Average indexed monthly earnings. When a worker retires, the Social Security Administration summarizes up to 35 years of the worker's lifetime earnings and adjusts them for wage inflation. This number is then used to calculate the retiree's "PIA" or primary insurance amount.
For more, click here.
Social Security recipients are not limited to retirees. In the OASI system, spouses are entitled to a spousal benefit, as are dependents of beneficiaries who are under the age of 19.
The cost of living adjustment is an annual calculation designed to prevent losses in beneficiaries' purchasing power due to inflation.
For more, click here.Or click here.
Covered Earnings
The total amount of any employee's pay that is taxed by Social Security payroll taxes. All wages below the taxable maximum are covered earnings. About 94% of workers fall under the taxable maximum every year.
For more, click here.
DI stands for Disability Insurance. While most people associate Social Security with retirement, it also technically encompasses disability insurance payments to almost nine million Americans.
For more, click here.
Early Retirement Age
Future Social Security recipients can elect to retire early at 62 and receive reduced benefit payments.
For more, click here.
Employee Contribution
Every covered worker contributes 6.2% of their paycheck in OASDI payroll taxes, which constitutes the "employee contribution" toward Social Security.
Employer Contribution
Employers whose workers pay into Social Security also contribute 6.2% of each worker's payroll taxes. While it may seem like employers pay for half of all benefits, economists typically assume that any taxes paid by employers are in effect paid by employees, since in absence of the mandatory taxes, the employees would have higher wages by roughly the same amount.
Full OASDI Glossary
For a full glossary of terms in the OASDI Trustees Report provided by the SSA, click here.
OASDI Glossary
Full Retirement Age
The full retirement age began at 65 but is slowly increasing to the final age of 67 for those born in 1960 or later.
For more, click here.
OASDI stands for Old Age, Survivors, and Disability Insurance. It encompasses both the retirement portion of Social Security (OASI) and the disability insurance program (DI).
The Old Age and Survivors Insurance Trust Fund is what most people picture when they hear "Social Security." This trust fund pays benefits to retired workers and their spouses and dependents. It also pays benefits to the survivors of deceased retirees.
For more, click here.
The primary insurance amount is the sum of three separate percentages of the AIME. It is the initial benefit a retiree receives, and it increases with any future COLA.
For more, click here.Or click here.
Payroll Tax
Every covered worker pays a payroll tax that includes a combined 12.4% up to the taxable maximum.
Replacement Rate
In the context of Social Security, the "replacement rate" or "replacement ratio" is the percent of pre-retirement earnings that Social Security recipients can expect to receive. Median-income retirees typically expect around a mid-thirty percent replacement rate, low-income retirees get closer to fifty percent, and high-income retirees typically receive a mid-twenty percent replacement rate.
For more, click here.
Social Security Trustees Report
Congress mandates that the Social Security Board of Trustees issues annual reports on their recent and future operations. These reports reflect official data, estimates, and projections for future costs and participation rates.
For the most recent Trustees Report, click here.
Special Issue Securities
All funds in the OASDI trust funds are invested in "special issue securities" specifically created for Social Security. In effect, they are IOUs that the government pays to itself.
For more, click here.
Spousal Benefit
As the spouse of a Social Security recipient, you are entitled to additional benefits of up to one-half of their full benefits. You do not have to have a work history to receive this payment. If you have worked and are owed Social Security benefits, you get the maximum of what you are owed or your calculated spousal benefit.
For more, click here.
Taxable Maximum
As a covered worker, you pay Social Security taxes up to the taxable maximum. In 2021, that amount is $142,800. Since Social Security was never meant to function as a retirement program, wages subject to taxation were capped so that high-income individuals did not end up with Social Security payments many times what would be necessary to prevent poverty in old age.
For more, click here.
Worker to Beneficiary Ratio
For every current recipient of Social Security, there are several active workers whose taxes are transferred directly to retirees. When Social Security began, there were dozens of workers per every recipient. That number has shrunk to just under three workers for every active Social Security recipient.
For more, click here.

Frequently Asked Questions

How did we choose the numbers that we're using?
When possible, we use official numbers from the Social Security Administration. The most recent Social Security Trustees Report provides numerous tables with historical data and official projections. Where it's not possible to use official sources, we use nonpartisan estimates from government agencies like the Congressional Budget Office. Absent even those, we use midpoint estimates from various think tanks or academically-published research reports, while taking special care to collect data from left-leaning, right-leaning, and ostensibly nonpartisan organizations.
What are the official sources for trust fund data?
The Social Security Administration (SSA) publishes the official numbers for the OASDI trust funds. The annual Social Security Trustees Reports contain historical data and the official projections of future costs and participation rates.
To see the 2020 Social Security Trustees Report, click here.
What is the difference between low-cost, intermediate, and high-cost projections?
The intermediate cost projections represent the Trustees' best estimates of likely future demographic, economic, and program-specific projections. The low-cost projections assume relatively rapid economic growth, high inflation, and favorable demographic projections. The high-cost projections assume relatively slow economic growth, low inflation, and unfavorable demographic projections.
For more, click here to see the Trustees Report glossary.
What is the rate of return on the securities in the trust fund?
The average interest rate of investments held in the OASI trust fund was 2.506% in December 2020. The average interest rate of investments held in the DI trust fund was 2.916% in December 2020.
For more on the special issue securities held by the OASDI trust funds, click here.To see recent investment holdings, click here.
When is Social Security going bankrupt?
The 2020 Social Security Trustees Report projects that the combined OASDI trust funds will go bankrupt in 2035, requiring a mandatory 21% cut to all benefits across the board.
For more, see the tables with official projections in the 2020 Social Security Trustees Report.

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