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1 1 (October 2, 2023)

handle is hein.crs/govenbe0001 and id is 1 raw text is: Con ressiona R tes infurming he~ egsaive d ba oh Ser/ce a 1914 Updated October 2, 2023 Social Security Overview Social Security provides monthly cash benefits to retired or disabled workers and their family members, as well as to the family members of deceased workers. It is one of the federal government's largest programs, both in terms of the number of people affected (workers and beneficiaries) and its finances. People of all ages are affected by the program, including 183 million covered workers and over 66 million beneficiaries (of whom 3.9 million are children) in 2023. In 2022, the program had total income of $1.22 trillion (94.6% from dedicated tax revenues) and total expenditures of $1.24 trillion (99.0% for benefit payments). Currently, the Social Security trust funds hold about $2.83 trillion in U.S. Treasury securities-asset reserves that are available for future program spending. Over the long term, however, Social Security is projected to be unable to pay full benefits scheduled under current law beginning in 2034. At that point, the asset reserves held by the trust funds are projected to be depleted, and the program's tax income is projected to cover about three-fourths of scheduled benefit payments through the remainder of the projection period (i.e., 2034-2097). These projections are made under the Board of Trustees' intermediate assumptions in the 2023 annual report; the 2023 report reflects the trustees' understanding of Social Security at the start of 2023. How Is Social Security Financed? Social Security, authorized under Title II of the Social Security Act, is a self-financing program with most of its income derived from dedicated payroll tax contributions (90.6%). The program also receives income from the federal income taxes that some beneficiaries pay on a portion of their benefits (4.0%), interest income on asset reserves held by the Social Security trust funds (5.4%), and a small amount (less than 1%) of other income (including reimbursements from the General Fund of the Treasury). Workers who are covered by Social Security (94% of all workers in 2023) and their employers must pay Social Security payroll taxes. The payroll tax rate is 12.4%, divided evenly between the worker and the employer (each pays 6.2%). The payroll tax is applied to the worker's earnings in covered employment, up to an annual limit (the taxable maximum). The taxable maximum is generally adjusted each year based on average wage growth. The payroll tax is applied to earnings up to $160,200 in 2023. A worker's earnings above the taxable maximum are not subject to the Social Security payroll tax, and they are not counted in the worker's benefit computation. Among workers who are not covered by Social Security (6% of all workers), the largest groups consist of some state and local government employees who participate in alternative pension plans. Who Quahfies for Benefits? Social Security benefits are payable to retired or disabled workers who meet the minimum insured requirements, among other factors. In general, 10 years of covered employment are needed to qualify for retired-worker benefits. The number of years of coverage to be insured in the event of disability or death varies by age, from 1½ years for the youngest workers to 10 years for older workers. In general, disabled workers must have worked for 5 of the past 10 years immediately before the onset of disability. Key Points on Social Security . 183 million covered workers (and their employers) pay into the system. . Over 66 million beneficiaries receive monthly cash benefits, including retired workers, disabled workers, spouses, children, and widow(er)s. . It is a self-financing program, with 94.6% of its total income from dedicated tax revenues. Over its 88-year history, the program has collected $26.40 trillion and paid out $23.57 trillion, leaving trust fund asset reserves of about $2.83 trillion. It is projected to be unable to pay full benefits starting in 2034, largely due to demographic factors. Another eligibility factor is age. For example, a worker can claim retired-worker benefits as early as age 62. However, benefits claimed before the full retirement age (FRA) are reduced to take into account the longer expected period of benefit receipt. (The FRA ranges from 65 to 67, depending on the worker's year of birth.) Similarly, a worker may delay claiming retired-worker benefits until after the FRA; in this case, benefits are increased (up to age 70) to take into account the shorter expected period of benefit receipt. Adjustments for early or delayed retirement are intended to provide the worker with the same total lifetime benefits (based on average life expectancy). Benefits are also payable to the family members of retired, disabled, or deceased workers. Eligible family members include spouses, divorced spouses, widow(er)s, dependent children, and dependent parents. The benefit amount payable to a family member is based on the type of benefit and the worker's basic benefit amount (before any adjustments are made). For example, spouses receive up to 50% of the worker's basic benefit amount; widow(er)s receive up to 100% of the worker's basic benefit amount. There is an overall limit on the amount of benefits payable on a worker's record. If total benefits payable to the worker and family members exceed the maximum, benefits for each family member (excluding the worker) are reduced on a proportional basis. Other adjustments may be made to the family member's benefit, based on the person's age when claiming benefits, whether the person receives a Social

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