Social Security is a federal government program that provides retirement, disability, and survivor benefits to eligible individuals. It was established in 1935 as part of the New Deal legislation signed by President Franklin D. Roosevelt.
To be eligible for Social Security benefits, you must have earned enough credits by working and paying Social Security taxes. The amount of your benefit is based on your earnings history and the age at which you begin receiving benefits.
Social Security is funded through payroll taxes paid by workers and their employers. Currently, the Social Security tax rate is 6.2% for employees and 6.2% for employers, for a total of 12.4%. Self-employed individuals pay the full 12.4% themselves.
The money collected from these taxes goes into the Social Security Trust Fund, which is used to pay benefits to current and future beneficiaries.
Despite concerns about the future of Social Security, it is expected to remain solvent for at least the next few decades. However, the program will eventually face funding shortfalls if changes are not made to address the growing number of retirees and longer life expectancies.
To ensure the long-term sustainability of Social Security, policymakers may need to consider options such as increasing the retirement age, adjusting the benefit formula, or raising the payroll tax rate.
Yes, you can receive Social Security benefits while still working, but your benefits may be reduced if you earn more than a certain amount. This is known as the earnings limit. In 2021, the earnings limit is $18,960 for individuals who have not yet reached full retirement age. If you earn more than this amount, your benefits will be reduced by $1 for every $2 you earn above the limit.
Once you reach full retirement age, there is no earnings limit and you can work and receive your full Social Security benefit.