Share this Page URL

Chapter 23. Social Security and Medicare > Taxes and More Taxes - Pg. 238

Social Security and Medicare 238 · Who knew that our population wouldn't continue to grow at the rate of the Boomers' births and that there would actually be fewer workers in the next generation to support a growing population collecting Social Security benefits? What Is Social Security, Really? Social Security is a lot of things to a lot of people. It started out as the Old Age Survivors and Dependents Insurance, a fund into which workers paid and from which they could collect if they lived long enough. You must work and pay taxes into Social Security to get benefits, although it does allow for a dependent or a survivor to receive benefits on another person's Social Security record. You Must Earn Your Credits As you work and pay taxes, you earn Social Security credits that count toward eligibility for future Social Security benefits. You can earn a maximum of four credits each year. In 2001, you earn one credit for each $830 in earnings you make. The amount of money needed to earn one credit goes up every year, naturally. Most individuals need 40 credits to qualify for benefits. Younger people need fewer credits to be eligible for disability benefits or for their family members to be eligible for survivors' benefits if they die. During your working lifetime, you're likely to earn more credits than you need for eligibility. These extra credits do not increase your eventual benefits. However, the income you earn will increase the amount of your benefits, because the more you earn and the longer you work, the larger your benefit will be.