Social Security


DEFINITION of 'Social Security'

A United States federal program of social insurance and benefits developed in 1935. The Social Security program's benefits include retirement income, disability income, Medicare and Medicaid, and death and survivorship benefits. Social Security is one of the largest government programs in the world, paying out hundreds of billions of dollars per year.

Based on the year someone was born, retirement benefits may begin as early as age 62 and as late as age 67. The amount of income received is based on the average wages earned over the worker's lifetime, with a maximum calculable amount of $102,000 as of 2008. Spouses are also eligible to receive Social Security benefits, even if they have limited or non-existent work histories.

BREAKING DOWN 'Social Security'

The original program was part of President Franklin D. Roosevelt's New Deal plan to lift the U.S. out of the Great Depression. Today, the program is funded through payroll taxes collected by employees and companies; monies are placed into the Social Security Trust Fund and payments are managed by the government along with the Federal Reserve Board.

Social Security has faced serious solvency issues for many decades; today's payments are made from current payroll contributions by workers who may not have money available for them when they retire. Social security reform, whether through legislation, tax law changes, or privatization, has been a major political issue that draws strong opinions from different demographic segments.

Social Security faces the real threat of becoming insolvent because of factors such as longer life expectancies, a large baby boomer population currently entering retirement age, and inflation.

To learn more about social security, check out Can my spouse and children collect my Social Security when I die?

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  1. Are spousal Social Security benefits retroactive?

    Spousal Social Security benefits are retroactive. These benefits are quite complicated, and anyone in this type of situation ... Read Full Answer >>
  2. Are Social Security payments included in the US GDP calculation?

    Social Security payments are not included in the U.S. definition of the gross domestic product (GDP). Transfer Payments For ... Read Full Answer >>
  3. What is the Social Security tax rate?

    The Social Security tax rate is 12.4% as of 2015. Of that amount, the employee is responsible for half, or 6.2%, and the ... Read Full Answer >>
  4. What is the Social Security administration responsible for?

    The main responsibility of the U.S. Social Security Administration, or SSA, is overseeing the country's Social Security program. ... Read Full Answer >>
  5. What are the Social Security disability benefits for children with ADHD?

    Parents may receive Social Security disability benefits for children with ADHD. The percentage of children with ADHD who ... Read Full Answer >>
  6. How soon should I start saving for retirement?

    The best answer to the question, "How soon should I start saving for retirement?", is probably, "yesterday," and the second ... Read Full Answer >>
  7. Are Social Security benefits adjusted for inflation?

    Social Security benefits are adjusted for inflation. This adjustment is known as the cost of living adjustment (COLA). For ... Read Full Answer >>
  8. Are Social Security benefits taxable after age 62?

    Eligibility to collect Social Security benefits begins at age 62. Many seniors, to collect larger benefit amounts, wait until ... Read Full Answer >>
  9. Are my Social Security disability benefits taxable?

    Social Security disability benefits may be taxable if you receive other income that places you above a certain threshold. ... Read Full Answer >>
  10. How can I get a 'pensionado' visa to retire in Costa Rica?

    The first and primary criteria necessary to obtain a pensionado visa in Costa Rica is that you must have a pension or pension-like ... Read Full Answer >>
  11. Do I need to file an income tax return every year?

    Contrary to popular belief, there are indeed situations where a person does not need to file a tax return every year. For ... Read Full Answer >>
  12. Which United States Presidents have run the largest budget deficits?

    While most U.S. presidents over the past 75 years have run budget deficits for many if not all of their years in office, ... Read Full Answer >>
  13. How do I calculate my Social Security break-even age?

    Individuals nearing retirement can implement a number of strategies to cover living expenses during their post-working years. ... Read Full Answer >>
  14. What are the top Social Security scams targeted at the elderly?

    Elderly recipients of Social Security benefits are a highly targeted group for online con artists. Some scams operate over ... Read Full Answer >>
  15. Can I collect Social Security if I still have a job?

    It's possible to collect Social Security while you are still employed. You can collect both Social Security retirement and ... Read Full Answer >>
  16. Who is exempt from paying Social Security taxes?

    Social Security is a U. S. federal program that provides recipients with benefits, including retirement and disability income, ... Read Full Answer >>
  17. How can I avoid paying taxes on my Social Security income?

    Nearly 90% of individuals over age 65 rely on Social Security income to pay for a large portion of living expenses throughout ... Read Full Answer >>
  18. What are the Social Security tax caps?

    The Social Security tax cap limits the amount of annual wages or self-employment income that is eligible for Social Security ... Read Full Answer >>
  19. How do Social Security survivor benefits work?

    Though it's not a pleasant subject, it is important to consider the financial future of your family in the event of your ... Read Full Answer >>
  20. How is the Social Security trust fund invested?

    The Social Security trust fund is an account held with the U.S. Treasury Department. The federal government uses it to record ... Read Full Answer >>
  21. How do I know what Social Security benefits I am eligible for?

    Depending on your age, wage history and disability status, you may be eligible to receive a variety of Social Security benefits. ... Read Full Answer >>
  22. What are the main differences between Social Security Benefits & Social Security ...

    While the names are very similar and they have similar purposes, there are a few marked differences between Social Security ... Read Full Answer >>
  23. How do Social Security benefits for widows or widowers work?

    If you are the surviving widow or widower of a deceased worker who would have been eligible to receive Social Security benefits ... Read Full Answer >>

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