Social Security
Social Security is an insurance program of a federal agency. The Old-Age, Survivors, and Disability Insurance (OASDI) program is made for people to get retirement, survivor or disability payments from SSA (Social Security Administration).
How Social Security Works
Insurance contributions are made from salaries (employees) or by giving Social Security taxes (self-employed).
It is possible to earn up to 4 credits per year. In 2022, 1 credit is available for every $1,510 earned to accumulate $6,040 or 4 credits. This money is divided into 2 funds: the Disability Insurance Trust Fund (DI) for recipients of disability benefits, and the Old-Age and Survivors Insurance Trust Fund (OASI) for retirees. These trust funds give payments to people, who have the right to them. If the money is not spent, it stays in the trust funds.
These trust funds are under a trustee board supervision. There are six people on the board of trustees. Four members are chosen from the secretaries of the Ministries of Labor, Finance, Welfare (commissioner) and Health. 2 people are public officials appointed by the president.
Health insurance for citizens 65 and older is provided federally by Medicare. They also serve some people with disabilities. The money goes into a third trust fund managed by the Centers for Medicare & Medicaid Services (CMS). The fund is supported by salary deductions.
Types and amounts of Social Security benefits
Social Security gives support to retirees, their survivors, and disabled workers.
Pension benefits. An employee has the right to retire at age 66 to 67. If an employee has made social security payments for at least 10 years, he or she may retire early at age 62. The higher the age of retirement, the higher the payments. The benefits increase until age 70, but if the employee continues working, the benefits will not increase.
The pension depends on AIME (average indexed monthly earnings) for 35 years, the highest earnings are considered. Pensions are different for different people. April 2022 data shows that the average monthly pension is $1,588.89.
The annual pension increases by 8% when people retire late (from age 62 to age 70). Also, the pension increases because of inflation (cost of living increases). Therefore, the amount of retirement pension depends on the age of retirement and inflation. In 2022, the pension adjustment based on inflation is 5.9%. In 2022, the maximum monthly pension for people aged 62 is $2,364. The maximum monthly pension for people aged 70 is $4,194.
There is a special minimum payment for long-term low salary employees, having earnings at least 11 years. In 2022 the special monthly minimum benefit is $45.50. It increases for each working year for a low salary. The maximum special benefit is $950.80. People, who have worked for 30 years, are considered for this maximum.
Disability Benefits. Some people are unable to work due to a physical or psychological condition that can last a year or more. It can also lead to death. Because of serious health problems, people may be considered for Social Security Disability Insurance (SSDI) payments. A disabled worker must meet certain earnings requirements. His or her family members may also qualify for this payment.
April 2022 data shows that 9 million Americans were getting SSDI. The average payment per month was $1,226.03. The average payment per month for disabled workers was $1,361.40. The average payment per month for spouses of disabled workers was $377.02 and for children it was $431.25.
Survivor benefits. In case of an employee's death, the spouse and children may have the right to receive survivor's benefits. The amount of the payment is based on the employee's earnings records. Such cases may include people aged 60 and older, who are surviving spouses, as well as people aged 50 and older, who are disabled, on condition that they have not remarried. This category also includes people who are responsible for a disabled person who has lost a spouse or an under aged child (aged 16 and younger).
Children must be under age 18 or disabled to get a right for getting benefits. A stepson, grandchild, stepdaughter or adopted child may get this right in specified conditions.
Parents aged 62 or older who depended on a deceased employee for at least 1\2 of their income may also get the right to receive benefits. In some cases, surviving spouses and minor children can get a one-time payment of $255.
History of Social Security
U.S. President Franklin D. Roosevelt signed the Social Security Act on August 14, 1935. On that day the Social Security system began to exist. The first benefit payments began in 1940. Ida M. Fuller was the first person to receive a check for $22.54. She was a retired law secretary in Vermont.
Of course, the system and its requirements have changed a lot over the years. And now Social Security has become one of the biggest government programs in the world. It pays hundreds of billions of dollars every year.
