Social Security Learning Center
In 1934, Franklin D. Roosevelt proposed the social security system, but it wasn’t until 1937 that the first social security card was issued. In 1943, federal agencies were required to use the social security record keeping systems, to identify all employees by their new Taxpayer I.D. number. Chances are that your grandparents, parents or other relative is collecting social security right now, but that’s not the first time you’ve probably heard about it. We use our social security numbers (SSN) when we apply for a job, file our taxes, open bank accounts, and we are often asked for it when we fill out medical or other forms. Giving a new employer this number allows them to link to your personal tax information and then the appropriate social security tax can be withdrawn and added to your personal fund. When used on a job application, it also allows the company to view your recorded history and see how good you may be at handling credit and/or money. As of today, every person born in America receives a number and sometimes parents are given an application in the hospital the same day of the birth. A SSN is individual, no one is assigned the same number as someone else and so it is important to keep it as private as possible. It is your official financial identity, you pay taxes during the years you work and then you get that money back when you retire or become disabled. If you die before you retire, your spouse or children can collect what you have earned. No real changes have been made to the program since 1983, when higher tax rates were enacted and minimum age requirements were raised. This worked well for a while, but as seniors started collecting payments as soon as they were eligible, it depleted the program more quickly than anticipated. Some proposed future plans include: guaranteeing a minimum benefit for low-wage earners, reducing work requirements, supplementing low-income single workers, reducing how long someone has to be married, and longevity insurance. A teenager usually has their first experience using their SSN when they get their first job, but they usually have no real understanding of what it is for. Today around 44-million Americans, collect benefits from social security and many more hope that it will be available when they need it, but do they really understand what it is?
Anyone 18-years of age or older must have a SSN in order to work in the U.S. It is a snapshot of our work history, as well as your financial history.
What’s Your Number?
A social security number consists of 9-digits, and is usually assigned to a person when they are young, possibly just after birth. This SSN is yours and yours alone. It is broken into sections that identify particular things about who you are and where you’re from. It also identifies when you applied for your SSN and assigns you a serial number. There are many rumors about what the numbers say about us, but most of that is folklore, so learn the facts and skip the stories.
• The SSN Numbering Scheme An explanation of your social security number is broken down in sections, including a brief explanation of the area number, group number, and the serial number.
• My Social Security Number - How Secure Is It? An easy to use fact sheet outlining the ins and outs of a person's social security number.
• Taxpayer Identification Numbers An explanations of Taxpayer Identification Numbers (TINs) that outlines the different varieties of numbers that are used to identify taxpayers, including SSNs.
Why Social Security?
Everyone would love to be self-sufficient and while it is possible to save for one’s own retirement, often those savings can used up due to lack of work, illness or by funding a child’s education. People just don’t always have enough funds to pay for all of their needs. In the 1930’s many were unemployed or underpaid and were unable to save anything to live on in their golden years. The people wanted help and though the government tried different things, it finally decided the social security system would be in the best interest of the people and the people themselves could finance the program. This allowed the government to save the money collected from the fund and restrict its reuse until a contributor’s later years.
• Why Do We Have a Social Security Law? A history of SS with pamphlets from the day, addressing the logic behind Social Security and the factors that have influenced policymakers.
• Social Security: What it does, what it should do? Article about rethinking S.S. and work laws from the Ragged EDGE online periodical, first published in 2001.
• Why Do We Pay Taxes? An brief explanation of why taxes, including the Social Security tax, are necessary for the proper function of government sponsored programming.
How does it Work?
Anyone 18-years of age or older must have a SSN in order to work in the U.S. It is a snapshot of our work history, as well as your financial history. The money collected from every paycheck for Social Security taxes is put into a trust fund that pays out monthly benefits to those who have retired, or are otherwise unable to work. Social security taxes also pay for the administration of those funds. Any money not immediately used is then invested in U.S. government bonds, which can pay dividends to be used by the program later on; working much as a savings account that earns interest or pays dividends. While it was originally created in order for the government to keep track of our wage earnings and deduct a portion for our retirement, other entities we deal with on a daily basis saw it as a way to identify us, since each number identifies each individual without any duplication. Institutions, such as hospitals, insurance companies, and banks, thought it would be useful in making sure their patients were who they said they were. This is not what the number was intended for, but how it is often used.
• How Today's Social Security Works This paper from The Heritage Foundation explains what Social Security is and how it works.
• Going To Work: A Guide to Social Security Benefits Focusing on young people with various disabilities, this site addresses common questions about Social Security and how it is used to benefit people with disabilities.
• How does Social Security work? Part of retirement is working with the Social Security Administration to obtain the benefits each person is entitled to. Use this article to better understand how the Social Security system works today.
If someone legally works in the United States, they will have to pay social security. Those that work “under the table” do not pay Social Security tax, or any other taxes for that matter. Employers must deduct a portion or percentage from every paycheck made out to their employees. An individual who is self-employed, or who in any way earns a wage not paid by an employer, must give a portion of that income towards the social security fund. This ensures that the program can be ongoing and support those who have retired or do not work. Meanwhile, those working and paying into the fund, pay for those who retire at that time, and will be taken care of when it is their turn to collect Social Security benefits. It is an ongoing process.
• The Issues of Retirement Savings Programs The National Bureau of Economic Research provides valuable resources for those looking to address a number of issues that exist within today's retirement process.
• What Is the Distribution of Lifetime Health Care Costs from Age 65? The Center For Retirement Research provides an article detailing the average cost of medical and long-term care to senior citizens. In relation to the average Social Security monthly benefit, it is unlikely that a person would be able to afford long-term medical care on only SS benefits.
• Who pays the Social Security tax? Social Security is partially paid by an employer and partially by the employee, unless a worker is self-employed the system is a bit different. Refer to this article for a description of how each situation is set up and the percentage that is required under law.
Although there may be differences in how much Social Security tax each person pays, in general, it is around 70-cents out of every dollar of a person’s gross income. The Social Security tax rate is a percentage that may vary by year, but if the percentage were 12.40 %, the employee would pay 6.20%. The other half is than paid by the employer. There is also an earnings cap for this tax and anything earned above and beyond that point is not taxable. Self-employed individuals must pay the full percentage of tax if they have net earnings of $400 or more in a year.
• Policy Basics: Where Do Our Federal Tax Dollars Go? An article from the Center on Budget and Policy Priorities that explains the distribution of taxes, including the Social Security tax, after they are collected; know where your money is going.
• Sources of retirement income Looking at recent figures and factors that should be considered before retiring, this article maps out what percentage of income comes from different sources, including what percentages are from Social Security.
• A Consumer Guide To Taxes With so much being taken out of each paycheck, it is important to keep track of what is being taken out of your gross pay and where it is going.
How Do I Use It?
If you’re like most people, you will not need social security benefits until you retire, around 66 years old, but in some cases, people need those benefits for other reasons. If a person is, or becomes, disabled they can request Social Security benefits. Also, if they are a widow or widower they can also receive benefits and a child of a deceased parent can collect benefits until they are 18-years of age, decreased the amount of income lost upon their death. It is not meant to be a person’s only income, but it help people supplement what they already have or earn during the time that they worked. The Social Security Administration recommends that you never carry your card with you except when absolutely needed. Try to memorize your SSN, so you won’t feel the need to carry it with you in times where it is not necessary.
• When to Start Social Security Benefits Some people are confused about whether or not they can start to receive Social Security benefits. Refer to this AARP article for a better understanding of when you can start collecting your benefits.
• Social Security Resources official benefits website of the U.S. government, with information on over 1,000 benefit and assistance programs.
• Centers for Medicare CMS Programs & Information
Will It Be There?
It is generally believed that the social security system as it is today, will be able to continue for another 30-years. This means that in order for it to continue to be a benefit for future generations, congress needs to make changes in the way the program is being handled. This will need to happen in order to safeguard the financial future of the program. In recent years, there have been an ever-growing number of people retiring (baby boomers) and it has created a great strain on the system. If something is not done to the program, it will eventually bankrupt itself and will become a burden to the people.
• Social Security Questions Answered Get in depth information about many different parts of Social Security.
• Social Security's Wheel of Fortune For a number of years, the Social Security system has taken a major hit. What are the odds it will be available for today's teenagers when they are old enough to retire.
• S.S. Advisory Board Get up to date information on Social Security and the latest from Capital Hill on the current state of the SS system.
Social Security was quite controversial when it came into being, some believed it would kill jobs, while others thought that older people would be encouraged to retire; making way for younger workers. Today, older workers are encouraged to stay in the workforce as long as possible, so that the Social Security Administration does not have to pay out more than needed, saving as much as possible for the future while still meeting the current needs. Social Security has had growing pains over the years and has gone through many changes. Overall, it has served the people well, and many hope it will continue to do so. See how much you know about Social Security by playing some of the games and taking the quizzes below.
• Social Security Numbers Top news, identity theft, your SSN and student privacy, legislation and cases
• Safety tips for teens Protecting your SSN
• Social Security: What's in It for Younger People? Test out your Social Security know-how with this quiz.
• Quick Quiz on Social Security and Public Employees Another quiz to testing for Social Security skills, can you answer all of the questions correctly?
• Try your hand at Social Security reform. The Social Security game and links to reform options, briefs and documents will make sure that you are ready to retire, when you're old enough, and with confidence.
• Quiz: Do You Understand Social Security? Do you know how much Social Security you'll receive once you retire? Or what will happen after the trust fund runs out in 2037? Test your knowledge of Social Security trivia.