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The wage base is the maximum amount of income on which Social Security taxes must be paid. Employees must pay 6.2 percent up to that income level, while employers kick in another 6.2 percent.
It is also the maximum amount of covered wages that are taken into account when average earnings are calculated in order to determine a worker's Social Security benefit. In 2020, the Social Security Wage Base was $137,700 and in 2021 was $142,800; the Social Security tax rate was 6.20% paid by the employee and 6.20% paid by the employer.
The Average Indexed Monthly Earnings (AIME) is used in the United States' Social Security system to calculate the Primary Insurance Amount which decides the value of benefits paid under Title II of the Social Security Act under the 1978 New Start Method. Specifically, Average Indexed Monthly Earnings is an average of monthly income received by ...
Despite its regressive tax rate, Social Security benefits are calculated using a progressive benefit formula that replaces a much higher percentage of low-income workers' pre-retirement income than that of higher-income workers (although these low-income workers pay a higher percentage of their pre-retirement income). [159]
The new version of the benefits calculator requires less input from the user by making use of the Social Security database to determine past wages. The Social Security administration rolled out a ...
A separate analysis from the Center on Budget and Policy Priorities found that the poverty rate for adults aged 65 and above would be nearly four times higher if Social Security didn't exist -- 10 ...
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