The United States founded a federal benefits program in 1935 called Social Security. It is mostly associated with monthly retirement benefits. It also attempts to grant disability income, pensions & public housing. These systems are funded through payroll taxes.
According to Federal Insurance Contribution Act (FICA), a monetary amount equivalent to 12.4% is levied on first $132900 of every individuals’ earned income each year. The employers and the employees pay 6.2% and the self-employed pay 12.4% of their annual income. In order to avail the benefit one shall apply three months prior to the retirement date.
Social Security Eligibility
Social Security bulks huge in national life. The eligibility to enjoy the program’s benefits are as follows-
Year of Birth Full Retirement Age
1937 or earlier 65
1938 65 & 2 Months
1939 65 & 4 Months
1940 65 & 6 Months
1941 65 & 8 Months
1942 65 & 10 Months
1943-1954 66
1955 66 & 2 Months
1956 66 & 4 Months
1957 66 & 6 Months
1958 66 & 8 Months
1959 66 & 10 Months
1960 & Later 67
Social Security was never designed to serve as the sole source of retiree’s income. Taking the matter in one’s own hand is the best way of achieving a secure retirement. Real Estate is one of the best examples of smart non-retirement investment.
Benefits of Social Security
Social Security Association (SSA) to serve those retired or elderly Americans who lost everything in Great Depression. In order to help children, disabled persons and widows, this association was very effective.
According to SSA, 73% of Americans received monthly Social Security Benefit in 2017.
The 6.2% of tax on earning paid by employers & employees is not transferred to bank account; rather it goes to provide monthly benefits for current retirees and other social recipients. To qualify for Social Security retirement benefits, at least 10 years of work is required by the person.
When can you collect Social Security?
It is common among people that 65 is the appropriate age to retire but according to SSA, one cannot apply for social security until they’ve reached a certain age. The table shows the age when the citizen can collect their social security:-
- 66 if born between 1943-1954
- 66 & 2 months if born in 1955
- 66 & 4 months if born in 1956
- 66 & 6 months if born in 1957
- 66 & 8 months if born in 1958
- 66 & 10 months if born in 1959
- 67 if born in 1960 or later
If these are delayed to nearly 70 years, the Social Security Benefit can be increased upto 32% or more. Similarly, the benefits will be reduced if SSB is collected before 62 years of age.
Survivor Benefits
Social Security can continue to pay benefits to a person’s spouse & children after death. A person has to earn at least 6 social security credits in 3 years before death, in order to continue the benefit to the family. Eligibility for survivor benefits:-
- Surviving spouse is at least 60 or older
- Surviving spouse is 50 or older & disabled
- Surviving spouse is caring for your child who is younger than 16 or disabled
- Children who are younger than 18
- Children younger than 19 & enrolled in elementary or secondary school
- Children over 18 who are severely disabled
- Your surviving parents if they were dependent on you for at least half of their support
Disabled Benefits
SSA has strictly held the definition of ‘disabled’. One can only qualify for Social Security Disabled Benefit if he/she is severely disabled with a condition that prevents him/her from working entirely & is expected to last at least an year or result in death. Also, there should be enough credits earned to receive the benefit payments.
Following are some important information to qualify for disability benefit:-
- A person has to be 60 years in age and should have 40 credit points
- A person younger than 24 years will require minimum 6 credit points
- A person should be working at the time the disability began
- Spouse & Children can qualify for the benefits as well, receiving half the amount the person is entitled to each month
- Payments are based on person’s lifetime earnings
Social Security & the Poor
Recent searches have shown that nearly the entire decline in the poverty rate among the elderly started during the 1960s consequential to social security benefits. As a matter of fact, social security reduced poverty significantly. Around 65% of dollars disseminated by the program go to those considered poor.
According to University of Chicago, Social Security reduced the rate of poverty among households with elderly residents by 75%, it also reduced poverty among household led by a disabled recipients by 33%.
Social Security also reduced poverty for those who were close to the poverty line, though the effect is less dramatic.
In Conclusion,
Social Security is a vital program serving millions of Americans. It is an ongoing intergenerational transfer mechanism. The high income earners pay a lower proportion of their income for social security taxes than the low income earners. Some economists also view Social Security as evil tax. because of its regressive nature.
Andrew M. Paul is the new Commissioner of Social Security at the agency’s office in Washington D.C, serving six-year term expiring in January, 2025. The agency has a national workforce of about 63000 employees & 1500 facilities across the country & around the world.
Social Security is one of the largest government programs in the world, paying out hundreds of billions of dollars each year. It is healthy & promising way of securing future.
According to Jane Austen, People always life for ever when there is an annuity to be paid by them.
By Yumna Fatima
Literary Sources:ssa.gov, investopedia.com, nytimes.com, wikipedia.org, goodreads.com
Image Source: money.cnn.com