Lecture 20 - Lecture 20: Social Security History of Social...

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Lecture 20: Social Security History of Social Security Social security was established in 1935 . It originally paid monthly benefits to individual workers upon retirement at age 65. Benefits are based on each worker's contribution in the form of a payroll tax collected over his or her working lifetime. Benefits were extended in 1939 to the spouse and children of a deceased retiree and to the survivors of a deceased worker. In the 1950's and 1960's, benefits began to be provided to disabled workers. Almost 46 million Americans receive benefits today. Financing Social Security Social security operates as a pay-as-you-go system: benefits to current retirees are financed by contributions from today's workers. Since the 1980's, tax contributions have exceeded the benefits paid. The surplus is held in the social security trust fund which will be used in the future to help pay benefits as the baby boomers retire. Social security is financed by a tax imposed on wages: a flat percentage of gross wages, up to a certain limit, split evenly between the employee and employer (although the employer may be able to shift all or part of their burden to the worker in the form of lower wages).
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This note was uploaded on 03/21/2012 for the course ECO ECO2023 taught by Professor Hermbaine during the Winter '09 term at Broward College.

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Lecture 20 - Lecture 20: Social Security History of Social...

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