Binder & Binder - social security
America's Most Successful
Social Security Disability Advocates ®
Call or E-mail Us for a FREE Consultation
1-800-66-Binder(800-662-4633)1-800-662-4633
Menu Learn More

Social Security Premiums Analyzed

social security card.jpg

This blog has consistently emphasized that Social Security Disability (SSD) benefits are not welfare, as some politicians try to suggest. Rather, SSD benefits come from wage replacement insurance paid for by almost every worker and his or her employer with each paycheck. SSD is not so different from car insurance, health insurance or even home insurance. Premiums are paid in, and if a covered event such as a disability or an auto accident occurs, benefits are paid out. The act that authorizes employers to make such deductions even has the word "insurance" in the title. It's called the Federal Insurance Contributions Act (FICA) and it covers SSD, old age pensions, and Medicare.

It may help to analyze how the Social Security Administration uses the premiums paid by covered workers to provide the various benefits that employees can receive. First, how much are the premiums? Today, the employer and employee each pay 6.2 percent of wages up to the maximum, currently $117,000. Payments for Medicare coverage are 1.45 percent for both employer and employee. There is no wage maximum for Medicare; all wages are taxed.

Second, how are these tax dollars used by the SSA? Here's breakdown provided by the Internet personal finance website Motley Fool.

· Most payments into the Social Security system go toward pensions for retired workers. In 2013, this number was 74 percent. The SSA averages a worker's highest 35 years to calculate the actual benefit.

· Disability benefits make up the next largest percentage of SSA payouts, only 16 percent in 2013.

· Survivor benefits represent 10 percent of payouts. These benefits go to spouses and children of deceased workers.

· Administrative overhead is only one percent of operating the Social Security system. Because of this very low overhead, the government views the SSA as one of the most efficient federal agencies.

In past years, Congress has allowed the SSA to adjust allocations to match changing demographic needs. However, this requires a specific authorization from the politicians, something that may not happen in today's polarized environment.

This analysis of SSA payments is brought to you by Binder & Binder®, America's most successful Social Security Disability advocates. Despite the cries of those who believe SSD is welfare, disability benefits continue to be available to eligible employees who paid into the system. If you are having trouble with your application for disability benefits, call us from anywhere in the United States. Tell us your story and find out how we may be able to help.

It may help to analyze how the Social Security Administration uses the premiums paid by covered workers to provide the various benefits that employees can receive. First, how much are the premiums? Today, the employer and employee each pay 6.2 percent of wages up to the maximum, currently $117,000. Payments for Medicare coverage are 1.45 percent for both employer and employee. There is no wage maximum for Medicare; all wages are taxed.

Second, how are these tax dollars used by the SSA? Here's breakdown provided by the Internet personal finance website Motley Fool.

  • Most payments into the Social Security system go toward pensions for retired workers. In 2013, this number was 74 percent. The SSA averages a worker's highest 35 years to calculate the actual benefit.
  • Disability benefits make up the next largest percentage of SSA payouts, only 16 percent in 2013.
  • Survivor benefits represent 10 percent of payouts. These benefits go to spouses and children of deceased workers.
  • Administrative overhead is only one percent of operating the Social Security system. Because of this very low overhead, the government views the SSA as one of the most efficient federal agencies.

    In past years, Congress has allowed the SSA to adjust allocations to match changing demographic needs. However, this requires a specific authorization from the politicians, something that may not happen in today's polarized environment.

    This analysis of SSA payments is brought to you by Binder & Binder®, America's most successful Social Security Disability advocates. Despite the cries of those who believe SSD is welfare, disability benefits continue to be available to eligible employees who paid into the system. If you are having trouble with your application for disability benefits, call us from anywhere in the United States. Tell us your story and find out how we may be able to help.

    No Comments

    Leave a comment
    Comment Information

    News & Features

    Doing Things Better & Nicer. A Binder Tradition.

    We do the "little things" to make your experience great!Read More

    Social Security Tax Tips from Harry J. Binder

    You are allowed a deduction for every expense you incur...Read More