers first eligible for benefits in or after 1979, average indexed monthly earnings (AIME) have replaced the AMW as the earnings measure that typically applies. The PIA computation based on AIME currently involves the following three steps:

1. 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.
   Annual Statistical Supplement Table 2.A8 shows the indexing factors applicable to the earnings of workers who were first eligible in the last 16 years. Table 2.A9 shows indexed earnings for workers first eligible in the last 8 years who had maximum taxable earnings in any year after 1950.
2. Determining AIME. 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 (one-fifth 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.
   The actual years used in the computation (the computation years) 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. AIME is calculated as the sum of indexed earnings in the computation period, divided by the number of months in that period.
   Table 6 provides a historical outline of provisions related to AIME and AMW and describes variations in the number of dropout years.

   Table 6 Legislative provisions addressing average monthly wage and average indexed monthly earnings, by year enacted

   Year enacted	Provision
   	Average monthly wage (AMW)
   1939	Computed using creditable earnings after 1936 and before year of death or retirement, divided by months after 1936 and before quarter of death or retirement, excluding months before age 22 in quarters not covered.
   1950	Alternatively, computed using creditable earnings after 1950 (or year aged 21, if later) and before year of death, year of retirement, or subsequent year (or year age 65 attained if then insured), divided by number of months in those years.
   1954	Earnings and months in 4 years may be excluded in all cases; 5 years if worker has 20 quarters of coverage. Period of disability may be excluded.
   1956	Earnings and months in 5 years may be excluded in all cases. Computation period may end at age 62 for women then insured.
   1960	Earnings may be used for any year after 1950 and before year of retirement but including year of death, with the number of years equal to the years elapsed after 1955 (or year age 26 attained) and before year of death or age 65 attained (62 for women).
   	Same method may be used for earnings after 1936 and years elapsed after 1941.
   1972	Number of years for men reaching age 62 after 1972, measured to age 62 or to 1975, if later.
   1977	For workers who attain age 62, become disabled, or die after 1978, excludes earnings in year of attainment of age 62 and later, computed using creditable earnings after 1936.
   	For workers who attain age 62 after 1978 and before 1984, excludes earnings in year of attainment of age 62 and later, computed using creditable earnings after 1950.
   	Average indexed monthly earnings (AIME)
   1977	For workers who attain age 62, become disabled, or die after 1978, AIME is computed by using indexed earnings after 1950 for the same computation period applicable in calculating the AMW. Indexed earnings for a given year equal actual creditable earnings multiplied by the national average wage for the second year before worker attains age 62, becomes disabled, or dies, divided by the national average wage for the given year, except that for years after the second year before the worker attains age 62, becomes disabled, or dies, indexed earnings equal actual creditable earnings.
   1980	For disabled workers, the number of years of earnings used equals the number of years elapsed after 1950 (or year age 21 attained, if later) and before year of disability, minus dropout years equal to one-fifth of the number of elapsed years rounded to the next lower integer (to a maximum of 5 dropout years). However, the number of years of earnings used is at least 2. Effective for initial entitlement after June 1980.
   	Disabled workers with computations using fewer than 3 dropout years under the one-fifth rule may be credited with additional dropout years based on child care, up to a total of 3 dropout years. (To receive this credit, a worker must have had no earnings in that year and have been living with his or her child or spouse's child under age 3.) However, the number of years of earnings used is at least 2. Effective July 1981.
   1983	For workers who die after 1978 but before attaining age 62, indexed earnings for a given year equal actual creditable earnings, multiplied by the national average wage for the earlier of (1) the year in which the worker reached or would have reached age 60 or (2) the second year before the survivor becomes eligible for aged or disabled widow(er) benefits, and then divided by the national average wage for the given year. This computation method applies only if it results in a higher benefit. Effective for surviving spouses first eligible after 1984.
   SOURCES: Social Security Act of 1935 (the Act), as amended through December 31, 2024; regulations issued under the Act; and precedential case decisions (rulings). See the Social Security Program Rules page (https://www.ssa.gov/regulations/index.htm) for specific laws, regulations, rulings, legislation, and a link to the Federal Register.
   NOTE: Before 2025, this table was Annual Statistical Supplement Table 2.A10.
   CONTACT: statistics@ssa.gov.

3. Computing the PIA. The computation involves several steps. The first step uses a formula that is weighted to provide a higher PIA-to-AIME ratio for workers with comparatively low earnings. The formula applies declining percentage conversion rates to three portins of the AIME. The portions depend on the year in which a worker attains age 62, becomes disabled, or dies before attaining age 62. in 2024. See Actuarial Services' Primary Insurance Amount page.

   This computation is then increased by cost-of-living adjustments (COLAs) beginning with the payment for December of the first year of eligibility, which the beneficiary receives in January of the following year.

   Annual Statistical Supplement Table 2.A11 shows the PIA formula and first applicable COLA for workers first eligible in 1979 or later.

The dollar amounts defining the AIME brackets are referred to as bend points. Bend points (shown in Annual Statistical Supplement Table 2.A11) 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.

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. Subsequent recomputations of the worker's benefit, including additional earnings not originally considered, delayed retirement credits, or additional COLA increases, all refer to the computation of the formula that originally applied on the basis of the year of eligibility.

PIA 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.

A cost-of-living increase in benefits generally is established each year if the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), 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 CPI-W for July, August, and September in the year of determination is compared with the arithmetical mean of the CPI-W 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 CPI-W, 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.

Under certain conditions, depending on the size of the combined OASDI 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 stabilizer provision. In no case, however, are benefits reduced below the level of benefits in the year of determination. Historically, this provision has never been triggered.

Table 7 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 AIME brackets in the PIA formula and the PIA 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 CPI.

Alternative PIA Computation Provisions

Special Minimum PIA

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 PIA 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 PIA 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 PIA are linked to cost-of-living adjustments.

Windfall Elimination Provision (WEP)

The WEP affected workers who received Social Security benefits based on their own work and were also entitled to a pension based on noncovered work after 1956. The Social Security Fairness Act (enacted January 2025) repealed the WEP retroactively to benefits payable in or after January 2024, but the resulting benefit increases and retroactive payments were not processed until 2025. See the archival Social Security Bulletin article “Social Security Beneficiaries Affected by the Windfall Elimination Provision in 2006” for WEP history, computation, and applicability. See Annual Statistical Supplement, 2024 Table 2.A11.1 for WEP legislative provisions (this table was discontinued after the 2024 edition).

Family Maximum Provisions

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 PIA. The maximum benefit for disabled-worker families is the smaller of (1) 85 percent of AIME (or 100 percent of the PIA, if larger) or (2) 150 percent of the PIA.

Like the formula for determining the PIA, 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 COLAs.

Benefit Types and Levels

Retired and Disabled Workers

The full retirement age (FRA) is the earliest age at which an unreduced retirement benefit is payable (sometimes referred to as the normal retirement age). 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 FRA affected workers who reached age 62 in 2000. Workers who reached age 62 in 2022 are in the first birth cohort for whom the FRA is 67.

Reduced retirement benefits are available as early as age 62. The monthly rate of reduction from the full retirement benefit (that is, the PIA) is ⁵⁄₉ of 1 percent a month for the 36 months immediately preceding FRA. The reduction rate is ⁵⁄₁₂ of 1 percent a month for any prior months. The maximum overall reduction for early retirement rose as the FRA increased across birth cohorts, from 20 percent for workers who reached age 62 in 1999 or earlier (whose FRA is 65), to 30 percent for workers who reached age 62 in 2022 (whose FRA is 67).

Table 9 shows the FRA and maximum reduction of retired-worker benefits by year of birth.

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.

For insured workers who postpone their retirement beyond FRA, benefits are increased for each month of nonpayment beyond that FRA up to age 70. This increase is called a delayed retirement credit and is potentially available for any or all months following attainment of FRA (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.

Table 10 shows the maximum delayed retirement credit percentages by year of birth. Table 11 shows a history of provisions to increase benefits for delayed retirement.

Spouses and Children of Workers

Spouses receive 50 percent of the worker's PIA (regardless of the worker's actual benefit amount), if the spouse has attained FRA 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 ²⁵⁄₃₆ of 1 percent a month for the 36 months immediately preceding FRA and ⁵⁄₁₂ 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 FRA for spouses attaining age 62 in that year.

Children of retired or disabled workers are also eligible to receive monthly benefits. The term child 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 child 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 PIA, 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.

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.

Survivors Benefits

Widows and widowers of fully insured workers are eligible for unreduced benefits at FRA. As with retired workers and spouses, widow(er)s' FRA 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 ex-spouses can also receive widow(er) benefits if they were married to the worker for at least 10 years and were not remarried before age 60 (age 50 if disabled).

For survivors whose full benefit retirement age is 65, the monthly rate of reduction for the first 60 months immediately preceding FRA is ¹⁹⁄₄₀ of 1 percent of the worker's PIA, with a maximum reduction of 28.5 percent at age 60. For survivors whose FRA is after 65, the amount of reduction for each month prior to FRA is adjusted accordingly to ensure that the maximum reduction at age 60 remains 28.5 percent of the worker's PIA.

Table 12 shows the FRA and maximum reduction of widow(er)'s benefits by year of birth.

Benefits for widows and widowers are increased if the deceased worker delayed receiving retirement benefits beyond the FRA. In these cases, the survivor benefits include any delayed retirement credits the deceased worker earned. Conversely, if the worker had elected early retirement, widow(er)s' benefits are limited for widow(er)s 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 PIA or the amount the worker would be receiving if still alive. Disabled widow(er)s aged 50 to 60 receive the rate of reduction set for widow(er)s aged 60 (71.5 percent of PIA) regardless of their age at the time of entitlement.

Children of deceased workers and mother and father beneficiaries under FRA are eligible to receive monthly benefits up to 75 percent of the worker's PIA 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 PIA. When two dependent parents qualify for benefits, the monthly benefit for each is equal to 75 percent of the deceased worker's PIA. 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.

Table 13 describes age-related reductions for dependent beneficiaries, as does Table 14 for widow(er)s. Table 15 summarizes the history of certain OASDI benefits other than monthly benefit payments.

Provisions for Railroad Retirement Board Beneficiaries

SSA statistical publications 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.

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.

• 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 OASDI actually paid on the basis of nonrailroad work; and
• 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.

Public Law 107-90 (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.

Effect of Current Earnings on Benefits

Annual Earnings Test

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.

Under the annual earnings test provisions of the Social Security Act, beneficiaries who are younger than FRA 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 (see Exempt Amounts Under the Earnings Test). Different rules on earnings apply to beneficiaries who receive disability benefits, and are described in a subsequent section.

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 ¹⁄₁₂ 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.

A foreign work test applies to work outside the United States in employment or self-employment that is not subject to U.S. Social Security taxes. Benefits are withheld for each month a beneficiary younger than FRA works more than 45 hours.

The earnings test no longer applies beginning with the month a beneficiary attains FRA. Elimination of the earnings test at FRA is effective for taxable years ending after December 31, 1999 (Public Law 106-182). At FRA no benefits are withheld for earnings, regardless of the amount of earnings.

Automatic Adjustments for Additional Earnings

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 PIA could be affected by the additional earnings. These adjustments occur automatically; the worker does not need to request the action.

Adjusted Reduction Factor

The reduction factor is based on all months of entitlement prior to FRA. If a full month or partial month of benefits is withheld because of the earnings test, the reduction factor is automatically adjusted at FRA. For widows and widowers, the automatic adjustments are effective at age 62 and at FRA. This adjustment of the reduction factor results in a higher ongoing monthly benefit. For example, if retirement benefits are claimed 36 months before FRA, a 36-month reduction factor is applied to the PIA. If the earnings test results in no payment of benefits for 6 of those months, the reduction factor is automatically adjusted at FRA, the ongoing reduction factor is changed to 30 months, and benefits are increased retroactively to the month of FRA.

Recomputation

Additional earnings also have the potential to increase the PIA. A recomputation is automatically considered each year when earnings of the insured worker are credited to the record. A recomputation of the PIA is processed if the earnings result in an increase to the PIA of at least $1.00. The increase is retroactive to January of the year following the year of new earnings.

Earnings and Disability Benefits

Beneficiaries entitled on the basis of their own disability—disabled workers, disabled adult children, and disabled widow(er)s—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 (SGA) and therefore no longer meet the requirements for disability benefits. Although other factors are considered, numerical earnings thresholds are used to evaluate SGA. Disabled beneficiaries must report all earnings to SSA for timely evaluation of SGA.

Through 2000, SSA periodically changed the earnings amount for which a nonblind disabled individual was considered to be engaged in SGA. Effective January 1, 2001, SGA amounts are automatically adjusted annually on the basis of increases in the national average wage index (see Substantial Gainful Activity).

A different definition of SGA applies to blind individuals receiving Social Security disability benefits. Increases in the SGA amount for blind individuals have been pegged to increases in the national average wage index since 1978.

A 9-month 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 SGA level is used to determine whether earnings are substantial.

Additional Information

Taxation of Benefits

Like all matters dealing with tax liability, taxation of Social Security benefits falls under the jurisdiction of the Internal Revenue Service (IRS). See IRS Publication 915, “Social Security and Equivalent Railroad Retirement Benefits,” for details.

Program Changes

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.

Government Pension Offset (GPO)

Under the GPO provision, 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(er)'s Social Security benefits. The Social Security Fairness Act (enacted January 2025) repealed the GPO retroactively to benefits payable in or after January 2024, but the resulting benefit increases and retroactive payments were not processed until 2025. See Annual Statistical Supplement, 2024 OASDI Program Description and Legislative History section for more details (this information was discontinued after the 2024 edition).

Agency Structure and Organization

The OASDI program is administered by the Social Security Administration (SSA), which became an independent agency in 1995. The commissioner of Social Security serves a 6-year 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.

The SSA organization is centrally managed, with a nationwide network of Field 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 one-stop service to the public.

SSA is headquartered in Baltimore, Maryland. Major headquarter components include the National Computer Center, which contains the mainframe computers that drive SSA systems; much of the executive staff for policy, programs, operations, and systems; and field support components.

SSA's 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. In addition, there are teleservice centers providing national toll-free service (1-800-772-1213). Although physically located in different regions, each teleservice center manages the public's Social Security business from throughout the nation using state-of-the-art communications systems.

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 toll-free number. The Hearings Offices and Appeals Council make decisions on appeals of Social Security determinations in claims for benefits.