What Is Social Security And Why It’s Important
What exactly is social security? Why do I need it?
What is Social Security and Why It’s Important
Social Security provides you with a source of income when you retire; or if you can’t work due to a disability. It can also support your legal dependents (spouse, children, or parents) with benefits in the event of your death. Social Security is a program run by the federal government. The program works by using taxes paid into a trust fund to provide benefits to eligible people. You’ll need a Social Security number when you apply for a job.
While you work, you pay Social Security taxes. This tax money goes into a trust fund that pays benefits to:
· Those who are currently retired.
· People with disabilities.
· The surviving spouses and children of workers who have died.
· Each year you work, you’ll get credits to help you become eligible for benefits when it’s time for you to retire. Find all the benefits Social Security Administration (SSA) offers.
Four main types of benefits that the SSA offers:
· Benefits for spouses or other survivors of a family member who's passed.
Superficially, Social Security resembles traditional employer pensions: Americans pay into the system during their working years and receive a monthly pension during retirement.
But, the differences are fundamental. Social Security benefits are based on a balancing of two principles: equity and adequacy.
Equity means that what you put in is related to what you get out; in other words, workers with higher wages, who pay more into the system, receive higher benefits later on.
But, under the principle of adequacy, the Social Security benefit formula overlooks years of low earnings (for example, when a worker may have been disabled or unemployed). It also replaces a higher proportion of earnings for the poor than for the rich.
This is why it’s our most successful anti-poverty program!
In addition, Social Security benefits are indexed against inflation and protected from the ups and downs of the economy and financial markets. That’s why the program provides security for the middle class.
How much Social Security income you’ll receive depends on:
· Your earnings over your lifetime
· The age at which you'll begin receiving benefits
· Whether you'll be eligible to receive a spouse’s benefit instead of your own
· You can use Social Security’s retirement benefits planner to:
Estimate your benefits at each age, from 62 (the earliest you can receive them) to 70 (when you hit your greatest amount).
The ultimate consideration is this: Social Security protects people against a variety of risks. This is to ensure them a basic floor of income in old age and to enable many people who have struggled all their lives. This helps them look forward to a decent standard of comfort and dignity when they retire. It would be a crime to take that away from them.
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