Social Security: One more homework assignment
If you’re one of the many teenagers or young adults planning to get a summer job or start a career this summer, you may be surprised to see what’s deducted from your paystub. If you don’t know already, it’s time to learn what your Social Security taxes are all about.
By law, employers must withhold from a worker’s paycheck Social Security taxes. While usually referred to on an employee’s pay statement as “Social Security taxes,” sometimes the deduction is labeled as “FICA taxes” which stands for Federal Insurance Contributions Act, a reference to the original Social Security Act.
The taxes you pay now translate to a lifetime of protection, for retirement in old age or in the event of disability. And when you die, your family (or future family) may be able to receive survivors benefits based on your work as well.
Right now you probably have family members – grandparents, for example – who already are enjoying Social Security benefits which your Social Security taxes help provide.
Because you’re a long way from retirement, you may have a tough time seeing the value of benefit payments that could be many decades in the future. But keep in mind that the Social Security taxes you’re paying can provide valuable disability or survivors benefits in the event the unexpected happens. Studies do show that of today’s 20 year olds, about one in four will become disabled and about one in eight will die before reaching retirement.
Warning: if an employer offers to bend the rules and pay you “under the table,” you should refuse. They may try to sell it as a benefit to you since you get a few extra dollars in your pay. But you’re really only allowing the employer to cheat you out of your Social Security credits. It’s also illegal.
Another tip: don’t carry your Social Security card around with you. It’s an important document that should be safeguarded and protected. And it can be a valuable tool for an identity thief, if it’s lost or stolen.
If you’d like to learn a little more about Social Security and exactly what you’re building up for yourself by paying Social Security taxes, take a look at our online booklet, How You Earn Credits, at http://www.socialsecurity.gov/pubs/10072.html.
Do you prefer videos to reading? Check out our webinar, “Social Security 101: What’s in it for me?” The webinar explains what you need to know about Social Security. You can find it, along with other informative webinars, at http://www.socialsecurity.gov/webinars.
You can also learn more by surfing the web at http://www.socialsecurity.gov.
kathy petersen is a public affairs specialist for social security, denver region. you can write her c/o social security administration, 605 main, suite 201, rapid city, sd, 57701 or via e-mail at firstname.lastname@example.org. next week kathy shares how to get dad some “extra help.”
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