Social Security Basics

Social Security is a mandated supplemental retirement system in the U.S. that was established in 1935. It was motivated largely by the events of the Great Depression, which saw many Americans out of work and the nation's retired elderly often left in poverty. The intent of the Social Security program is to ensure a threshold subsistence level below which any worker who had paid into the program cannot fall.

Your Social Security benefits are the foundation upon which you can build a secure retirement. Social Security is funded out of payroll taxes; that is, a certain percentage of a worker's paycheck goes directly into the Social Security fund to help provide benefits to current Social Security benefit recipients. In a nutshell, a small amount is taken out of each of your paychecks. Over the years, you save up more money and earn “credits.” Then after you retire, these savings are paid back to you, depending on how many credits you earned.

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