Social
Security
Basics
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Eugene has a severe case of asthma.
Social Security Insurance covers his treatment. Photo İHarvey
Finkle, Impact Visuals |
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Under Social Security, workers contribute a certain amount of their pay
into the system through their work life. They then earn entitlement to family benefits
when they retire, become disabled, or die.
Social Security is funded through payroll taxes (FICA, or Federal
Insurance Contribution Act) on both the employee and employer. Currently each pays 6.2
percent on all wages and salaries up to a maximum of $68,400 in income. The payroll taxes
we pay today finance the benefits for today’s retirees. From the money we contribute,
the government writes Social Security checks and mails them to beneficiaries.
Any extra money collected through payroll taxes goes into a Social
Security Trust Fund. Until the 1990s, the Social Security Trust Fund was relatively small.
However, it has ballooned in size in the past decade — and in fact has helped create
the much celebrated "balanced budget."
Some 44 million Americans receive benefits from Social Security. Thirty
million of these are the elderly and their dependents, 6 million are the disabled and
their dependents, and 7 million are the survivors of deceased workers.
About 92 percent of people over 65 receive Social Security benefits. Since
1935, when the labor movement helped force passage of Social Security, the program has
dramatically reduced poverty among the elderly and disabled. Unfortunately, though, some
people who really need it — like farmworkers — still aren’t entitled to
Social Security.
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