Social Security

Definition

Social Security is a federal social insurance program in the United States that provides retirement, disability, and survivor's benefits to eligible individuals. It was established in 1935 as part of President Franklin D. Roosevelt's New Deal legislation, with the goal of providing a safety net for Americans during economic hardships.

5 Must Know Facts For Your Next Test

1. Social Security was created as part of the New Deal legislation in 1935 to provide a social safety net for Americans during the Great Depression.
2. The Social Security Act established old-age retirement benefits, survivor's benefits, and disability insurance as the three main components of the program.
3. Social Security is funded through the Federal Insurance Contributions Act (FICA) payroll tax, which is automatically deducted from employee paychecks.
4. The Social Security Trust Fund is the account where payroll tax revenues are deposited and held in reserve to pay future benefits.
5. Social Security has played a crucial role in reducing poverty among the elderly, disabled, and survivors, and is considered one of the most successful government programs in U.S. history.

Review Questions

• Explain the key components of the Social Security program and how they provide a social safety net for Americans.
  • The Social Security program consists of three main components: old-age retirement benefits, survivor's benefits, and disability insurance. These benefits are designed to provide a financial safety net for Americans during their retirement years, in the event of the death of a spouse or parent, or if they become disabled and unable to work. By providing a guaranteed source of income, Social Security has played a crucial role in reducing poverty and improving the financial security of millions of Americans.
• Describe the role of the Social Security Trust Fund and how it is funded through the FICA payroll tax.
  • The Social Security Trust Fund is the account where payroll tax revenues collected through the Federal Insurance Contributions Act (FICA) are deposited and held in reserve to pay future benefits. The FICA payroll tax is automatically deducted from employee paychecks, with both employers and employees contributing a portion. This dedicated funding source helps to ensure the long-term solvency of the Social Security program and its ability to provide benefits to eligible individuals, even during economic downturns or demographic shifts.
• Analyze the historical significance of the Social Security program and its impact on American society, particularly in the context of the New Deal.
  • The creation of the Social Security program in 1935 as part of President Franklin D. Roosevelt's New Deal legislation was a landmark moment in American history. During the Great Depression, Social Security provided a critical social safety net for Americans, helping to alleviate poverty and financial insecurity among the elderly, disabled, and survivors. By establishing a guaranteed source of income for these vulnerable populations, Social Security has had a profound and lasting impact on American society, reducing poverty and improving the overall well-being of millions of citizens. The program's success and popularity have made it one of the most enduring and successful government programs in the United States.

Related terms

Old-Age, Survivors, and Disability Insurance (OASDI): The official name of the Social Security program, which includes retirement benefits, survivor's benefits, and disability insurance.

Federal Insurance Contributions Act (FICA): The payroll tax that funds the Social Security and Medicare programs, which is automatically deducted from employee paychecks.

Social Security Trust Fund: The account where Social Security payroll taxes are deposited and held in reserve to pay future benefits.