ECONOMIC AND BUDGET ISSUE BRIEF

Is Social Security Progressive?

c

Social Security is the nation’s largest domestic program. 

It provides income support to 49 million beneficiaries, 

including retired workers, disabled workers, and their 

dependents and survivors. Benefit payments currently 

account for more than a fifth of federal outlays, and the 

payroll taxes that finance the program account for more 

than a quarter of federal revenues.

Social Security can have a significant effect on the economic well-being of workers and their families. One key 

to understanding that effect, and how it might change 

under proposals to modify the program, is to measure 

how Social Security benefits and the burden of the Social 

Security payroll tax are distributed among different 

groups of participants.1 Of particular interest is whether 

and to what extent the program is progressive, in the 

sense of redistributing income from individuals with 

higher lifetime earnings to those with lower lifetime 

earnings.

Tax systems are typically identified as progressive if individuals with higher income pay a larger fraction of their 

income in taxes than do individuals with lower income. 

Similarly, public benefit programs are identified as progressive if they provide proportionately greater benefits to 

individuals with lower income.

Because the Social Security system involves both taxes 

and benefits, measures of its progressivity must incorporate information about both. To do so, analysts comCBO A series of issue summaries from 

the Congressional Budget Office 

DECEMBER 15, 2006

Summary

For people with lower than average earnings, the 

ratio of the lifetime benefits they receive from Social 

Security to the lifetime payroll taxes they pay for the 

program is higher than it is for people with higher 

average earnings. In that sense, the Social Security 

system is progressive. For people in the bottom fifth of 

the earnings distribution, the ratio of benefits to taxes 

is almost three times as high as it is for those in the top 

fifth.

The benefits paid to retired workers, which account 

for about three-quarters of total benefits, are also 

progressive, but less progressive than Social Security 

benefits overall. The Social Security benefit formula is 

designed to provide beneficiaries who had lower lifetime earnings with monthly benefits that are higher, as 

a percentage of their lifetime average earnings, than 

those received by higher-earning beneficiaries. That 

progressivity in the benefit formula is only partly offset 

by the fact that higher-earning individuals tend to live 

longer and thus collect benefits longer. 

The benefits paid to disabled workers and to the dependents and survivors of Social Security participants 

are by their nature generally paid to individuals with 

lower lifetime earnings. Disabled-worker and auxiliary 

benefits together account for only about a quarter of 

total benefits, but they account for most of the differences in the benefit-to-tax ratio across the earnings distribution. Therefore, analyses that consider the entire 

Social Security system will generally find more overall 

progressivity than studies that focus only on retired 

workers. Disabled-worker benefits are still progressive, 

but less so, when measured by a method that approximates their insurance value to all workers rather than 

one that considers only the benefits actually paid.

1. The Congressional Budget Office’s (CBO’s) past analyses of proposals to change Social Security have included studies of the 

effects of proposals on aggregate Social Security finances and the 

total federal budget and studies of how taxes and benefits are distributed among different groups of participants. See, for example, 

Long-Term Analysis of S. 2427, the Sustainable Solvency First for 

Social Security Act of 2006 (April 2006). Analogous information is 

included in CBO’s baseline analyses; see The Outlook for Social 

Security (June 2004) and Updated Long-Term Projections for Social 

Security (June 2006).
2 CONGRESSIONAL BUDGET OFFICE

ECONOMIC AND BUDGET ISSUE BRIEF

monly focus on various measures of “money’s worth,” 

or the net benefit, positive or negative, that participants 

receive from the system.2 One measure of money’s worth 

is the ratio of lifetime Social Security benefits that an 

individual receives to his or her lifetime Social Security 

taxes paid. If that benefit-to-tax ratio is higher for lowerearning individuals, then the system is considered 

progressive.

Measuring Money’s Worth for Different 

Groups of Workers

Individuals pay Social Security taxes and receive Social 

Security benefits at different times in their lives. Because 

a dollar received or paid today is worth more than a dollar 

received or paid decades from now, constructing a meaningful measure of the net benefit derived from Social 

Security requires putting those cash flows from different 

periods, often decades apart, on a comparable basis. The 

standard method is to calculate the present discounted 

value of both taxes and benefits at a single point in time.3

The benefit-to-tax ratio for an individual is thus calculated as the present value of all benefits received from the 

program divided by the present value of all taxes paid into 

the program. 

Calculating the present value of taxes paid by an individual is relatively straightforward. All one needs to know or 

estimate is the individual’s earnings in each year of his or 

her career and the Social Security payroll tax rate applicable in each of those years. The tax is currently 12.4 percent of earnings up to a taxable maximum. Half of the tax 

is collected from the worker and half from his or her employer, but economists generally agree that the entire tax 

is effectively paid by the worker, because pressures in the 

labor market cause wages to adjust so as to offset the employer’s share. The Congressional Budget Office (CBO) 

models the Social Security system as a whole using a statistical sample of workers and calculates lifetime taxes 

paid on the basis of their historical and projected earnings 

patterns and on the tax rates in effect over time.

The calculation of benefits is more complex. Workers 

may become eligible for two types of benefits based on 

their own earnings: retirement benefits and disability 

benefits. Spouses and children of a retired, disabled, or 

deceased worker may also receive benefits, called auxiliary 

benefits, which are based on the worker’s earnings. (Most 

auxiliary benefits in practice are paid to widows.) As a 

result, the total benefits received over a lifetime depend 

on many factors, including the year of birth, number 

of years worked, earnings in different years, disability status and age at the onset of disability, age at retirement, 

age at death, and family relationships. In addition, Social 

Security law changes from time to time, so people born in 

different years may be subject to different eligibility criteria and benefit formulas.4 In CBO’s calculation, only net 

benefits are considered; those are equal to gross benefits 

minus any income taxes on those benefits credited to the 

Social Security trust funds.5

To analyze the progressivity of benefits, CBO’s analysis 

groups individuals according to a measure of their lifetime household earnings. For any years in which an individual is single, household earnings are simply equal to 

individual earnings. In any years in which the individual 

is married, household earnings are taken to be equal to 64 

percent of the couple’s total earnings, to adjust for the 

fact that two can live more cheaply in one household 

than in separate households.6 An individual’s lifetime 

2. See John Geanakoplos, Olivia S. Mitchell, and Stephen P. Zeldes, 

“Social Security Money’s Worth,” in Olivia S. Mitchell, Robert J. 

Myers, and Howard Young, eds., Prospects for Social Security 

Reform (Philadelphia: Pension Research Council, Wharton School 

of the University of Pennsylvania, 1999), pp. 79-151. 

3. The present values are calculated using a fixed discount rate equal 

to the expected long-run return after inflation on Treasury bonds, 

which in this analysis is assumed to be 3.0 percent.

4. In its June 2006 analysis, CBO projected that the Social Security 

trust funds would be exhausted in the middle of the century; 

therefore, benefits are not fully payable for all future cohorts. In 

other publications, CBO has produced scenarios for both scheduled and actually payable benefits, but for simplicity, this brief 

considers only scheduled benefits.

5. That approach assumes, in particular, that the income taxes on 

Social Security benefits are, in effect, a type of benefit reduction 

for high lifetime earners. Subtracting income taxes on benefits 

lowers benefits more for beneficiaries with high lifetime earnings 

than for other beneficiaries, making the system more progressive. 

However, those taxes are a fairly small fraction of the benefits paid 

(about 5 percent), so the adjustment does not materially affect the 

analysis.

6. Specifically, the couple’s earnings are first summed and then 

divided by 1.5692 (equal to 20.65). The resulting earnings level is 

assigned to each spouse. That factor is consistent with recommendations made by a 1995 National Research Council panel. See 

National Research Council, Measuring Poverty: A New Approach 

(Washington, D.C.: National Academy Press, 1995), p. 162. The 

adjustment affects only how people are sorted into groups, not the 

measure of an individual’s money’s worth.
ECONOMIC AND BUDGET ISSUE BRIEF

IS SOCIAL SECURITY PROGRESSIVE? 3

Figure 1.

Lifetime Social Security Benefit-to-Tax 

Ratio by Birth Cohort and Lifetime 

Earnings Quintile

(Percent)

Source: Congressional Budget Office.

Note: The analysis assumes that scheduled benefits are paid even 

after trust fund exhaustion.

earnings are the sum of the present value of those annual 

earnings when single and when married.7

To examine how participants’ money’s worth varies across 

time, the analysis also examines various birth cohorts, or 

groups of people born in the same time period. Social 

Security policy and demographic trends have changed 

only infrequently and gradually over the program’s history, so grouping people into 10-year birth cohorts allows 

enough detail to capture the effects of changes in policy 

and population characteristics yet creates groups that are 

large enough for statistical precision.

Factors Affecting Social Security’s 

Progressivity 

The Social Security system is progressive: the ratio of lifetime benefits to lifetime taxes declines significantly as lifetime earnings rise. As shown in Figure 1, the benefit-totax ratio is above 100 percent for the bottom earnings 

quintile (that is, the 20 percent of individuals with the 

lowest lifetime earnings) in all birth cohorts; that is, on 

average, those individuals receive lifetime benefits that exceed their lifetime taxes.8

 The ratio is close to 100 percent for the middle earnings quintile in all birth cohorts: 

on average, those individuals receive benefits that are 

roughly equal to their lifetime taxes. The ratio is consistently less than 100 percent for the highest earnings quintile: on average, higher-earining individuals receive less in 

Social Security benefits than they pay in taxes over their 

lifetime. The ratio for the bottom quintile is almost three 

times that for the top quintile.

Estimates of participants’ money’s worth vary among 

birth cohorts because of demographic and economic 

trends and, to a lesser extent, scheduled policy changes.9

The key demographic trend affecting the estimates is the 

projected long-term decline in mortality rates: as life 

spans increase, retirees will collect benefits for more years, 

so that, all else being equal, lifetime benefit-to-tax ratios 

will rise. Figure 1 shows, however, that those ratios actually change little over time: the general upward trend associated with declining mortality is offset to some extent 

by other trends.10 Indeed, the differences in benefit-totax ratios among birth cohorts are quite small compared 

with the variation among earnings groups. For all cohorts, the ratio of lifetime benefits to lifetime taxes for the 

7. CBO uses total earnings—not just the amount taxable under 

Social Security—to classify people into groups. Because the measure of progressivity is the ratio of benefits to taxes, both of which 

are limited by the taxable maximum, that choice has little effect 

on the estimates.

1940s 1950s 1960s 1970s 1980s 1990s 2000s

0

50

100

150

200

250

Lowest Earnings Quintile

Middle Earnings Quintile

Highest Earnings Quintile

Birth Cohort

8. The overall ratio for the cohorts shown is less than 100 percent, 

primarily because of the pay-as-you-go structure of Social Security. 

See Congressional Budget Office, How Pension Financing Affects 

Returns to Different Generations (September 22, 2004). The ratio 

for earlier generations, which are not included in this analysis, is 

much higher. See Dean R. Leimer, Historical Redistribution Under 

the Social Security Old-Age and Survivors Insurance and Disability 

Insurance Programs, Social Security Administration, Office of 

Research, Evaluation, and Statistics, Working Paper No. 102 

(February 2004).

9. One policy change already scheduled to occur is the increase in 

the normal retirement age (the age at which a beneficiary is entitled to receive the full primary insurance amount without adjustment for age; see note 13), which is rising from 65 for those born 

before 1938 to 67 for those born after 1959. Raising the normal 

retirement age will have the effect of lowering benefit-to-tax ratios 

for all earnings quintiles, but the effect is generally overwhelmed 

by economic and demographic trends and is not large enough to 

be visible in Figure 1.

10. For example, as more women work outside of the home, they 

become more likely to receive benefits based on their own earnings record and thus less likely to receive spousal benefits. Changes 

in the earnings distribution also affect benefit-to-tax ratios.
4 CONGRESSIONAL BUDGET OFFICE

ECONOMIC AND BUDGET ISSUE BRIEF

Figure 2.

Lifetime Social Security Benefit-to-Tax Ratio by Type of Benefit for the 1960s 

Birth Cohort

(Percent)

Source: Congressional Budget Office.

Note: The analysis assumes that scheduled benefits are paid even after trust fund exhaustion.

bottom quintile is nearly double that for the middle 

quintile, which is in turn about 40 percent higher than 

for the top quintile.11

Progressivity by Benefit Type

To illustrate how each of the three types of benefits—

retired-worker, disabled-worker, and auxiliary—contribute to the progressivity of the Social Security system, 

Figure 2 looks in more detail at a single birth cohort, that 

consisting of workers born in the 1960s; that cohort is 

the first for which the normal retirement age will be 67.12

The same general conclusions hold for other cohorts. 

Rather than presenting average benefit-to-tax ratios by 

earnings quintile as in Figure 1, the top line in Figure 2 

shows point estimates for the ratio at each percentile of 

lifetime earnings among members of the cohort. The average ratio for the lowest-earning 20 percent is about 165 

percent; that is the same as the value for the bottom quintile for the 1960s cohort shown in Figure 1. Values of the 

ratio for the top 20 percent of earners born in that decade 

average about 65 percent, which is again consistent with 

the average for the top quintile shown in Figure 1. 

As demonstrated by the results for the 1960s birth cohort, the progressivity of Social Security is driven mainly 

by disabled-worker and auxiliary benefits: in Figure 2, the 

bands representing those benefits taper sharply as one 

moves rightward along the earnings distribution, whereas 

the band representing retired-worker benefits narrows

relatively little. That representation reflects the fact that 

the first two benefit types are inherently more progressive, because disabled workers and auxiliary beneficiaries 

tend to have lower lifetime earnings. But retired-worker 

benefits, which account for 74 percent of lifetime benefits 

for this cohort, are progressive as well. At the 10th percentile of lifetime earnings, the ratio of retired-worker 

benefits received to total Social Security taxes paid is 

about 80 percent, falling to about 55 percent at the 90th 

percentile.

0

20

40

60

80

100

120

140

160

180

200

Retired-Worker

Disabled-Worker

Auxiliary

10 20 30 40 50 60 70 80 90

Percentile of the Household Lifetime Earnings Distribution

11. As noted above, this analysis assumes that benefits will be paid as 

scheduled. If benefits were reduced upon trust fund exhaustion to 

a level payable with Social Security’s revenues at that time, the 

benefit-to-tax ratio would be lower for people collecting benefits 

after 2046, the year in which, CBO projects, the trust funds will 

be exhausted.

12. The values in Figure 2 are smoothed by averaging over percentiles 

in order to eliminate the statistical sampling variation that arises 

when using a relatively small sample for the calculations. 
ECONOMIC AND BUDGET ISSUE BRIEF

IS SOCIAL SECURITY PROGRESSIVE? 5

Disabled-worker benefits account for only 16 percent of 

lifetime benefits for this cohort but are much more progressive than retired-worker benefits. (Disabled-worker 

benefits are a much smaller share of lifetime benefits 

simply because far fewer individuals receive them than 

receive retired-worker benefits.) The ratio of lifetime 

disabled-worker benefits to lifetime Social Security taxes 

falls from 59 percent at the 10th percentile of lifetime 

earnings to about 4 percent at the 90th percentile; that 

steeply declining pattern clearly dominates the overall 

difference in the total benefit-to-tax ratio among earnings 

groups. 

Auxiliary benefits are also much more progressive than 

retired-worker benefits, but not quite as progressive as 

disabled-worker benefits. The benefit-to-tax ratio for 

auxiliary benefits falls from about 28 percent at the 10th 

percentile to under 5 percent at the 90th percentile. 

Those figures are not surprising, because auxiliary benefits are paid mainly to people with relatively low lifetime 

earnings. A spousal beneficiary, in particular, must have 

earned less than half the retirement benefit of his or her 

spouse in order to qualify. However, auxiliary benefits 

have a smaller effect on overall system progressivity than 

do disabled-worker benefits, because they account for 

only 10 percent of total lifetime benefits.

Progressivity in Retired-Worker Benefits

The overall progressivity of retired-worker benefits is the 

net result of two offsetting factors. The first is the degree 

of progressivity built into the benefit formula, and the 

second is differences in average mortality observed among 

workers of different earnings levels. 

At retirement, a benefit formula is applied to a measure 

of the retiring worker’s lifetime earnings to determine 

that worker’s initial monthly retirement benefit. The 

formula is designed to be progressive, so that initial 

Social Security benefits replace a larger proportion of preretirement earnings for workers with low average earnings 

than for those with higher earnings.13 In general, retiredworker benefits can replace 90 percent of taxable earnings 

for the lowest earners, but as little as 27 percent for the 

highest earners. 

The progressivity of the benefit formula is partly offset by 

the fact that higher earners tend to live longer than the 

average worker—a phenomenon known as differential 

mortality. As a result of differential mortality, higher 

earners on average collect retired-worker benefits for 

more years than does the average earner and hence receive 

higher total lifetime benefits.14

How much does the benefit formula contribute to the 

progressivity of retired-worker benefits, and how much 

does differential mortality reduce progressivity? Those 

questions can be answered by making a few counterfactual, or “what-if,” calculations. In Figure 3, the reference point for those counterfactuals (the line labeled 

“Scheduled Benefits”) is reproduced from Figure 2. (The 

line is smoother than in Figure 2 because the variation 

due to statistical sampling has been eliminated; it declines 

more steeply than in Figure 2 only because the scale is 

different.)

The first counterfactual (“Flat Formula and No Differential Mortality”) removes both the progressivity in the 

benefit formula and the effects of differential mortality. 

That calculation is done by setting benefits equal to 40.5 

percent of average earnings for everyone, rather than by 

the current benefit formula. That level of benefits is chosen to result in the same average annual total outlays for 

the 1960s cohort as scheduled benefits.15 At the same 

time, the effect of earnings and other socioeconomic variables on mortality rates in the model is turned off. The

13. Specifically, at age 62, a worker’s earnings are indexed to account 

for overall wage growth in the economy during the worker’s lifetime. The highest 35 years of indexed earnings, including any 

years with zero earnings, are averaged to obtain that worker’s average indexed monthly earnings (AIME). A progressive formula is 

then applied to the AIME to compute the worker’s primary insurance amount (PIA). For workers turning 62 in 2007, the formula 

is 90 percent of the first $680 of the AIME, 32 percent of the next 

$3,420 of the AIME, and 15 percent of the rest. Monthly benefits 

are then adjusted for the age at which the worker chooses to begin 

receiving payments: workers retiring before the normal retirement 

age receive less than the PIA, and those retiring after receive more. 

To qualify for benefits, a worker generally must have worked at 

least 10 years. For details, see Congressional Budget Office, Social 

Security: A Primer (September 2001), pp. 20-22.

14. CBO uses an estimate of differential mortality based on research 

done for the Social Security Administration. See Lee Lillard and 

Stan Panis, “Demographic Projections,” Michigan Retirement 

Research Center, University of Michigan, May 1999, available at 

www.mrrc.isr.umich.edu/conferences/cp/cp99_lillard_demo.pdf.

15. The 10-year work requirement is also removed, so that even workers who worked only during a single year may receive benefits.
6 CONGRESSIONAL BUDGET OFFICE

ECONOMIC AND BUDGET ISSUE BRIEF

Figure 3.

Lifetime Social Security Retired-Worker Benefit-to-Tax Ratios with Scheduled 

Benefits and Under Three Counterfactural Scenarios for the 1960s Birth Cohort 

(Percent)

Source: Congressional Budget Office.

Note: The analysis assumes that scheduled benefits are paid even after trust fund exhaustion.

result is an almost flat line, indicating that the ratio of 

retired-worker benefits to taxes would be similar for all 

earnings groups.16

The second and third counterfactuals illustrate the effects 

of the progressive benefit formula and differential mortality separately. The upward-sloping line in Figure 3 (“Flat 

Benefit Formula”) shows that switching to the simple 

proportional benefit formula would make retired-worker 

benefits regressive, because differential mortality would 

still operate to produce higher lifetime benefits for 

higher-earning workers. Retired-worker benefits would 

rise from about 50 percent of lifetime earnings at the 

10th percentile to around 65 percent at the 90th percentile. Finally, the steeper downward-sloping line (“Scheduled Benefits and No Differential Mortality”) shows that 

if the current progressive benefit formula was unchanged 

but lower-earning people lived just as long on average as 

higher-earning people, the Social Security system would 

be more progressive than it is.

Taken together, those results indicate that the progressivity of the benefit formula more than offsets the regressive 

effect of differential mortality: that conclusion can be 

seen from the fact that the “Flat Benefit Formula” is farther away from the “Scheduled Benefits” curve than is the 

“Scheduled Benefits and No Differential Mortality” line. 

Thus, Social Security retired-worker benefits as currently 

structured are progressive.

In contrast, some previous research has found that the 

effect of differential mortality equals or outweighs the effect of the progressive benefit formula for retired-worker

5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95

0

40

60

80

100

120

Scheduled Benefits

Scheduled Benefits and

 No Differential Mortality

Flat Formula and

No Differential Mortality

Flat Benefit Formula

Percentile of the Household Lifetime Earnings Distribution

16. The average ratio of retired-worker benefits to taxes paid under 

this counterfactual (around 60 percent) is lower than the overall 

average under scheduled benefits because assuming the same average life span for everyone lowers average benefits. An alternative 

way of showing the same principle would be to set the flat benefit 

replacement factor (the 40.5 percent in this counterfactual) at 

some higher level, such that the average benefit-to-tax ratio 

matched scheduled benefits. That would shift the line up, but it 

would still be flat, which is the point of the exercise.
ECONOMIC AND BUDGET ISSUE BRIEF

IS SOCIAL SECURITY PROGRESSIVE? 7

benefits.17 It appears that the differences reflect past data 

limitations and different modeling decisions. Estimates of 

lifetime progressivity require data on earnings, taxes, benefits, and mortality experiences for the population being 

analyzed. Some studies, too, have focused on only retiredworker benefits and therefore found less progressivity 

than did analyses that have included all types of benefits. 

One noteworthy difference among studies is sample selection: CBO includes everyone in the population who 

lives through age 45, whereas some other studies have focused only on those eligible to collect benefits at age 62. 

Because of differential mortality, those studies disproportionately remove lower earners from the sample. Probably 

the most important difference between studies is in how 

people are classified with respect to lifetime earnings: 

some studies have credited nonworking individuals with 

“potential” earnings when sorting the population into 

lifetime earnings groups. The idea is that those individuals—who actually receive low benefits because they have 

low lifetime earnings—could have earned more but chose 

not to, and therefore should, for the purpose of analyzing 

progressivity, be grouped with the people who actually 

had higher earnings. Decisions like those either make the 

study group more homogeneous or re-sort people from 

the low to the high lifetime earnings group and therefore 

reduce measured progressivity.18

Progressivity in Disabled-Worker Benefits

The pronounced progressivity of disabled-worker benefits, illustrated in Figure 2, reflects three distinct factors. 

First, the disability benefit formula is progressive: like 

retired-worker benefits, initial disabled-worker benefits 

replace a larger proportion of earnings for people with 

low average earnings than for those with higher earnings. 

Second, workers with low earnings are more likely than 

the average worker to become disabled. Such differential 

disability accentuates the progressivity of disabled-worker 

benefits. (Note that differential mortality has the opposite 

effect. Because higher earners tend to live longer, differential mortality reduces progressivity.)

Third, individuals who become disabled are much more 

likely to have low lifetime earnings for the simple reason 

that, once disabled, those workers generally cease working or work less than they otherwise would have. (In 

some cases, that reduction in work results from the availability of disability benefits and the limitation on the 

amount that disabled beneficiaries may earn while receiving benefits. In the absence of such incentives, some less 

severely disabled workers would continue to work.)

The third factor presents a challenge in interpreting and 

measuring the progressivity of disabled-worker benefits. 

Consider two identical workers, each with the same earnings through age 55 and each with the same earnings potential thereafter. One continues working and retires at 

age 65. The other is unlucky, becomes disabled at age 55, 

and receives disability benefits. The disability program 

clearly provides significant benefits to the second worker. 

However, one could argue that the program has benefited 

each worker equally in terms of the value of the disability 

insurance provided. In other words, the disability program provided the same insurance to each worker, but 

only the second was unfortunate enough to receive payments from it. On the basis of that reasoning, some analysts have argued that progressivity should be measured 

by the expected benefits for an individual—that is, the upfront value of the insurance—not on any after-the-fact 

payments that are made.

One way to examine the importance of that insurance 

effect is to classify individuals not according to their 

household earnings for a complete working lifetime, but 

instead according to how much they earned before becoming disabled. There are technical problems with implementing exactly that approach, but classifying all individuals on the basis of their earnings through age 45 

provides similar results: workers are usually well into their 

careers by that age but are unlikely to have become disabled. That classification implicitly focuses the analysis 

on the insurance value of disabled-worker benefits, rather 

than realized payments, yet it still reflects much information about individuals’ lifetime earnings prospects.

As expected, disabled-worker benefits are less progressive 

when individuals are classified on the basis of earnings 

17. For a summary of studies about Social Security’s progressivity see 

Don Fullerton and Brent D. Mast, Income Redistribution from 

Social Security (Washington, D.C.: American Enterprise Institute, 

2005). 

18. One study that used the same sample selection, projection, and 

classification strategy as CBO and included all Social Security 

taxes and benefits found the same basic patterns in distributional 

outcomes as reported here. See C. Eugene Steuerle, Adam 

Carasso, and Lee Cohen, How Progressive Is Social Security 

When Old Age and Disability Insurance Are Treated as a Whole?

Straight Talk on Social Security and Retirement Policy Brief 38 

(Washington, D.C.: Urban Institute, May 2004). 
8 CONGRESSIONAL BUDGET OFFICE

ECONOMIC AND BUDGET ISSUE BRIEF

Figure 4.

Lifetime Social Security Disabled-Worker Benefit-to-Tax Ratios Under Alternative 

Earnings Classifications

(Percent)

Source: Congressional Budget Office.

Note: The analysis assumes that scheduled benefits are paid even after trust fund exhaustion.

through age 45, as shown in Figure 4. The benefit-to-tax 

ratio is significantly lower at the lower end of the earnings 

distribution and slightly higher at the upper end. For 

example, the ratio of disabled-worker benefits to taxes at 

the 10th percentile is 43 percent using this measure, 

compared with 59 percent under the lifetime earnings 

measure.

Even under the earnings-through-age-45 measure, however, disabled-worker benefits are much more progressive 

than retired-worker benefits. For example, the ratio of 

retired-worker benefits to taxes is 45 percent higher at the 

10th percentile of the earnings distribution than at the 

90th percentile, but the ratio of disabled-worker benefits 

to taxes is more than 600 percent higher. Under any earnings measure, disabled-worker benefits are a major contributor to system progressivity.

0

20

40

60

80

100

120

10 20 30 40 50 60 70 80 90

Percentile of the Household Earnings Distribution

Classified by Lifetime Earnings

Classified by Earnings

Before Age 45

This brief was prepared by Noah Meyerson and 

John Sabelhaus. It and other publications by the 

Congressional Budget Office can be found on the 

agency’s Web site, www.cbo.gov.

Donald B. Marron

Acting Director