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What Is Social Security and How Does It Work?

The Old-Age, Survivors, and Disability Insurance (OASDI) program in the United States is known as Social Security. A government agency administers the Social Security Administration (SSA). It is most recognized for its retirement benefits, but it also offers survivor benefits and income to injured workers.

What is the Function of Social Security?

Social Security is a type of insurance. Workers often contribute to the program through payroll withholding at their employment. When self-employed people submit their federal tax returns, they must pay Social Security taxes.

Each year, employees can earn up to four credits. In 2021, one credit will be awarded for every $1,470 earned, up to a maximum of $5,880, or four credits. 1 That money is put into two Social Security trust funds—the Old-Age and Survivors Insurance Trust Fund (OASI) for retirees and the Disability Insurance Trust Fund (DI) for disability beneficiaries—and used to provide payments persons who are currently eligible. Money that is not spent is kept in trust funds.

A board of trustees oversees the financial operations of the two Social Security trust funds. The Secretaries of the Treasury, Labor, and Health and Human Services and the Commissioner of Social Security make up four of the six members. At the same time, the remaining two are public representatives selected by the president and ratified by the Senate.