What does Social Security do? It’s a question that affects millions of Americans, and understanding the answer can help you plan for your financial future. Social Security provides a range of benefits, including retirement, disability, and survivor benefits, and it’s important to know how these programs work and how to qualify for them.
In this article, we’ll take a closer look at what Social Security does, how it’s funded, and the challenges it faces. We’ll also provide answers to some frequently asked questions about Social Security.
Overview of Social Security
Social Security is a U.S. government program that provides financial assistance to individuals and families in the event of retirement, disability, or death. It was established in 1935 as part of President Franklin D. Roosevelt’s New Deal and has since become an essential safety net for millions of Americans.
Social Security provides several types of benefits, including:
- Retirement benefits
- Disability benefits
- Survivor benefits
- Medicare benefits
Retirement Benefits
Retirement benefits are paid to individuals who have reached a certain age and have contributed to Social Security through payroll taxes during their working years. The amount of retirement benefits received is based on a formula that takes into account the individual’s earnings history and age at retirement.
To be eligible for retirement benefits, individuals must have earned a certain number of Social Security credits. The number of credits required varies depending on the age at which the individual retires.
Individuals can claim retirement benefits in a number of ways, including:
- Filing an application with the Social Security Administration (SSA)
- Calling the SSA’s toll-free number
- Visiting a local SSA office
Disability Benefits, What does Social Security do?
Disability benefits are paid to individuals who are unable to work due to a physical or mental impairment. The amount of disability benefits received is based on a formula that takes into account the individual’s earnings history and the severity of their disability.
To be eligible for disability benefits, individuals must have earned a certain number of Social Security credits and must meet the SSA’s definition of disability. The SSA considers an individual to be disabled if they are unable to engage in any substantial gainful activity (SGA) due to a medically determinable physical or mental impairment that is expected to last for at least 12 months or result in death.
Individuals can apply for disability benefits in a number of ways, including:
- Filing an application with the SSA
- Calling the SSA’s toll-free number
- Visiting a local SSA office
Survivor Benefits
Survivor benefits are paid to the surviving spouse, children, or parents of an individual who has died. The amount of survivor benefits received is based on a formula that takes into account the deceased individual’s earnings history and the age and relationship of the survivor.
To be eligible for survivor benefits, the survivor must meet certain requirements, such as being the surviving spouse, child, or parent of the deceased individual and meeting the SSA’s definition of dependency.
Survivors can claim survivor benefits in a number of ways, including:
- Filing an application with the SSA
- Calling the SSA’s toll-free number
- Visiting a local SSA office
Medicare Benefits
Medicare benefits are provided through Social Security and are available to individuals who are 65 years of age or older, certain younger individuals with disabilities, and individuals with End-Stage Renal Disease (ESRD).
Medicare provides two types of coverage:
- Part A (Hospital Insurance): Covers inpatient hospital care, skilled nursing facility care, hospice care, and home health care.
- Part B (Medical Insurance): Covers doctor visits, outpatient hospital care, durable medical equipment, and other medical services.
Individuals can enroll in Medicare by completing an application with the SSA.
Funding and Sustainability
Social Security is funded through payroll taxes paid by employees and employers. The tax rate is 12.4%, with employees and employers each paying half of the tax.
The Social Security Trust Fund is the repository for the payroll taxes collected. The Trust Fund is invested in U.S. Treasury securities, and the interest earned on these securities helps to pay for Social Security benefits.
The Social Security Trust Fund is projected to be exhausted by 2035. This means that Social Security will not be able to pay full benefits to retirees and other beneficiaries after that date.
There are a number of proposals for addressing the sustainability of Social Security, including:
- Raising the payroll tax rate
- Increasing the retirement age
- Reducing benefits
- Investing the Social Security Trust Fund in a broader range of assets
Final Wrap-Up
Social Security is a complex and important program that provides a safety net for millions of Americans. By understanding how Social Security works, you can make informed decisions about your financial future and ensure that you’re getting the benefits you deserve.
General Inquiries: What Does Social Security Do?
What is Social Security?
Social Security is a federal insurance program that provides benefits to retired workers, disabled individuals, and survivors of deceased workers.
How is Social Security funded?
Social Security is funded through payroll taxes paid by workers and their employers.
What are the different types of Social Security benefits?
Social Security provides three main types of benefits: retirement benefits, disability benefits, and survivor benefits.
How do I qualify for Social Security benefits?
To qualify for Social Security benefits, you must have worked and paid Social Security taxes for a certain number of years.
