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Social Security provides income to millions of Americans that are retired, disabled, and families of retired, disabled or deceased workers.
Around 163 million Americans work and pay Social Security taxes and 60 million collect monthly benefits.
The current Social Security system works like this:
- When you work you pay taxes into Social Security.
- They use the tax money to be benefits to retirees, people who are disabled, survivors or workers who have died and dependents of beneficiaries.
- The money you pay into taxes is used to pay for people receiving benefits now.
- Any unused money goes to the Social Security trust funds, not a personal account with your name on it.
You pay Social Security taxes based on your earnings, up to a certain amount. In 2016, that amount is $118,500.
You pay Medicare taxes on all of your wages or net earnings from self-employment. These taxes are for Medicare coverage.
