Social Security

Social Security is the term used for the Old-Age, Survivors, and Disability Insurance (OASDI) program in the United States, which is run by the Social Security Administration (SSA), a federal agency. Though it is best known for retirement benefits, it also provides survivor benefits and income for workers who become disabled.

As of September 2022, more than 70.4 million Americans were collecting benefits. Let’s look at how Social Security works and how much money you can expect to get from it.

Social Security is a federal program in the U.S. that provides retirement benefits and disability income to qualified people and their spouses, children, and survivors.

To qualify for Social Security retirement benefits, workers must be at least 62 years old and have paid into the system for 10 years or more.

Workers, who wait to collect Social Security, up to age 70, will receive higher monthly benefits.

The amount of those benefits is calculated based on your average indexed monthly earnings (AIME) during your 35 highest-earning years and, thus, varies from person to person.

People, who can’t work due to a disability, and surviving spouses and children, may also be eligible for benefits if they meet certain
requirements.

Social Security is an insurance program. Workers pay into the program, typically through payroll withholding where they work. Self-employed workers pay Social Security taxes when they file their federal tax returns.

Workers can earn up to four credits each year. In 2022, for every $1,510 earned, one credit is granted until $6,040, or four credits, has been achieved. In 2023, it will be $1,640 until $6,560. That money goes into two Social Security trust funds—the Old-Age and Survivors Insurance Trust Fund (OASI) for retirees and the Disability Insurance Trust Fund (DI) for disability beneficiaries—where it is used to pay benefits to people currently eligible for them. The money that is not spent remains in the trust funds.

A board of trustees oversees the financial operation of the two Social Security trust funds. Four of the six members are the secretaries of the departments of Treasury, Labor, and Health and Human Services, and the Commissioner of Social Security. The remaining two members are public representatives appointed by the president and confirmed by the Senate.

Medicare, the federal health insurance program for Americans 65 and older and some people with disabilities, is also supported through payroll withholding. That money goes into a third trust fund, which is managed by the Centers for Medicare & Medicaid Services (CMS).

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