Security Contributions and Benefits

The security contributions or the social security tax is paid in the event one needs to benefit from a social insurance program in case of poverty, unemployment, old age. In the United States, social program that require a security contribution are Medicare, Social Security, the PBGC program and other state-related insurance programs dedicated for the unemployed.

The security contributions have to be paid every year and, usually, they represent rates that apply to the earnings of an individual. In 2011, the social security tax or security contribution is 4.2 percent for employees and 6.2 percent for employers. A 10.4 percent must be paid by those who are self-employed.

Those who are excused from paying the security contributions must present a proof that they fall in one of the next categories: they are self-employed with annual earnings of less than $400, they are graduate students with no job or they are workers and perform certain types of work. This last category includes election workers and household employees.

If security contributions are paid during the lifetime, the spouse, child or widow/widower can benefit from the social security contribution. Children usually receive the social benefits if they are under the age of 18 or if they have not yet graduated from school.

Paying the social security contributions means that, when retired, the individual will receive a monthly income directly proportional to his earning records and to the years he spent working. The retirement age is also a factor in calculating the benefits. The security contributions are sometimes called pay-as-you-go contributions.

A survey conducted in 2011 showed that 54 million people were beneficiaries of the Social Security Program in 2010, meaning that 54 million people have paid their security contributions. Today, some experts estimate that, due to social contributions, almost 40% of Americans are kept above the poverty line.

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