Social Security: The Public Servant Retirement Protection Act (H.R. 2772/S. 1647)

Social Security: The Public Servant Retirement
Protection Act (H.R. 2772/S. 1647)
Updated July 9, 2007
Laura Haltzel
Specialist in Social Security
Domestic Social Policy Division



Social Security: The Public Servant Retirement
Protection Act (H.R. 2772/S. 1647)
Summary
A worker is “covered” by Social Security if he or she pays into Social Security
through the Old-Age, Survivors, and Disability Insurance (OASDI) payroll tax.
Currently 96% of all workers are covered by Social Security. The majority of non-
covered positions are held by federal, state, and local government employees.
The current-law Windfall Elimination Provision (WEP) reduces the Social
Security retirement or disability benefits of workers who also receive a pension from
employment not covered by Social Security. The goal of the WEP was to remove an
unintended advantage that the regular Social Security benefit formula provided to
employees who divided their careers between covered and non-covered positions.
As of December 2006, approximately 971,300 beneficiaries (approximately 2% of
the entire beneficiary population at that time) had their benefits reduced as a result
of the current-law WEP.
On June 19, 2007, Representative Kevin Brady introduced H.R. 2772, the Public
Servant Retirement Protection Act (PSRPA), which would alter the current-law WEP
formula for those who first enter non-Social Security-covered employment one year
after the bill’s enactment. The PSRPA would maintain the current-law WEP for
workers who have worked in non-covered employment prior to this date except in
cases where the PSRPA WEP provides them with a higher benefit. On June 19,
2007, Senator Kay Bailey Hutchison introduced the sister bill, S. 1647. Both bills
would replace the current-law WEP formula with a new WEP formula that provides
a benefit in rough proportion to the percentage of earnings worked in Social Security-
covered employment.
When compared to current-law, the effect of the PSRPA WEP on a worker’s
benefit levels varies both by earnings level and the number of years of Social Security
covered-earnings. The current-law WEP generally provides a benefit that increases
with additional years of Social Security coverage. By contrast, the key determinant
of the new proportional benefit amount is the percentage of the highest 35 years of
covered and non-covered earnings that can be attributed to Social Security covered
work — the higher the value of these covered earnings compared to the highest 35
years of covered and non-covered earnings, the larger the benefit under the PSRPA.
Thus, the PSRPA WEP provides a benefit that increases with a rise in the proportion
of Social Security covered earnings relative to overall earnings, regardless of the
number of years worked in Social Security covered employment.
This report will be updated as legislative activity warrants.



Contents
Background ......................................................1
Current-Law Windfall Elimination Provision (WEP) .....................1
Rationale ....................................................3
Social Security-Covered and Non-Covered Work.....................4
Who is Currently Affected by the WEP.............................6
The “Public Servant Retirement Protection Act” (PSRPA)................10
Future Non-Covered Workers...................................10
Applies a New, Proportional PIA Formula to Those Who First Begin
Non-Covered Employment One Year after the Bill’s Enactment10
Current and Past Non-Covered Workers...........................10
Holds Harmless Individuals Who Already Work or Have Worked
in Non-Covered Employment...........................10
How Will the PSRPA Affect Benefits?............................11
Earnings Levels..........................................12
Number of Years of Covered Earnings........................17
Assumptions and Methodology......................................18
Appendix: Benefit Amounts Under Current-Law and PSRPA by
Earnings Level and Years of Social Security Covered Earnings.........20
List of Figures
Figure 1. Current-Law WEP, Scaled Average-Wage Earner................3
Figure 2. Current-Law WEP and PSRPA WEP,
Scaled Average-Wage Earner...................................11
Figure 3. Current-Law WEP and PSRPA WEP,
Minimum Wage Earner........................................14
Figure 4. Current-Law WEP and PSRPA WEP,
Scaled Low-Wage Earner......................................14
Figure 5. Current-Law WEP and PSRPA WEP,
Scaled High-Wage Earner......................................15
Figure 6. Current-Law WEP and PSRPA WEP,
Maximum-Wage Earner........................................16
Figure 7. Percent Change in WEP Benefit Under PSRPA Compared
to Current Law, by Earnings Level...............................16
Figure 8. Percent Change in WEP Benefit Under PSRPA Compared
to Current Law, by Years of Covered Earnings......................17



List of Tables
Table 1. Estimated Social Security Coverage of Workers with
State and Local Government Employment, 2005.....................4
Table 2. Number of Beneficiaries in Current Payment Status
with Benefits Affected by Windfall Elimination Provision (WEP),
by State and Type of Benefit, December 2006.......................6
Table 3. Number of Beneficiaries in Current Payment Status
with Benefits Affected by the Windfall Elimination Provision (WEP),
by Gender and Type of Benefit, December 2006......................8
Table 4. Number of Individuals Affected by the Windfall Elimination Provision,
by Gender and Number of Years of Coverage, December 2006..........8
Table 5. Minimum-Wage Worker....................................20
Table 6. Scaled Low-Wage Worker..................................21
Table 7. Scaled Average-Wage Worker...............................22
Table 8. Scaled High-Wage Worker..................................23
Table 9. Maximum-Wage Worker ...................................24



Social Security: The Public Servant
Retirement Protection Act
(H.R. 2772/S. 1647)
Background
The Windfall Elimination Provision (WEP) reduces certain Social Security
benefits of workers who also have pension benefits from employment not covered
by Social Security. On June 19, 2007, Representative Kevin Brady introduced H.R.
2772, the Public Servant Retirement Protection Act (PSRPA), which would alter the
current-law WEP formula for those who first enter non-Social Security-covered
employment one year after the bill’s enactment. The PSRPA would maintain the
current-law WEP for workers who have worked in non-covered employment prior
to this date except in cases where the PSRPA WEP provides them with a higher
benefit. On June 19, 2007, Senator Kay Bailey Hutchison introduced the sister bill,
S. 1647. Both bills would replace the current-law WEP formula with a new WEP
formula that provides a benefit in rough proportion to the percentage of earnings
worked in Social Security-covered employment.
Current-Law Windfall
Elimination Provision (WEP)
The current-law WEP reduces the Social Security retirement or disability
benefits of workers who also receive a pension from employment not covered by
Social Security.1 The base Social Security benefit, the Primary Insurance Amount
(PIA), is the amount that a worker would receive as a Social Security retirement
benefit if he or she retired exactly at the full retirement age (65 years and eight
months in 2007). The PIA formula applies three progressive factors — 90%, 32%,
and 15% — to three different levels, or brackets, of a worker’s average indexed


1 The WEP is sometimes confused with the Government Pension Offset (GPO), which
reduces the Social Security spousal benefits of individuals who receive a pension from
employment not covered by Social Security. For more information on the GPO, please see
CRS Report RL32453, “Social Security: The Government Pension Offset (GPO)” by Laura
Haltzel.

monthly covered earnings (AIME).2 In 2007, for those who reach age 62 or who
become disabled, the PIA formula is
90% of the first $680 of the AIME, PLUS
32% of the AIME between $680 and $4,100, PLUS

15% of the AIME exceeding $4,100.


Under current-law, this regular PIA formula is modified for those receiving
pensions from non-Social Security covered employment by adjusting the 90% factor
based on the number of years the worker had “substantial” employment covered by
Social Security (i.e., having earned at least one quarter of the “old-law” Social
Security maximum taxable wage base for each year).3 The higher the number of
years of substantial Social Security coverage, the higher the first formula factor used
in the WEP PIA formula. The lowest formula factor is 40%, which applies to those
with 20 or fewer years of substantial Social Security covered employment. For each
additional year of substantial Social Security coverage over 20, the formula factor
increases by five percentage points until it reaches 90% for those with 30 years of
substantial Social Security covered employment — the same first formula factor as
under the regular PIA formula. Thus, a worker who would otherwise be subject to
the WEP would be exempt from any benefit reduction if he or she had at least 30
years in covered employment. The 32% and 15% PIA formula factors continue to
apply as under the regular PIA formula. Figure 1 demonstrates how the benefit level
resulting from the current-law WEP formula varies by years of covered earnings for


2 The AIME is a dollar amount that represents the average monthly earnings from Social
Security-covered employment over most of the worker’s adult life indexed to the increase
in average annual wages. To calculate the AIME for a retired worker, a worker’s earnings
prior to age 60 are first indexed to the year that the worker reaches age 60. The highest 35
years of indexed yearly earnings are used to compute the AIME. The sum of the indexed
earnings in these 35 years is divided by the number of months in these 35 years to obtain the
average indexed monthly earnings.
3 For determining years of coverage after 1978 for individuals with pensions from non-
covered employment, the amount is 25% of what the contribution and benefit base otherwise
would have been if the 1977 Social Security Amendments had not been enacted. In 2007,
the “old-law” taxable wage base is equal to $72,600 and, thus, to earn credit for one “year
of coverage” under the WEP, a worker would have to earn at least $18,150 in Social
Security-covered employment.

a worker with average earnings.4 In no case can the reduction in benefits under the
WEP exceed more than half of the pension based on non-covered work.
Figure 1. Current-Law WEP, Scaled Average-Wage Earner


$3, 500
$3, 000
)Current Law WEP
$2, 500
l
$2,00007 Dollars
fit Leve
$1, 500
Benetant 20
$1, 000
(Cons
$500
$0
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35
Years of Covered Earnings
Rationale
The goal of the WEP was to remove an unintended advantage that the regular
Social Security benefit formula provided to employees who divide their careers
between covered and non-covered positions. The regular Social Security formula is
intended to replace a higher proportion of earnings for those workers who spend their
working years in low paying jobs relative to those who have high earnings.
However, the regular formula cannot differentiate between those who work their
whole lives in low-paying jobs and those who simply appear to be low paid because
they work for many years in jobs not covered by Social Security. Because those who
work in non-Social Security covered positions do not contribute to Social Security
through the payroll tax, each year of non-covered employment is recorded as a year
4 A “year of coverage” should not be confused with a “year of covered earnings.” In 2007,
to earn credit for one “year of coverage” under the WEP, a worker would have to earn at
least $18,150 in Social Security-covered employment. A “year of covered earnings” is any
year in which the worker had earnings from Social Security-covered employment, regardless
of the amount earned. Because the PSRPA does not rely on the current-law definition of
“years of coverage”in calculating WEP benefits (as determined by measuring “substantial
earnings”), the common denominator of “years of covered earnings” is used in all charts.
For example, in 2007, a minimum-wage worker in Social Security covered-employment
would earn $10,712. Although this minimum-wage worker has a year of Social Security-
covered earnings, he or she would not have earned a “year of coverage” towards the current-
law WEP formula that requires a worker to earn at least $18,150 in Social Security covered-
employment. Any attempt to graphically represent a minimum-wage worker’s current-law
benefit under the WEP by “years of coverage” would have been impossible as the minimum-
wage worker never qualifies for a single “year of coverage.”

of zero earnings in the calculation of a worker’s AIME. Thus, workers in non-
covered Social Security positions received the advantage of the progressive Social
Security formula because their few years of covered earnings were averaged over
their entire working career to determine the average covered earnings on which their
Social Security benefits were based. The WEP formula is intended to remove this
advantage for these workers.
Social Security-Covered and Non-Covered Work
A worker is in a position “covered” by Social Security if he or she pays into
Social Security through the Old-Age, Survivors, and Disability Insurance (OASDI)
payroll tax. Approximately 96% of all workers are covered. The majority of non-
covered positions are held by government employees: most federal employees hired
before 1984 and 29% of current state and local government employees. The latest
available information on the Social Security coverage of state and local workers is
for the year 2005. Nationwide, approximately 71% of state and local government
employees are covered.5 However, coverage varies from state to state. For example,
approximately 97% of state and local employees in Vermont are covered by Social
Security, while only 3% of state and local employees in Ohio are covered.6 Table
1 provides a breakdown of Social Security covered and non-covered employees by
state.
Table 1. Estimated Social Security Coverage of Workers with
State and Local Government Employment, 2005
(in thousands)
StateAll Workersa Covered WorkersNon-CoveredWorkersPercent Non-Covered
Alabama 377 350 27 7%
Alaska 86 41 45 53%
Arizona 425 383 42 10%
Arkansas 194 172 22 11%
California 2 ,493 1,045 1,448 58%
Co lo rado 409 116 293 72%
Co nnecticut 287 193 94 33%
Delaware 66 62 4 6 %
District of Columbia58401832%
Florid a 1 ,173 1,011 162 14%
Georgia 694 498 196 28%
Hawaii 129 77 52 40%
Idaho 140 129 11 8%
I llino is 1 ,0 2 1 5 2 7 4 9 4 4 8 %
Indiana 493 441 52 11%
Iowa 286 254 32 11%
Kansas 286 256 30 10%


5 Social Security Administration, Estimated Social Security Coverage of Workers with State
and Local Government Employment, 2005.
6 Ibid.

StateAll Workersa Covered WorkersNon-CoveredWorkersPercent Non-Covered
Kentucky 373 271 102 27%
Lo uisiana 359 99 260 72%
Maine 127 63 64 50%
Maryland 443 399 44 10%
Massachusetts 457 16 441 97%
Michigan 802 712 90 11%
Minneso ta 445 408 37 8%
Mississippi 254 232 22 9%
Misso uri 469 340 129 28%
Montana 9 6 8 4 1 2 12%
Nebraska 155 144 11 7%
Nevada 149 33 116 78%
New Hampshire111971413%
New Jersey685635507%
New Mexico2101852512%
New York1,7251,665603%
North Carolina698643558%
North Dakota75631216%
Ohio 868 22 846 97%
Oklahoma 305 268 37 12%
Oregon 292 266 26 9%
Pennsylvania 815 742 73 9%
Puerto Rico2912563512%
Rhode Island69571217%
South Carolina358338206%
South Dakota797279%
T ennessee 488 440 48 10%
T exas 1 ,749 827 922 53%
Utah 220 199 21 10%
Vermont 6 0 5 9 1 3%
Virginia 650 611 39 6%
Washington 528 468 60 11%
West Virginia1561401610%
Wisconsin 478 421 57 12%
Wyoming 77 67 10 13%
Other b83567%
To tal 23,741 16,940 6,801 29%
Source: Social Security Administration, Continuous Work History Sample, 1% sample.
Notes: Workers with more than one state and local employer during the year are counted for each
employer.
a. Includes seasonal and part-time workers for whom state and local government employment was not
the major job.
b. Includes persons employed in American Samoa, Guam and Virgin Islands, U.S. citizens employed
abroad by American employers, and persons employed on oceanborne vessels.



This variation in coverage occurs because, although Social Security originally
did not cover any state and local government workers, over time the law has changed.
Most state and local government employees became covered by Social Security
through voluntary agreements between the Social Security Administration and
individual states.7 Beginning in July 1991, state and local employees who were not
members of a public retirement system were mandatorily covered by Social Security
because they had no alternative retirement or disability protection.8
Who is Currently Affected by the WEP
Individuals who work or who have worked in positions where they did not pay
into Social Security are potentially affected by the WEP. As of December 2006,
approximately 971,300 beneficiaries (approximately 2% of the entire beneficiary
population at that time) had their benefits reduced as a result of the current-law WEP.
As Social Security coverage varies by state, so does the number of individuals
affected by the WEP. Table 2 below provides a detailed breakdown by state of the
number of beneficiaries affected by the WEP.
Table 2. Number of Beneficiaries in Current Payment Status
with Benefits Affected by Windfall Elimination Provision (WEP),
by State and Type of Benefit, December 2006
Total NumberRetiredDisabledSpousesPercent of All
Stateof WEPWorkersWorkersandBeneficiariesa
BeneficiariesChildrenin the State
Alabama 13,477 11,9122611,3041%
Alaska 4,600 4,270802507%
Arizona 17,579 15,9782961,3052%
Arkansas 7,788 7,0102005781%
California 120,458 109,7151,5889,1553%
Colorado 27,957 25,6693161,9725%
Connecticut 8,742 8,1991344091%
Delaware 2,191 1,994521451%
District of Columbia 5,995 5,6291082588%
Florida 56,471 51,3467124,4132%
Georgia 27,497 25,3613801,7562%
Hawaii 6,214 5,580865483%
Idaho 4,147 3,750603372%
Illinois 49,565 46,2885062,7713%
Indiana 9,805 8,8472167421%
Iowa 5,712 5,254643941%
Kansas 6,100 5,564984381%


7 These agreements are known as “Section 218 agreements” because they are authorized by
Section 218 of the Social Security Act.
8 P.L. 101-508, The Omnibus Budget Reconciliation Act of 1990, H.Rept. 101-881, p. 358.

Total NumberRetiredDisabledSpousesPercent of All
Stateof WEPWorkersWorkersandBeneficiariesa
BeneficiariesChildrenin the State
Kentucky 12,283 11,1092689062%
Louisiana 18,299 16,0904431,7663%
Maine 8,644 7,9081435933%
Maryland 30,674 28,2474281,9994%
Massachusetts 32,140 30,1654711,5043%
Michigan 12,139 10,9302219881%
Minnesota 12,114 11,2061337752%
Mississippi 6,624 5,9061465721%
Missouri 20,342 18,8323301,1802%
Montana 3,545 3,188622952%
Nebraska 3,664 3,376412471%
Nevada 12,230 11,4011816483%
New Hampshire 4,326 3,959912762%
New Jersey 14,984 13,6212891,0741%
New Mexico 8,428 7,3621629043%
New York 21,889 19,8543631,6721%
North Carolina 17,855 16,3213001,2341%
North Dakota 1,810 1,641141552%
Ohio 70,599 64,7528764,9714%
Oklahoma 12,397 11,0682591,0702%
Oregon 9,643 8,7881377182%
Pennsylvania 23,640 21,2844821,8741%
Rhode Island 3,017 2,757711892%
South Carolina 11,114 10,0751698701%
South Dakota 2,645 2,437331752%
Tennessee 12,642 11,3711761,0951%
Texas 80,990 73,7491,0546,1873%
Utah 8,556 7,6071248253%
Vermont 1,715 1,559221341%
Virginia 32,442 29,3254122,7053%
Washington 18,575 16,4862891,8002%
West Virginia 4,305 3,7621054381%
Wisconsin 8,028 7,418995111%
Wyoming 1,620 1,483231142%
Outlying areas and 53,094 40,69648411,9147%
Total 971,310 878,09914,05879,1532%
Source: Social Security Administration, Office of Research, Evaluation and Statistics, May 23, 2007.
a. CRS calculations based on Social Security Administration, Office of Research, Evaluation and
Statistics, Congressional Statistics Factsheets, May 2007.



Of this group affected by the WEP, about 90% were receiving retired worker
benefits, about 1% were receiving disabled worker benefits, and about 9% were
receiving benefits as spouses or children of insured workers. Spouses and children
may have their benefits indirectly reduced as a result of the WEP since their benefits
are based on the reduced PIA of the worker. However, the WEP reduction is
removed for the calculation of survivor benefits. Of those receiving retirement or
disability benefits, approximately 35% were women and 65% were men (see Table

3).


Table 3. Number of Beneficiaries in Current Payment Status
with Benefits Affected by the Windfall Elimination Provision
(WEP), by Gender and Type of Benefit, December 2006
GenderTotalType of BenefitRetired WorkersDisabled Workers
Women 312,955 308,099 4,856
Men 579,202 570,000 9,202
T o tal 892,157 878,099 14,058
Source: Social Security Administration, Office of Research, Evaluation and Statistics, May 23, 2007.
The number of affected individuals also varies by years of coverage (years of
substantial Social Security covered earnings) that count towards the WEP formula.
Table 4 demonstrates that approximately 73% of all individuals currently affected
by the WEP had 20 or fewer years of coverage and 19% had 21 or more years of
coverage, while the information on years of coverage is not available for about 8%
of those affected. Thus, for about 73% of all beneficiaries affected by the current-law
WEP, the first formula factor used in the WEP PIA never exceeds 40%.
Table 4. Number of Individuals Affected by the Windfall
Elimination Provision, by Gender and Number of Years of
Coverage, December 2006
Years ofWomenMenTotalPercent of Totalby Years of
CoverageCoverage
Information 36,53436,25172,7858.2%
Not Available
0 3 ,045 1,334 4,379 0.5%
1 4 ,525 3,309 7,834 0.9%
2 6 ,556 5,751 12,307 1.4%
3 8 ,719 8,389 17,108 1.9%
4 10,791 11,629 22,420 2.5%
5 12,747 15,282 28,029 3.1%
6 14,600 18,940 33,540 3.8%
7 16,191 22,380 38,571 4.3%



Years ofWomenMenTotalPercent of Totalby Years of
CoverageCoverage
8 17,858 26,041 43,899 4.9%
9 18,547 29,150 47,697 5.3%
10 18,359 31,383 49,742 5.6%
11 17,290 31,758 49,048 5.5%
12 15,731 29,882 45,613 5.1%
13 13,930 27,550 41,480 4.6%
14 12,413 25,597 38,010 4.3%
15 10,915 23,998 34,913 3.9%
16 9,794 22,308 32,102 3.6%
17 8,891 20,828 29,719 3.3%
18 7,804 19,748 27,552 3.1%
19 6,813 18,616 25,429 2.9%
20 6,169 18,867 25,036 2.8%
21 5,701 19,885 25,586 2.9%
22 4,932 19,034 23,966 2.7%
23 4,548 17,433 21,981 2.5%
24 4,111 15,711 19,822 2.2%
25 3,684 13,834 17,518 2.0%
26 3,419 12,624 16,043 1.8%
27 2,956 11,313 14,269 1.6%
28 2,721 10,179 12,900 1.4%
29 2,625 10,138 12,763 1.4%
30+ 36 60 96 0.0%
To tal 312,955 579,202 892,157 100.0%
Source: Unpublished table, Social Security Administration, Office of Research, Evaluation and
Statistics, May 23, 2007.
Notes: A “year of coverage” should not be confused with a “year of covered earnings.” Under the
current-law WEP, the number of years the worker had “substantial” employment covered by Social
Security (i.e., having earned at least one quarter of the “old-law” Social Security maximum taxable
wage base for each year) qualifies as a year of coverage.” In 2007, the “old-law” taxable wage base
was equal to $72,600 and, thus, to earn credit for one “year of coverage” under the WEP, a worker
would have to earn at least $18,150 in Social Security-covered employment. Ayear of covered
earnings” is any year in which the worker had earnings from Social Security-covered employment,
regardless of the amount earned.



The “Public Servant Retirement Protection Act”
(PSRPA)
The PSRPA would treat future non-covered workers differently from current or
past non-covered workers when calculating Social Security retirement or disability
benefits.
Future Non-Covered Workers
Applies a New, Proportional PIA Formula to Those Who First Begin
Non-Covered Employment One Year after the Bill’s Enactment. The
PSRPA legislation establishes a new PIA formula that takes into account the
proportion of a worker’s career earnings attributable to Social Security-covered
employment. First, to represent the PIA that a worker would receive if he or she had
worked a full career in Social Security-covered employment, a PIA is calculated
using the worker’s highest 35 years of earnings from both covered and non-covered
employment. Second, this career-based PIA is multiplied by a ratio that reflects the
portion of the worker’s lifetime earnings attributable to covered employment. This
ratio is equal to the current-law AIME, which is based on the worker’s highest 35
years of Social Security-covered earnings, divided by an AIME based on the worker’s
highest 35 years of earnings from both covered and non-covered employment. The
new PIA is therefore equal to the portion of the career PIA that the worker is eligible
to receive based on his or her Social Security-covered earnings. Thus, the new PIA
formula for future non-covered workers is as follows:
New PIA = PIA using covered X (AIME using highest 35 years covered earnings)
and non-covered earnings(AIME using highest 35 years covered and non-
covered earnings)
Current and Past Non-Covered Workers
Holds Harmless Individuals Who Already Work or Have Worked in
Non-Covered Employment. Those individuals currently working in non-Social
Security-covered employment, those who have worked in non-covered employment
in the past, and those who begin work in non-covered employment within one-year
of the bill’s enactment would not experience any reduction in benefits and could
potentially experience a benefit increase. The PSRPA legislation retains the current-
law WEP formula for these individuals as well as the guarantee that the reduction in
benefits caused by the current-law WEP cannot exceed more than half of the pension
based on non-covered work. However, if the PIA calculated under the proportional
WEP formula would be higher than that provided under current-law, the worker
would receive the higher PIA.
Figure 2 demonstrates the basic relationship between the current-law WEP
formula and the PSRPA proportional benefit formula for a scaled average-wage
worker whose years of Social Security covered earnings occur at the end of his
career.



Figure 2. Current-Law WEP and PSRPA WEP,
Scaled Average-Wage Earner


$3, 500
$3, 000
s)Current LawWEP
$2, 500ll ar
el DoPSRPA WEP
$2, 000ev 0 7
fit Lt 20
$1, 500ne
Betan
$1, 000ons
(C
$500
$0
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35
Years of Covered Earnings
The straight line represents benefits under the PSRPA, while the line with bend
points at 20 and 30 years of covered earnings and shifting slopes represents the
current-law WEP. The area between these two lines represents the estimated change
in benefits between current-law and the PSRPA. Most of the following analysis of
the results deals with explaining the difference in the gaps for workers with varying
levels of earnings and years of covered earnings.
How Will the PSRPA Affect Benefits?
!Under the current-law WEP, benefits are driven by the number of
“years of coverage,” while under the PSRPA benefits are driven by
the value of covered earnings relative to overall earnings, regardless
of the number of years spent accruing those covered earnings.
!While the current-law WEP formula provides no increase in the first
PIA formula factor of 40% for those with between 10 and 20 years
in covered employment, the PSRPA uses a 90% formula factor and
thus would provide a higher percent increase in benefit levels for
each year of covered earnings.
!Future non-covered workers who spend 30 years or more in Social
Security covered employment would not be exempt from a reduced
Social Security benefit as are workers under current-law.

!On the basis of estimates for future hypothetical workers using the
PSPRA formula:
— Minimum-wage workers and low-wage workers would receive
the greatest percent increase in Social Security benefits under
the PSRPA relative to current-law, regardless of the number of
years of covered earnings.
— Average-wage workers with up to 27 years of covered earnings
would receive benefits greater than what they would receive
under current law.
— High-wage workers with up to 23 years of covered earnings
would receive benefits greater than what they would receive
under current law.
— Maximum-wage workers would experience a decrease in Social
Security benefits under the PSRPA relative to current-law,
regardless of the number of years of covered earnings.
The remainder of this report uses the Congressional Research Service (CRS)
Social Security case-simulation model to analyze how the PSRPA would affect the
Social Security benefits of hypothetical workers with various earnings levels who
spend differing numbers of years working in Social Security-covered employment.
In the case-simulation model, it is necessary to specify not only the number of years
of covered employment, but also when those years occurred. Because we are relying
on hypothetical earnings patterns for workers, in all of our examples higher earnings
levels come towards the end of the worker’s career. Therefore, individuals whose
years of covered earnings occur later in their career experience slightly higher benefit
levels under the PSRPA than those individuals who have covered earnings earlier in
their career. While the relative importance of the timing of covered earnings holds
true for individuals with earnings histories that start low and increase throughout the
career, it would not necessarily hold true for other earnings patterns.
The appendix provides a series of tables with examples of how the PSRPA
would affect future non-covered workers based on differences in earnings levels and
years of Social Security covered earnings. For these examples, each worker’s
covered earnings are assumed to fall towards the end of his or her career. The output
for each scenario includes information on the PIA based on all earnings, the new
PSRPA PIA, the current-law WEP PIA, and the percent increase or decrease under
the PSRPA proposal compared to current-law. The main results based on these
examples and a preliminary explanation of these results are summarized below.
Earnings Levels. Figures 3, 4, 5 and 6 demonstrate the relationship between
current-law and the PSRPA for minimum-wage workers, scaled low-wage workers,
scaled high-wage workers and maximum-wage workers, respectively, who have
covered earnings at the end of their careers.9 These figures illustrate features of the


9 The projected earnings histories for these workers are those used by the Social Security
Administration to produce the Annual Trustees Report. It is assumed that they follow
(continued...)

current-law and the PSRPA WEP formulas, with respect to years of covered
earnings, by earnings levels. In all cases, the WEP benefit level, under both current-
law and the PSRPA, increases with years of covered earnings. However, the current-
law WEP generally increases at a varying rate with years of covered earnings,
whereas the PSRPA WEP increases at a constant rate.10 Also, the slope of both the
current-law WEP and PSRPA WEP, with respect to years of coverage, increases as
earnings increase (e.g., compare Figure 3 with Figure 4). These formula features
account for the differences in benefits illustrated in subsequent figures, with respect
to years of covered earnings and earnings levels.
Given our assumed earnings histories, the PSRPA provides a strictly
proportional benefit. However, the current-law WEP formula replaces a higher
proportion of the AIME of higher-wage workers than lower-wage workers. Higher-
wage workers tend to have larger AIMEs, and a larger portion of their benefit is
based on the 32% and 15% formula factors under the current-law WEP PIA. Lower-
wage workers tend to have smaller AIMEs, and a larger portion of their benefit is
based on the first PIA formula factor which can be as small as 40% under the current-
law WEP. Furthermore, under the current-law WEP, minimum-wage earners do not
have high enough earnings to qualify for a “year of coverage” under the WEP.
Therefore, while their AIMEs increase with additional years of covered earnings,
their WEP “years of coverage” do not and so the first PIA formula factor remains at

40%.


9 (...continued)
typical lifetime earnings patterns that would produce a Social Security benefit equivalent
to that of workers with career earnings of either: (1) a “low”wage (45% of a wage equal to
Social Security’s “average wage series);” (2) an “average wage”(a wage equal to Social
Security’s “average wage series);” (3) a “high” wage (160% of a wage equal to Social
Security’s “average wage series);” or (4) the maximum wage creditable under Social
Security.
10 This constant rate is primarily a function of the assumptions used to generate the
hypothetical earners used in this analysis, particularly the long-term constant rate of growth
in the national average wage.

Figure 3. Current-Law WEP and PSRPA WEP,
Minimum Wage Earner
$3,500
$3,000
Current Law WEP
$2,500lllars)
oPSRPA WEP
veD
$2,000 Le07
efitnt 20
$1,500nta
Bes
n
$1,000Co
(
$500
$0
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35
Years of Covered Earnings
Figure 4. Current-Law WEP and PSRPA WEP,
Scaled Low-Wage Earner


$3, 500
$3, 000
Current Law WEP
rs)
$2,500lllaPSRPA WEP
o
ve D
$2,000 Le07
fitt 20
$1, 500an
Benest
$1, 000on
(C
$500
$0
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35
Years of Covered Earnings

The impact of this “year of coverage” requirement can be seen by comparing
Figure 3 (minimum-wage worker) with Figure 2 (scaled average-wage worker). The
pattern of current-law benefits by years of covered earnings for the minimum-wage
worker does not exhibit the typical bend-points one expects from the WEP formula
because the first PIA formula factor never rises with additional years of covered
earnings. This same pattern holds true for scaled low-wage workers (Figure 4), but
to a lesser degree. Scaled low-wage workers earn high enough wages in some years
to qualify for a “year of coverage,” but even then the first PIA formula factor only
reaches 60%. Thus, when the new proportional PIA is used, and the regular PIA
formula using the 90% first formula factor is put in place, minimum-wage and scaled
low-wage workers experience the greatest percent increase in benefits. Scaled
average-wage, scaled high-wage, and maximum-wage earners all have high enough
earnings in each year of covered earnings to qualify for a ‘year of coverage’ under the
WEP and thus their first PIA formula factors rise every year between 20 and 30 years
of covered earnings (Figure 2, Figure 5 and Figure 6). The difference in the
percentage increase or decrease by earnings level is highlighted in Figure 7.
Figure 5. Current-Law WEP and PSRPA WEP,
Scaled High-Wage Earner


$3, 500
$3,000Current Law WEP
PSRPA WEP
$2, 500lars)
Dol
$2, 000
t Level
$1,500 2007
Benefistant
$1, 000
(Con
$500
$0
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35
Years of Covered Earnings

Figure 6. Current-Law WEP and PSRPA WEP,
Maximum-Wage Earner
$4, 000
$3,500Current Law WEP
$3,000lars)PSRPA WEP
l
$2, 500o
$2, 000
$1,500Benefit Level
$1,000(Constant 2007 D
$500
$0
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35
Years of Covered Earnings
Figure 7. Percent Change in WEP Benefit Under PSRPA Compared
to Current Law, by Earnings Level


Minimum wage workerScaled low-wage worker
120%Scaled average-wage worker
Scaled high-wage workerMaximum wage worker
10 0%
80%
60%EP Benefit
40%ge in W
20%
0%
Percent Chan
-20%
-40%
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35
Years of Covered Earnings

Number of Years of Covered Earnings. Under the PSRPA, the key
determinant of the new proportional benefit amount is the percentage of the highest
35 years of covered and non-covered earnings that can be attributed to covered work
— the higher the value of covered earnings to career earnings, the larger the benefit
under the PSRPA. In order to separate out the effect of the number of years of
covered earnings, we examined workers with identical earnings histories, but with
different numbers of years of covered earnings. For example, Figure 8 highlights
how the percent change in benefit level for a scaled average-wage worker who has
covered earnings at the end of his career varies by the number of years of coverage.11
As seen in Figure 8, the average-wage worker who has between 10 and 20 years
of covered earnings experiences a large percent increase in Social Security benefit
level compared to the current-law WEP. The current-law WEP formula limits the
first PIA formula factor to 40% (instead of 90% for regular workers) no matter how
many additional “years of coverage” a worker earns between 10 and 20. With the
PSRPA PIA, workers would receive an increase in benefit proportional to the
increase in their earnings for each year of additional covered earnings.
Figure 8. Percent Change in WEP Benefit Under PSRPA Compared
to Current Law, by Years of Covered Earnings


30%
25%fit
neScaled Average-Wage Worker
20%Be
15%WEP
n
10%e i
5%ang
t Ch
0%en
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35rc
-5%Pe
- 10%
Years of Covered Earnings
For those workers with 21 to 29 years of covered earnings, the percent increase
in benefit under the PSRPA declines for each year of covered earnings gained.
Again, this pattern is due to the current-law WEP formula. Under the current-law
WEP, the first formula factor in the PIA increases by 5% for each additional “year
of coverage” at the same time the current-law AIME increases as a result of
11 For scaled average-wage workers, a year of covered earnings equals a “year of coverage”
under the current-law WEP.

additional covered earnings. For the average-wage worker, the percent increase in
the covered AIME per year of coverage (the base of growth for the PSRPA) doesn’t
keep pace with the 5% increase in the first PIA formula factor (the base of growth for
the current-law WEP). Thus, for the average-wage worker, the current-law WEP
provides a higher benefit than the PSRPA would once covered earnings exceed 27.5
years.
Relative to current-law, individuals who work 30 to 34 years of covered
earnings would experience the largest percent decrease in their Social Security
benefits. Under current-law, individuals who work 30 or more years in covered
employment are exempt from any reduction in benefits under the WEP because their
benefits are calculated using the regular PIA formula with the 90% formula factor.
Under the new PSRPA, these individuals would now be affected by the proportional
WEP PIA.
Individuals who work for 35 years in covered employment at the end of their
careers would experience neither an increase nor a decrease in benefit levels. Under
current-law these individuals would be exempt from the WEP PIA formula. Under
the PSRPA PIA formula, these individuals are still exempt from the proportional
WEP reduction because their AIME based on covered work is equal to the AIME
based on all earnings. Because the AIME takes the highest 35 years of earnings, and
in both cases the highest 35 years are covered earnings from the end of the career, the
AIMEs are equal and the 35 year covered worker receives a PIA identical to what he
would have received under the current-law WEP PIA.
Assumptions and Methodology
The results presented in this report were calculated using the intermediate
(Alternative II) assumptions of the 2007 Social Security Trustees Report. All dollar
figures are in constant 2007 dollars. In each scenario, the worker is born in 1984,
begins work at age 21 in 2005, and retires at the full retirement age of 67 in 2051.
As a result, our example worker has a career of 46 years, split between Social
Security covered and non-covered work. We provide estimates for minimum-wage
workers, scaled low-wage workers, scaled average-wage workers, scaled high-wage
workers and maximum-wage workers, as defined by the Social Security Office of the
Chief Actuary.12 It is assumed that these workers follow typical lifetime earnings
patterns that would produce a Social Security benefit equivalent to that of workers
with career earnings of either: (1) a “low”wage (45% of a wage equal to Social
Security’s “average wage series);” (2) an “average wage”(a wage equal to Social
Security’s “average wage series);” (3) a “high” wage (160% of a wage equal to Social
Security’s “average wage series);” or (4) the maximum wage creditable under Social


12 Social Security Administration, Office of the Actuary, Internal Rates of Return Under the
OASDI Program for Hypothetical Workers, Actuarial Note no. 144, June 2001. The pattern
in these “scaled” earnings histories shows relatively low earnings at the beginning of the
career, fairly rapid growth through the middle of the career, and a gradual tapering off of
earnings at the end of the career.

Security. The scenarios provided show individuals with between 10 and 35 years of
covered earnings, with the remaining earnings out of the 46-year career being
uncovered. These scenarios are for illustration only and are not meant to fully
represent every possible scenario that actual workers may experience. For example,
by relying on stylized workers, we have assumed no gaps in employment.
Furthermore, the CRS case-simulation model does not contain information on the
estimated level of non-covered pension each type of worker could be expected to
receive upon retirement. Therefore, we are unable to model the provision of the
current-law WEP that would limit the reduction in Social Security benefits to 50%
of the non-covered pension amount. The output for each scenario includes
information on the PIA based on all earnings, the PSRPA PIA, the current-law WEP
PIA, and the percent increase or decrease under the PSRPA compared to current-law.



Appendix: Benefit Amounts Under Current-Law
and PSRPA by Earnings Level and Years
of Social Security Covered Earnings
Table 5. Minimum-Wage Worker
(All benefit amounts in constant 2007 dollars)
Years of PIA Based onCurrent-LawPSRPA WEPPercent
Covered All EarningsWEP-PIAPIAChange in
EarningsWEP Benefit
10 1,039.43 158.47313.6598%
111,039.43 173.39 342.6098%
12 1,039.43 188.01 371.55 98%
13 1,039.43 202.34 400.20 98%
14 1,039.43 217.26 429.14 98%
15 1,039.43 231.88 458.09 98%
16 1,039.43 246.21 487.04 98%
17 1,039.43 261.13 515.99 98%
18 1,039.43 275.45 544.64 98%
19 1,039.43 290.07 573.58 98%
20 1,039.43 305.00 602.53 98%
21 1,039.43 319.32 631.18 98%
22 1,039.43 333.94 660.13 98%
23 1,039.43 348.87 689.37 98%
24 1,039.43 363.19 718.02 98%
25 1,039.43 377.81 746.97 98%
26 1,039.43 392.44 775.92 98%
27 1,039.43 407.06 804.57 98%
28 1,039.43 421.68 833.52 98%
29 1,039.43 434.51 862.46 98%
30 1,039.43 446.15 891.11 100%
31 1,039.43 457.79 920.06 101%
32 1,039.43 469.43 949.01 102%
33 1,039.43 481.07 977.96 103%
34 1,039.43 492.71 1,006.61 104%
35 1,039.43 504.65 1,035.85 105%
Source: Congressional Research Service (CRS) calculations.
Notes: Assumes a worker is born in 1984, begins work at age 21 in 2005, and retires at the full
retirement age of 67 in 2051. This scenario is for illustration only and is not meant to fully represent
every possible scenario that actual workers may experience. For example, by relying on stylized
workers, we have assumed no gaps in employment. This scenario focuses on workers with between
10 and 35 years of covered earnings because a worker generally needs 40 quarters of coverage (10
years) to qualify for Social Security benefits and the highest 35 years of earnings are generally used
in calculating Social Security benefits. These estimates do not include the current-law WEP provision
that would limit the reduction in Social Security benefits to 50% of the non-covered pension amount.



Table 6. Scaled Low-Wage Worker
(All benefit amounts in constant 2007 dollars)
Years of CoveredPIA Based onCurrent-LawPSRPA Percent Change
EarningsAll EarningsWEP PIAWEP PIAin WEP Benefit
10 1,317.87 211.59 319.02 51%
11 1,317.87 236.36 356.62 51%
12 1,317.87 262.02 395.12 51%
13 1,317.87 288.28 435.11 51%
14 1,317.87 315.14 475.40 51%
15 1,317.87 342.30 516.28 51%
16 1,317.87 369.76 557.47 51%
17 1,317.87 397.21 599.25 51%
18 1,317.87 425.26 641.33 51%
19 1,317.87 447.65 683.11 53%
20 1,317.87 469.73 724.89 54%
21 1,317.87 492.11 766.67 56%
22 1,317.87 514.20 808.15 57%
23 1,317.87 535.98 849.33 58%
24 1,317.87 557.47 890.22 60%
25 1,317.87 578.96 930.51 61%
26 1,317.87 600.14 970.79 62%
27 1,317.87 621.03 1,010.19 63%
28 1,317.87 641.92 1,049.28 63%
29 1,317.87 662.52 1,088.08 64%
30 1,317.87 682.81 1,126.28 65%
31 1,317.87 756.22 1,163.88 54%
32 1,317.87 829.04 1,200.88 45%
33 1,317.87 848.44 1,237.29 46%
34 1,317.87 867.24 1,273.10 47%
35 1,317.87 886.04 1,308.32 48%
Source: Congressional Research Service (CRS) calculations.
Notes: Assumes a worker is born in 1984, begins work at age 21 in 2005, and retires at the full
retirement age of 67 in 2051. It is assumed that the “low” wage worker follows a typical lifetime
earnings pattern that would produce a Social Security benefit equivalent to that of workers with career
earnings equal to 45% of Social Securitys average wage” series. This scenario is for illustration only
and is not meant to fully represent every possible scenario that actual workers may experience. For
example, by relying on stylized workers, we have assumed no gaps in employment. This scenario
focuses on workers with between 10 and 35 years of covered earnings because a worker generally
needs 40 quarters of coverage (10 years) to qualify for Social Security benefits and the highest 35
years of earnings are generally used in calculating Social Security benefits. These estimates do not
include the current-law WEP provision that would limit the reduction in Social Security benefits to
50% of the non-covered pension amount.



Table 7. Scaled Average-Wage Worker
(All benefit amounts in constant 2007 dollars)
Years of PIA Based onCurrent-LawPSRPA PercentChange in
Covered EarningsAll EarningsWEP PIAWEP PIAWEP Benefit
10 2,171.68 461.37 526.13 14%
11 2,171.68 505.54 587.61 16%
12 2,171.68 551.20 651.47 18%
13 2,171.68 598.05 717.13 20%
14 2,171.68 645.51 783.68 21%
15 2,171.68 693.85 851.12 23%
16 2,171.68 742.49 919.17 24%
17 2,171.68 791.74 987.80 25%
18 2,171.68 841.28 1,057.04 26%
19 2,171.68 890.52 1,125.98 26%
20 2,171.68 939.76 1,194.92 27%
21 2,171.68 1,042.42 1,263.85 21%
22 2,171.68 1,144.48 1,332.19 16%
23 2,171.68 1,246.54 1,399.94 12%
24 2,171.68 1,347.71 1,467.08 9%
25 2,171.68 1,448.88 1,533.93 6%
26 2,171.68 1,549.45 1,599.89 3%
27 2,171.68 1,649.42 1,665.24 1%
28 2,171.68 1,748.80 1,729.70 -1 %
29 2,171.68 1,847.88 1,793.27 -3 %
30 2,171.68 1,946.06 1,856.24 -5 %
31 2,171.68 1,990.53 1,918.31 -4 %
32 2,171.68 2,034.10 1,979.49 -3 %
33 2,171.68 2,077.08 2,039.47 -2 %
34 2,171.68 2,119.15 2,098.56 -1 %
35 2,171.68 2,160.64 2,156.16 -0 %
Source: Congressional Research Service (CRS) calculations.
Notes: Assumes a worker is born in 1984, begins work at age 21 in 2005, and retires at the full
retirement age of 67 in 2051. It is assumed that the “average” wage worker follows a typical lifetime
earnings pattern that would produce a Social Security benefit equivalent to that of workers with career
earnings equal to Social Securitysaverage wage” series. This scenario is for illustration only and
is not meant to fully represent every possible scenario that actual workers may experience. For
example, by relying on stylized workers, we have assumed no gaps in employment. This scenario
focuses on workers with between 10 and 35 years of covered earnings because a worker generally
needs 40 quarters of coverage (10 years) to qualify for Social Security benefits and the highest 35
years of earnings are generally used in calculating Social Security benefits. These estimates do not
include the current-law WEP provision that would limit the reduction in Social Security benefits to
50% of the non-covered pension amount.



Table 8. Scaled High-Wage Worker
(All benefit amounts in constant 2007 dollars)
Years of PIA Based onCurrent-LawPSRPAPercent Change
Covered EarningsAll EarningsWEP PIA WEP PIAin WEP Benefit
10 2,876.57 686.99 696.54 1%
11 2,876.57 757.42 778.31 3%
12 2,876.57 830.83 863.06 4%
13 2,876.57 905.74 949.90 5%
14 2,876.57 981.84 1,037.94 6%
15 2,876.57 1,058.83 1,127.47 6%
16 2,876.57 1,137.02 1,217.60 7%
17 2,876.57 1,215.51 1,308.62 8%
18 2,876.57 1,294.59 1,400.24 8%
19 2,876.57 1,373.38 1,491.56 9%
20 2,876.57 1,452.46 1,582.88 9%
21 2,876.57 1,584.37 1,673.90 6%
22 2,876.57 1,715.97 1,764.32 3%
23 2,876.57 1,846.99 1,854.45 0%
24 2,876.57 1,977.10 1,943.38 -2 %
25 2,876.57 2,106.62 2,031.71 -4 %
26 2,876.57 2,235.54 2,119.15 -5 %
27 2,876.57 2,363.57 2,205.40 -7 %
28 2,876.57 2,490.70 2,291.05 -8 %
29 2,876.57 2,616.94 2,375.51 -9 %
30 2,876.57 2,707.36 2,458.77 -9 %
31 2,876.57 2,740.79 2,540.84 -7 %
32 2,876.57 2,773.61 2,621.71 -5 %
33 2,876.57 2,805.54 2,701.39 -4 %
34 2,876.57 2,837.18 2,779.28 -2 %
35 2,876.57 2,868.21 2,855.98 0%
Source: Congressional Research Service (CRS) calculations.
Notes: Assumes a worker is born in 1984, begins work at age 21 in 2005, and retires at the full
retirement age of 67 in 2051. It is assumed that the “high wage worker follows a typical lifetime
earnings pattern that would produce a Social Security benefit equivalent to that of workers with career
earnings equal to 160% of Social Securitys average wage” series. This scenario is for illustration
only and is not meant to fully represent every possible scenario that actual workers may experience.
For example, by relying on stylized workers, we have assumed no gaps in employment. This scenario
focuses on workers with between 10 and 35 years of covered earnings because a worker generally
needs 40 quarters of coverage (10 years) to qualify for Social Security benefits and the highest 35
years of earnings are generally used in calculating Social Security benefits. These estimates do not
include the current-law WEP provision that would limit the reduction in Social Security benefits to
50% of the non-covered pension amount.



Table 9. Maximum-Wage Worker
(All benefit amounts in constant 2007 dollars)
Years of PIA Based onCurrent-LawPSRPAPercent Change
Covered EarningsAll Earnings WEP PIA WEP PIAin WEP Benefit
10 3,529.84 1,260.57 1,069.87 -15%
11 3,529.84 1,368.90 1,168.06 -15%
12 3,529.84 1,476.93 1,266.54 -14%
13 3,529.84 1,584.96 1,365.02 -14%
14 3,529.84 1,693.00 1,463.20 -14%
15 3,529.84 1,801.03 1,561.69 -13%
16 3,529.84 1,909.06 1,659.87 -13%
17 3,529.84 2,017.39 1,758.65 -13%
18 3,529.84 2,125.42 1,856.83 -13%
19 3,529.84 2,185.41 1,955.32 -11%
20 3,529.84 2,236.14 2,053.50 -8 %
21 3,529.84 2,340.29 2,151.98 -8 %
22 3,529.84 2,444.15 2,250.46 -8 %
23 3,529.84 2,548.30 2,348.65 -8 %
24 3,529.84 2,652.15 2,447.13 -8 %
25 3,529.84 2,756.30 2,545.61 -8 %
26 3,529.84 2,860.16 2,643.80 -8 %
27 3,529.84 2,964.31 2,742.28 -7 %
28 3,529.84 3,068.16 2,840.46 -7 %
29 3,529.84 3,172.32 2,938.94 -7 %
30 3,529.84 3,276.17 3,037.42 -7 %
31 3,529.84 3,326.90 3,135.91 -6 %
32 3,529.84 3,377.64 3,234.09 -4 %
33 3,529.84 3,428.37 3,332.57 -3 %
34 3,529.84 3,479.10 3,431.05 -1 %
35 3,529.84 3,529.84 3,529.54 0%
Source: Congressional Research Service (CRS) calculations.
Notes: Assumes a worker is born in 1984, begins work at age 21 in 2005, and retires at the full
retirement age of 67 in 2051. It is assumed that themaximum wage worker follows a typical
lifetime earnings pattern that would produce a Social Security benefit equivalent to that of workers
with career earnings equal to the maximum wage creditable under Social Security. This scenario is
for illustration only and is not meant to fully represent every possible scenario that actual workers may
experience. For example, by relying on stylized workers, we have assumed no gaps in employment.
This scenario focuses on workers with between 10 and 35 years of covered earnings because a worker
generally needs 40 quarters of coverage (10 years) to qualify for Social Security benefits and the
highest 35 years of earnings are generally used in calculating Social Security benefits. These estimates
do not include the current-law WEP provision that would limit the reduction in Social Security
benefits to 50% of the non-covered pension amount.