What is Social Security?

Social Security works by distributing public funds to provide a basic level of economic stability for the public and to support them in specific situations.

How is Social Security Funded?

Social Security is funded by the money raised from social security taxes collected as part of FICA.

FICA tax payments directly fund Medicare and other Social Security elements though primarily, Social Security funds are expended on the retired.

From a pensions perspective, the theory is that the money you put into Social Security today, pays for your pension when you retire. This has however become distorted over the years as funds have been moved around, the net effect is that the money you pay today is actually paying for the pensioners of today. With an increasing population this means that our children and grandchildren will need to pay more and more social security if we are to have a retirement like that enjoyed by our own parents and grandparents.

Why have Social Security?

Social Security programs provide:

  • A basic level of living for everyone
  • Support for people when they need it
  • The opportunity to retire
  • Reduced crime. Without support, people turn to crime more quickly... anything to survive.
  • Greater economic stability: Cash flow continues at all levels of society. Never under estimate the importance of economic cash flow, the hundreds of millions of small dollar exchanges are worth far more than the odd few hundred thousand dollar purchases. When the poor can't spend, the economy topples.
  • a morale and ethical duty. No one likes to pay taxes but you should take solace that morally and ethical, Social Security programs provide quantifiable improvements to individuals, groups and families every day. Really, there should be a thank you note in your pay slip every month. Clearly there isn't but take a walk sometimes and cast your eyes around and think, I helped to keep these people going.

How is Social Security Managed?

Social Security is managed by the Social Security Administration (SCA) via a nationwide network of over 1,400 offices that include:

  • Regional offices
  • Field offices
  • Card centers
  • Teleservice centers
  • Processing centers
  • Hearing offices
  • The Appeals Council
  • State and territorial partners
  • The Disability Determination Services

Did you know that the SCA also have a presence in U.S. embassies around the globe.

You can access the SCA frequently asked questions here, its a good resource.

You can calculate how much Social Security you are due to pay using the Tax Calculator

You can calculate how Social Security affects your tax payments here, simply select the advanced tax calculator and enter your Social Security details

Want to share more about Social Security and Tax?

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