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Social Security Did You Knows

To help better understand Social Security, review our “Did You Know” lists. After reviewing our lists, you can decide the importance of Social Security in your financial life and prepare accordingly.

List #1
  1. Initially, Social Security provided only retirement benefits and only to the worker. The program was amended in 1939 to provide benefits to spouses and minor children and again in 1956 to provide disability benefits

  2. The U.S. Social Security system is made up of three major components and is officially known as OASDI (Old Age Survivors and Disability Insurance). The three (3) components are:

      OAS: Old Age Survivors Insurance - retirement income benefits at age 65 are what most people think of when they think of social security, but social security also provides benefits to surviving spouses and children of deceased beneficiaries if they meet specific eligibility requirements;
      DI: Disability insurance - individuals who are unable to work and their family members may receive social security disability payments until they reach retirement age if they meet specific eligibility requirements;
      SSI: Supplemental Security Income - provides benefit payments to disabled, blind, and older adults who do not qualify for retirement or disability based on work history. Disabled or blind children can also receive SSI

  3. Social Security (retirement, disability, and survivor benefits) is funded by a payroll tax called the Federal Insurance Contributions Act tax (or FICA tax). The FICA tax amount is published on your pay stub or check advice

  4. The Social Security FICA tax rate is 6.2%. Both you and your employer contribute 6.2% of your salary (for a combined contribution of 12.4%) up to the FICA cap.
  5. The current (2016) FICA cap (wage limit) is $118,500. Wages you earn in the calendar year above this cap are not subject to the Social Security FICA tax

  6. The FICA cap is subject to change each year

  7. The money collected by Social Security (via the FICA tax) from you and your employer is deposited into trust funds (OASI trust fund) and (DI trust fund) and used to pay benefits for current beneficiaries

  8. Not all jobs are covered by Social Security. If you work in a job that Social Security does not cover, you will not pay FICA taxes for THAT job. If you later work in a Social Security-covered job, you will pay the FICA tax and may be eligible to receive SS retirement benefits

  9. Eligibility for SS benefits: You must have the required number of credits (and have paid FICA taxes) before you can receive Social Security benefits

  10. The minimum number of credits needed to receive Social Security benefits is 40. You can receive a maximum of four (4) credits per calendar year, and, in 2013, you get one credit for each $1,160 of earnings. It takes approximately ten years to meet this minimum standard. Your Social Security benefits are calculated based on your 35 highest-paid years of earnings

  11. The average Social Security beneficiary will typically receive more than they put into Social Security

These Social Security Did You Knows (DYKS) were compiled from the Social Security Administration (SSA) website information. To learn more about the U.S. Social Security program, visit the SSA website at www.ssa.gov.
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