Social Security Basics
What year was the Social Security Act signed into law?
1935
At what age can a worker start collecting reduced Social Security retirement benefits?
62
What is the maximum percentage of Social Security benefits that can be subject to federal income tax?
85%
What is the Social Security program that provides benefits to disabled workers?
Social Security Disability Insurance (SSDI)
By what decade is the Social Security Trust Fund projected to be depleted?
2030s
What government agency administers Social Security?
Social Security Administration (SSA)
True or False: Spouses who never worked can receive Social Security benefits.
True
What happens to the Social Security Trust Fund when revenue from payroll taxes exceeds benefit payments?
The surplus is invested in U.S. Treasury securities.
What is the minimum number of work credits needed to qualify for SSDI benefits?
20 credits in the last 10 years (but varies by age)
What is one reason why Social Security is facing financial challenges?
More retirees than workers, longer life expectancy, or declining birth rates.
What type of system does Social Security use to fund benefits?
Pay-as-you-go system
Benefits are based on your highest __ years of earnings
35
If the Social Security Trust Fund runs out, how will benefits be paid?
Benefits will continue but at reduced levels, funded by ongoing payroll taxes.
Who can receive survivor benefits from Social Security?
Spouses, children, and sometimes dependent parents of deceased workers.
True or False: Social Security benefits increase automatically with inflation.
True (via Cost-of-Living Adjustments or COLA)
What percentage of a worker’s wages are paid into Social Security by the worker and employer (combined)?
12.4% (6.2% from the worker, 6.2% from the employer)
What is the Full Retirement Age (FRA) for individuals born after 1960?
67
What is one proposed solution to keep Social Security solvent?
Raising the payroll tax rate, increasing the retirement age, reducing benefits, or privatizing part of Social Security.
True or False: Social Security disability benefits automatically convert to retirement benefits at full retirement age.
True
What does the term "privatization" mean in the context of Social Security reform?
Allowing workers to invest part of their payroll taxes in private retirement accounts.
What is the official name of the tax that funds Social Security?
Federal Insurance Contributions Act (FICA) tax?
How many work credits does a worker need to qualify for Social Security retirement benefits?
40 credits (10 years of work)
What demographic trend is straining Social Security’s finances?
An aging population with fewer workers per retiree.
What is the name of the Social Security program that provides needs-based benefits to disabled individuals with low income?
Supplemental Security Income (SSI)
Name one country that has transitioned from a pay-as-you-go system to privatized retirement accounts.
Chile