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Is there any difference in payment amounts for SSI beneficiaries and retired workers?

Supplemental Security Income and Social Security are two of the largest programs overseen by the SSA. How are the benefit amounts calculated and why do they differ?

How to calculate the Social Security benefit reduction

The Social Security Administration (SSA) pays out benefits for various programs, including Social Security and Supplemental Security Income (SSI), which are two of the most common ones. Although these programs target different populations, some individuals may be eligible to receive benefits from both. There are significant differences in the amount of benefits provided to the beneficiaries of each program, which is determined by the way they are funded and the eligibility criteria.

Supplemental Security Income vs Social Security

SSI provides income to low-income people who are blind, deaf, and/or elderly. Unlike Social Security, children, who are blind or deaf are eligible to receive SSI benefits.

In contrast, to receive Social Security benefits, a person has to have “worked long enough and paid Social Security taxes” in order to be “insured” so that the benefits be paid to you or “certain members of your family.” Social security is primarily produced to retirees who have paid taxes to the SSA for at least forty-quarters. Based on the number of years worked and the incomes earned over those years, the SSA will distribute a monthly benefit.

How are Social Security benefits calculated?

The SSA has explained that the benefit amount you receive is based on “your highest 35 years of earnings and varies depending on how much you earn and when you choose to start benefits.” Those who retire later will be rewarded with a higher benefit amount.

It’s important to understand that the Social Security Administration (SSA) operates differently from a private retirement account like a 401(k). While the SSA collects taxes from your paycheck, they don’t hold onto those funds to save for your retirement. Instead, those taxes go towards paying benefits to those who are currently eligible.

When you retire, your benefits will be paid for by the taxes of those who are still working. This means that you won’t be receiving the money you paid specifically into the system, but rather you’ll be receiving a portion of the funds being paid by the current workforce.

How are SSI benefits calculated?

SSI, on the other hand, is not “based on your prior work or a family member’s prior work.” SSI payments are often much lower. For instance, in October 2023, the average SSI payment was:

  • All recipients: $676.60
  • Under 18: $790.41
  • 18–64: $720.97
  • 65 or older: 554.10

Payments are typically lower for individuals over 65 because they tend to receive Social Security benefits. Furthermore, many states offer a supplementary payment to eligible individuals to further enhance their federal benefits. In addition, many beneficiaries are also eligible for Medicaid, which can help cover expenses related to hospital stays, doctor visits, prescription drugs, and other healthcare costs.

Each benefit amount is different and is established by a set of factors that the SSA uses to calculate the monthly payment. When applying to receive benefits, all of these variables will be considered.

As for Social Security, in October, the average payments were nearly double those received by SSI beneficiaries:

Total Average Retirement benefits: $1,796.31

  • Retired workers: $1,843.96
    • Spouses of retired workers: $887.27
    • Children of retired workers: $861.48
  • Survivor benefits:$1,454.56
    • Children of deceased workers: $1,067.99
    • Widowed mothers and fathers: $1,239.59

Source: Social Security Administration  

In 2023, the maximum benefit is $943 for individuals and $1,415 for couples. These amounts will be adjusted by the 2024 Cost-of-living adjustment of 3.2 percent next year. SSI payments are paid through the US Treasury Department by collecting personal, corporate, and other taxes.