Social Security 101 – Crash Course on America’s Biggest Retirement Program
Social Security is basically a giant retirement program available to almost every American worker. It came into existence in August 1935 when President Franklin D. Roosevelt signed the Social Security Act into law. Social Security has evolved over the years and is now one of the biggest government programs in the world, paying out hundreds of billions of dollars each year to more than 70 million Americans. It provides retirement benefits and disability income to qualified people and their spouses, children, and survivors.
Retirement Benefits
The amount of retirement benefits you can collect depends upon your average monthly earnings during your 35 highest-earning years. Because of this, benefit amounts vary significantly among retirees, but the average monthly benefit (as of June 2022) was $1,542.22.
The age at which you start collecting Social Security also impacts how much benefit money you receive each month. Although you can start collecting Social Security as early as age 62, individuals who wait until they reach full retirement age (currently between 66 and 67 depending upon the year you were born) will receive higher monthly benefits. Retirees who hold off collecting Social Security until age 70 will receive the biggest monthly benefits, but there is no increase after your turn 70.
Social Security Funding
Social Security is funded through payroll taxes. Workers pay into the program, typically through payroll withholding where they work. Currently the payroll tax is set at 12.4 percent, with employees and employers each paying 6.2 percent. Self-employed workers pay the full 12.4 percent. In 2022, payroll taxes are only paid on the first $147,000 of income, any earnings over that are not taxed. Critics say this puts an unfair burden on low wage earners, because the wealthy are only paying taxes on a small portion of their income.
Many Social Security advocates, The Seniors Trust included, believe it’s time to “scrap the cap.” We want to see Congress enact the Social Security Expansion Act. This legislation would lift the income tax cap and subject all income above $250,000 to additional Social Security payroll tax. Under this bill, more than 93 percent of households would not see their taxes go up by one penny.
By requiring high wage earners to pay additional income tax, Social Security could shore up its depleting trust fund, extending its solvency through 2096. This would ensure retired Americans continue to receive all of the benefits they have earned and are entitled for another 75 years.
If this is something you can stand behind, please sign our petition to Congress, calling on lawmakers to protect Social Security for today’s seniors and tomorrow’s retirees by passing the Social Security Expansion Act.
