The
United States of America is one of the many nations that provide Social
Security to its citizens to support them financially whenever the need
may arise. It is the common term which is used for the Old-Age, Survivors and
Disability Insurance program (OASDI) which is under the jurisdiction of Social
Security Administration. This program came into existence when in the year 1935
President Franklin Roosevelt signed the Social Security Act. This program is
principally funded through Federal Insurance Contributions Act tax (FICA) and
Self Employed Contributions Act Tax (SECA) which are the payroll taxes which
the Internal Revenue Service (IRS) collects. These taxes are then deposited to
the Federal Old-Age and Survivors Insurance Trust Fund and the Federal
Disability Insurance Trust Fund, which are the Social Security Trust Funds.
How
is Social Security collected?
How
is Social Security collected?
The
funds for Social Security are primarily collected through the
salaried income of people and this amount is fixed and determined by law
according to the tax rate table and according to the data, in 2018 maximum
amount that could be taxed from the income of a person was $128,400. At
present, maximum people i.e. the legal residents of US have their individual
social security number which they can use to avail a number of services and
monetary benefits from the government if they are eligible for them. Therefore,
the people, whether they are working or even not employed in any job do possess
the social security number as it is also mandatory because it is required by
almost all the companies, businesses, and even to get enrolled in school,
college, get the insurance claim, get your passport or driving license made.
Must Read: What is Social Security and Importance?
The Economics of Social Security
The
US government collects a large amount of fund from the taxes and then spends a
large chunk of it in form of social security. Alone in the year 2015, the
expenditure under the Social Security was $750.5 billion for
the OASDI and along with $146.6 billion under DI. Though there has been some
criticism of this government scheme, still the data and studies show that it
has reduced the poverty rate from 40% to below 10% for the Americans aged 65
years or older.
The Universality of Social Security
Ever
since its conception, Social Security has supported the
Americans financially for more than 80 years. At present, an average citizen of
the US has either directly or indirectly benefited from social security
schemes or does know someone who has. It covers a number of aspects of a
person’s life right from the moment they are born to their death and even
beyond by providing economic support if needed. It is a highly successful
anti-poverty program in America as well as the entire world. The various stages
of life where the social security plays an important part are –
When a child is born
when a baby is born, many of the parents go ahead and apply for
the Social Security number for their child through the hospital itself and when
in future the baby grows up and needs it, it is already there, thus saving the
hassle. Also, when people get the social security number at birth and then name
their child, the government is able to record the name for their data and they
can reveal the most famous or unique baby name in the specific year.
When the Person starts to Work
when
an adult has to get employed in any place, it is commonly expected of them to
provide their social security number to their employer as it is helpful in
preventing or at least reducing the chances of fraud and provides the earning
record along with better accuracy for the person’s own benefit. This also makes
it easier for the person’s employer to collect Federal Insurance Contributions Act (FICA) with holdings so that they can
report the earnings electronically. This is necessary so that the government
can track the earnings of a person so that they may earn their social security
retirement, disability benefits and even the survivor’s coverage for the person
and their family. It is pertinent to know that a worker is required to earn
social security credits – up to four credits each year and 40 credits are
required which translates to 10 years of work so that they may be eligible for
retirement benefits.
When a person gets married
it is a common practice for women to change their last
name when they get married or maybe get divorced, so when this does happen, you
should get your information updated in the social security records so that the
earning can be recorded properly for the person’s own benefit.
During the event of Accident leading to Disability
there is hardly anything
more tragic than becoming disabled due to any number of reasons which can
hinder your ability to live your life normally or even get an employment thus affecting
your financial stability. This is where social security disability benefits can
provide economic support to the disabled workers, even the family members who
are dependent on them, this also includes the wounded warriors.
Support during the Tough Times
if a family loses a loved one then their living
spouse – husband or wife, and the children are entitled to receive financial
support under the survivor’s benefits that is available under the social
security scheme. The funds under this depend on the worker’s age when they pass
away. Also, the children who are not married and are under the age of 18 are
eligible to get this benefit.
On the Occasion of Retirement
when a person retires, they may be worried about the financial
implications in the future but if you have your social security number then you
do not have to worry of living the rest of your life in paucity.
Summary
It
is important to be aware of the benefits that Social Security has
and the number of ways it supports the people with limited income or resources
due to disability, the people who have retired get to live their lives without
getting into the clutches of poverty. This is the highly successful government
scheme that stays with you right from your birth and even after your death to
support your loved ones.
