What determines the amount of Old-Age Benefits received from Social Security?

The amount of Old-Age Benefits received from Social Security is primarily determined by the worker's averaged earnings during their career. Social Security uses a formula that takes into account the highest 35 years of earnings to calculate the primary insurance amount (PIA), which is the basis for the benefits one qualifies for upon retirement. Higher lifetime earnings result in a higher benefit amount.

This approach is designed to provide a safety net for retirees, correlating benefits not only with duration of work but also with the financial contributions made to the Social Security system over time. It reflects the principle that those who have contributed more—through payroll taxes based on their earnings—are eligible for more substantial benefits in retirement.

Other factors, such as government regulations, flat rates, or the number of dependents, do not have a direct impact on the calculation of Old-Age Benefits in the same way. Benefits primarily reflect individual earning history, making this approach equitable to workers who have paid into the system through their income.