Social Security is a comprehensive ssndob insurance program designed to provide financial support to individuals who are retired, disabled, or survivors of deceased workers. Established in the United States in 1935 as part of the New Deal initiatives during the Great Depression, Social Security has since become a crucial component of the nation’s social safety net. This article explores the foundations, benefits, challenges, and potential reforms associated with Social Security.
Foundations of Social Security:
- Funding Mechanism: Social Security operates on a “pay-as-you-go” system, where current workers’ payroll taxes fund the benefits of retirees and other eligible beneficiaries. The Federal Insurance Contributions Act (FICA) taxes a portion of workers’ earnings to finance Social Security programs.
- Eligibility and Benefits: Eligibility for Social Security benefits is primarily based on an individual’s work history and contributions to the Social Security system. The more a person works and pays into the system, the higher their potential benefits. Benefits are not solely for retirees; disabled individuals and survivors of deceased workers may also qualify.
- Retirement Benefits: Social Security retirement benefits are calculated based on an individual’s average indexed monthly earnings and the age at which they choose to begin receiving benefits. The Full Retirement Age (FRA) varies based on birth year, with the option to claim benefits as early as age 62 or delay them until age 70.
