how social security works

how social security works插图

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Social Security works by pooling mandatory contributions from workers into a large pot and then paying out benefits to those who are eligible for them. When you work,you pay into the system by having a portion of your earnings taxed and earmarked for Social Security.

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  • What is Social Security and how does it work?

  • Social Security was created in 1935 with the goal of providing economic security to the nation鈥檚 elderly; it was expanded in the 1950s to include support for the disabled.

  • How do people receive retirement benefits?

  • So let’s start by discussing how people receive retirement benefits and how the amount of the benefit is determined. Money in the Social Security trust funds is invested in government bonds, which helps pay for public works projects around the country.

  • How are Social Security retirement and disability benefits determined?

  • Your Social Security retirement benefits will depend on how much money you earned during your working years and your age at the time you start collecting benefits. Similarly, your Social Security disability benefits are based on your eligible lifetime average earnings.

  • How much will my Social Security benefits be?

  • Social Security benefits will generally average out to about 42 percent of your former wages. Personal savings and other other retirement funds are expected to make up the rest. Retirement benefits don’t only go to the retired worker. Certain family members of the retired worker can also receive benefits, including:

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