What is the Social Security Tax?

5. Social Security Tax Provides for Progressive Benefits

Progressive benefits are benefits representing a higher portion of an income earner's previous earnings, for employees receiving lower earnings. For example, if a lower-wage earner retires at age 65, benefits received will replace about half their prior earnings. Alternatively, benefits for high-wage earners (over $100,000) replace only about a third of their prior earnings. Once a person begins receiving Social Security benefits, the SSA increases benefits each year to match inflation rates. However, annuities and private pensions meant to help support retired individuals are typically not adjusted for inflation.

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