key term - Social Security

Definition

Social Security is a federal social insurance program in the United States that provides retirement, disability, and survivor benefits to eligible individuals. It is a crucial component of the social safety net, designed to provide financial security and support for American workers and their families.

5 Must Know Facts For Your Next Test

1. Social Security was established in 1935 as part of President Franklin D. Roosevelt's New Deal legislation to provide a social safety net for the elderly and disabled.
2. The Social Security system is funded through payroll taxes, with both employers and employees contributing a percentage of wages to the program.
3. Retirement benefits are calculated based on an individual's earnings history and the age at which they choose to start receiving benefits.
4. Social Security benefits are adjusted annually to account for inflation, ensuring that the purchasing power of the payments is maintained over time.
5. The Social Security Administration is responsible for administering the program and determining eligibility for benefits.

Review Questions

• Explain the purpose and key components of the Social Security program in the United States.
  • The primary purpose of the Social Security program is to provide a social safety net for American workers and their families. It does this by offering retirement benefits, disability benefits, and survivor benefits to eligible individuals. The program is funded through payroll taxes paid by both employers and employees, and the Social Security Administration is responsible for administering the program and determining eligibility for benefits.
• Describe how the Social Security program is financed and how benefits are calculated.
  • The Social Security program is financed through payroll taxes, with both employers and employees contributing a percentage of wages to the program. The amount of retirement benefits an individual receives is based on their earnings history and the age at which they choose to start receiving benefits. The Social Security Administration adjusts these benefits annually to account for inflation, ensuring that the purchasing power of the payments is maintained over time.
• Analyze the role of the Social Security program within the broader social safety net in the United States and its importance for ensuring financial security for workers and their families.
  • The Social Security program is a crucial component of the social safety net in the United States, providing a reliable source of income for retirees, the disabled, and the survivors of deceased workers. By ensuring a minimum level of financial security for these individuals, the program helps to alleviate poverty and promote economic stability. Furthermore, the program's universal coverage and guaranteed benefits make it an essential tool for ensuring the financial well-being of American workers and their families, particularly in the face of unexpected life events or economic downturns. The Social Security program's role in the broader social safety net is therefore crucial for maintaining the overall financial security and well-being of the American population.

Related terms

Payroll Tax: The tax that employers and employees pay to fund Social Security and Medicare programs. It is a percentage of an employee's wages that is withheld from their paycheck.

Retirement Benefits: Payments made to individuals who have reached the retirement age and have paid into the Social Security system throughout their working lives.

Disability Benefits: Payments made to individuals who have become disabled and are unable to work, provided they have paid into the Social Security system and meet the eligibility requirements.