Social Security
Financial term in the Retirement category
Definition
A federal program providing retirement, disability, and survivor benefits funded through payroll taxes. Retirement benefits are based on your 35 highest-earning years and the age at which you begin collecting. Full retirement age ranges from 66 to 67.
Related Terms
Payroll Tax
Taxes withheld from employee paychecks and paid by employers to fund Social Security and Medicare. Employees and employers each pay 7.65% of wages, split between Social Security (6.2%) and Medicare (1.45%).
Retirement Income
Money received during retirement from various sources including Social Security, pensions, retirement account withdrawals, annuities, and investment income. Planning for multiple income streams helps ensure financial security throughout retirement.
Pension
A retirement plan funded by an employer that provides regular payments to employees after retirement. Increasingly rare in private sector, more common in government jobs.
Frequently Asked Questions
What is Social Security?
A federal program providing retirement, disability, and survivor benefits funded through payroll taxes. Retirement benefits are based on your 35 highest-earning years and the age at which you begin collecting. Full retirement age ranges from 66 to 67.
Why is Social Security important in personal finance?
Social Security is an important retirement concept that helps individuals make better financial decisions. Understanding Social Security can improve your financial planning and help you achieve your money goals.
How does Social Security relate to Payroll Tax?
Social Security and Payroll Tax are related financial concepts. Taxes withheld from employee paychecks and paid by employers to fund Social Security and Medicare. Employees and employers each pay 7.65% of wages, split between Social Security (6.2%) and Medicare (1.45%).
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