How does Social Security work?

Social Security (or Old Age, Survivors, and Disability Insurance) is the primary social safety net program in the United States. It provides benefits to retirees, people who are disabled and unable to work, and benefits to survivors whose primary breadwinners passed away (survivor benefits to children of deceased parents). The goal of Social Security is to ensure that these groups, the most vulnerable to poverty, are not abandoned by society.

Social Security is funded by the FICA taxes (Federal Insurance Contribution Act) or Medicare, Medicaid taxes which are about 6.2 percent of your wage; the rest is paid by your employer. The tax rates are fixed at 6.2 percent apiece up to $118,500 (adjusted every year) of income. Therefore, if you make more than $118,500 a year, the money above that amount is not subject to the FICA taxes (also called OASDI/EE taxes).

You are not automatically entitled to Social Security when you retire; it is first to determined if you have sufficient credit. Credits are earned by people who work and pay FICA taxes. The amount you need to work varies from year to year, but it is about $1,300 per credit. You can earn a maximum of four credits a year. Once you reach the maximum number of credits, you are entitled to benefits. A similar system applies to disability claimants, but that depends on the disability, impact on work, and other factors.

As you can see, contrary to the spirit of the law, the application of the law is more complicated. It is not uncommon for people’s claims to be denied two, three, or even four times. If you are trying to file a social security disability claim, you may want to contact an attorney beforehand. A lawyer can go over the requirements to ensure that your claim receives the maximum possible likelihood of approval.