Worker’s questions about Social Security

by Mike Baksa, Social Security Administration
Monday, July 2, 2007 2:19 PM MDT

There are a couple of million teenagers out there who are starting their first real jobs this summer.

They may ask you “what are my Social Security taxes all about?” Some may even ask “what is FICA?” Here is a quick primer on what any new worker needs to know about Social Security.

First, by law, employers must withhold from a worker’s paycheck Social Security taxes at the rate of 6.2 percent of gross pay. In addition, a Medicare payroll tax of 1.45 percent of pay must also be withheld.

While usually referred to as “Social Security taxes,” sometimes the deduction is labeled on an employee’s payroll statement as “FICA taxes,” which stands for Federal Insurance Contributions Act, a reference to the original Social Security Act.

The taxes they pay now translate to a lifetime of protection, whether they retire or become disabled. And in the event that they die, their family (or future family) may be able to receive survivors benefits based on their work as well. And today they probably have family members —- grandparents, for example -— who already are enjoying Social Security benefits, which their Social Security taxes help provide.

Because they are a long way from retirement, young workers may have a tough time appreciating the value of benefit payments that could be some 50 years distant. But they also should know that the Social Security taxes they are paying can provide valuable disability benefits. Studies do show that a 20-year-old has about a three in 10 chance of becoming disabled sometime before reaching retirement age.

Finally, if you have the opportunity to talk to new workers about their job and Social Security, remind them that if an employer offers to bend the rules and pay them “under the table,” they should refuse. While the employee may see a few more dollars in his or her pay, the employee would not earn Social Security credits under this illegal arrangement.

Also remind new workers that they probably shouldn’t be carrying their Social Security card around with them. It’s a document that needs to be safeguarded and protected. And if they ask more questions than you can to answer, just tell them that the next time they are surfing the Web, they should stop by our Web page at www.socialsecurity.gov.

Public Affairs Specialist Mike Baksa may be reached at michael.baksa@ssa.gov.

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