Definition
It is financed primarily through payroll taxes and provides monthly benefits based partly on a worker’s earnings record.
Political Dictionary
Social Security
Social Security is a federal social-insurance program providing retirement, disability, and survivor benefits.
Why It Matters
It is a major source of income for retirees and people with disabilities.
How It Works
Workers and employers pay payroll taxes, and eligible beneficiaries receive payments under statutory formulas.
History
Created in 1935, the program expanded to include survivors and disability insurance.
Example
A retired worker receives a monthly benefit based on covered earnings and claiming age.
Common Misconceptions
- Social Security is a personal savings account.
- Only retirees receive benefits.
- Benefits are financed entirely from current individual contributions.
Related Terms
- Payroll Tax
- Retirement
- Medicare
- Social Insurance
- Entitlement
Related Topics
See Also