|Social Security Administration
      Your TaxesWhat They're Paying
          For And Where The Money Goes
      Publication Number 05-10010
          August 2000(February 2000 edition may be used)ICN 451459 | IntroductionTake a look at your pay stubthe 
      part that shows how much is taken out for the various taxes and benefits 
      each pay period. One of those deductions is for Social Security and Medicare 
      taxes. On some pay stubs it's called FICA, which stands for Federal 
      Insurance Contributions Act, the law that authorized payroll deductions 
      for Social Security.
      
      We thought you might like to know 
        what your Social Security taxes pay for and where the money goes.
      Who Pays Social Security 
        Taxes?You do, of course, but so do 
        more than 150 million other people. In fact, about 96 percent of all American 
        workers pay Social Security taxes. The tax rate is 7.65 percent of your 
        gross wages (6.2 percent for Social Security and 1.45 percent for Medicare). 
        In the year 2000, your employer withholds the full tax7.65 percentup 
        to a $76,200 wage base. If you earn more than $76,200, your employer continues 
        to withhold the Medicare portion of the Social Security tax, or 1.45 percent, 
        on the rest of your earnings.
      Did you know that your employer matches 
        your tax payment dollar for dollar? The next time you look at your Social 
        Security deduction, double it, and that's the amount you and your employer 
        are paying into Social Security toward your future benefits.
      (Self-employed people also pay Social 
        Security taxes. Their rate equals the combined employee/employer tax.)
      What Do Your Social
        Security Taxes Pay For?Today, you're working and paying 
        Social Security taxes. Tomorrow may be a different story. Some people 
        plan for their retirement, but many of us don't give enough thought to 
        what would happen if we become disabled, or what would happen to our family 
        if we died.
      That's why it's important for you 
        to know that your Social Security taxes are paying for a lot more than 
        just retirement benefits. In fact, you could 
        think of your Social Security taxes as a premium on a potentially valuable 
        insurance plan. Here's what you and your employer are buying with your 
        Social Security taxes:
      retirement coveragebenefits 
          paid every month to eligible retired workers as early as age 62;
        disability coveragebenefits 
          paid every month to eligible workers of all ages who have a severe disability;
        family coveragebenefits paid 
          every month to the spouses and children (including dependent adults 
          who have been disabled since childhood) of eligible retired and disabled 
          workers;
        survivors coveragebenefits 
          paid every month to the eligible widow/ widower and children of a deceased 
          worker; and
        Medicare benefitshelp with 
          hospital bills, as well as limited coverage of skilled nursing facility 
          stays, hospice care and other medical services at age 65 or younger 
          if you become disabled.You can help guarantee that you're 
        receiving the proper credit for your work and earnings by checking your 
        pay stubs and W-2 forms. Make sure your Social Security number is correct 
        and that your name is spelled properly. If there are mistakes, show them 
        to your employer so they can be corrected.
      Where Your Social
        Security Taxes Go
      Out of every dollar that workers and 
        their employers pay in Social Security taxes:
      85 cents goes to a trust fund that 
          pays for monthly benefits to retirees and their families and to widow, 
          widowers and children of workers who have died; and
        15 cents goes to a trust fund that 
          pays benefits to people with disabilities and their families.Your Social Security taxes also pay 
        for administering Social Security. The administrative costs are paid from 
        the trust funds described above and are less than 1 cent of every 
        Social Security tax dollar collected.
        The entire amount of taxes you pay for Medicare (1.45 percent of your 
        earnings) goes to a trust fund that pays for some of the costs of hospital 
        and related care of all Medicare beneficiaries. Medicare is administered 
        by the Health Care Financing Administration.
      Social Security is one of the most 
        popular and successful of all government programs and enjoys broad support 
        from all sectors of our society. Most Americans recognize the need to 
        continue to provide a basic level of financial support and health care 
        to be elderly, to people with disabilities and to the survivors of workers 
        who have died.
      What's In It For Me?We want to help you plan your 
        financial future by providing estimates of the retirement, disability 
        and survivors benefits you and your family could be eligible to receive 
        now and in the future. If you are 25 and older and not already receiving 
        Social Security benefits, we will send you a Social Security statement, 
        You can expect to receive a new statement showing your updated earnings 
        records and your potential benefits each year about three months before 
        your birthday.
        It is important that you check your statement each year because any missing 
        or unreported wages could affect your eligibility for Social Security 
        benefits or lower the amount of potential benefits. It's a good idea to 
        keep your W-2 forms and other wage records so you can verify the information 
        on your earnings and benefit statement, If you find a problem, contact 
        your local Social Security office right away and show us proof of your 
        actual wages so we can correct your record.
        One way you can help avoid any problems is to make sue Social Security 
        has your correct name on file, If your name has changed due to marriage, 
        divorce or any other reason, contact Social Security so we can change 
        our records and issue you a corrected Social security card.What's In It For All 
        Of Us?In addition to your personal 
        stake in Social Security, we think it's important to consider the positive 
        impact the program has on our country as a whole. Think of the value of 
        Social Security in terms of the benefits it pays to the family of a fellow 
        worker who has died, to a relative who has cancer and can't work or to 
        a neighbor who's retired after a lifetime of hard work.
      Social Security represents a pact 
        between generationsa financial and social commitment among people 
        of all ages. It guarantees a monthly income to current recipients and 
        ensures a base of financial support for future beneficiariesworkers 
        like you. As such, Social Security is one of the most important and far-reaching 
        investments that you and all Americans can make.
      For More InformationYou can get recorded information 
        24 hours a day, including weekends and holidays, by calling Social Security's 
        toll-free number, 1-800-772-1213.You can speak to a service representative 
        between the hours of 7 a.m. and 7 p.m. on business days. Our lines are 
        busiest early in the week and early in the month, so, if your business 
        can wait, it's best to call at other times. Whenever you call, have your 
        Social Security number handy.
      People who are deaf or hard of hearing 
        may call our toll-free TTY number, 1-800-325-0778, between 7 a.m. 
        and 7 p.m. on business days.
      We treat all calls confidentiallywhether 
        they're made to our toll-free numbers or to one of our local offices. 
        We also want to ensure that you receive accurate and courteous service. 
        That is why we have a second Social Security representative monitor some 
        incoming and outgoing telephone calls.
         
         
      
      Social 
        Security AdministrationSSA Publication No. 05-10010
        August 2000(February 2000 edition may be used)ICN 451459
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