Social Security - The Basics

Social Security is at the forefront of millions of Americans’ minds.  To fully understand Social Security and Social Security benefits you need to understand the system. The current Social Security system works like this: when you work, you pay taxes into Social Security. The tax money is used to pay benefits to:

• People who already have retired;
• People who are disabled;
• Survivors of workers who have died; and
• Dependents of beneficiaries.

The money you pay in taxes is not held in a personal account for you to use when you get benefits. Your taxes are being used right now to pay people who now are getting benefits. Any unused money goes to the Social Security trust funds, not a personal account with your name on it.

Social Security – The Future

Social Security is a compact between generations. For more than 65 years, America has kept the promise of security for its workers and their families. But now, the Social Security system is facing financial problems, and action is needed to make sure that the system is sound when today’s younger workers are ready for retirement.

Here is why the level of benefits that Social Security will be able to pay in the future is uncertain. Today there are about 35 million Americans age 65 or older. Their Social Security retirement benefits are funded by today’s workers and their employers, who jointly pay Social Security taxes—just as the money they paid into Social Security was used to pay benefits to those who retired before them.

Unless action is taken to strengthen Social Security, in just 13 years we will begin paying more in benefits than we collect in taxes. Without changes, it is estimated that by 2042 the Social Security trust fund will be exhausted. By then, the Social Security: a simple concept number of Americans 65 or older is expected to have doubled.

There will not be enough younger people working to pay all of the benefits scheduled for those who are retiring. At that point, there will be enough money to pay only about 73 cents for each dollar of benefits that retirees are scheduled to receive. We will need to resolve these issues to make sure Social Security will provide a foundation of protection for future generations as it has done in the past.

Social Security is more than retirement

Many people think of Social Security as just a retirement program. Although it is true that most of the people receiving Social Security receive retirement benefits, many others get Social Security because they are:

• Disabled; or
• A spouse or child of someone who gets Social Security; or
• A spouse or child of a worker who died; or
• A dependent parent of a worker who died.