Social Security provides much more than retirement benefits
When students take first-time jobs over the summer, they will undoubtedly moan loud and long about the deductions on their pay stubs labeled, “Social Security Tax” and “Medicare Tax.” Their comments will basically come down to “Not fair!” or “Why am I paying these old people’s taxes?”
That’s actually a wonderful opportunity for parents and older relatives to do a little kitchen table education and explain these programs are much more than retirement. For example, about 150,000 young men and women are now getting Social Security benefits – not old age, or retirement, benefits, but rather disability benefits. As we all know, sometimes in life, stuff happens.
We can never know when an injury at work, an accident on the highway, or a severe illness will keep us from working, sometimes for a long time. People who have paid Social Security taxes for as little as 1-1/2 years, and have an injury or illness that will keep them off the job for a year or more, could start getting a monthly disability check from Social Security.
And two years later, Medicare kicks in. That’s right, there are many young people in their 20s who not only get a Social Security disability check from the government, but also qualify for Medicare coverage.
Another piece of the Social Security pie that young workers are buying with those deductions from summer paychecks is what we call survivors benefits.
In not too many years, they probably will be getting married and starting a family. And if some really bad stuff happens, and if they were to die, their kids and spouse would start getting monthly checks from Social Security. Once again, there are millions of young widows, widowers and young children getting Social Security checks because a husband, wife or parent has died.
Finally, a word or two about the “old folks.” The taxes young workers pay help provide a Social Security retirement check for their parents and grandparents, aunts and uncles and other senior citizens. And, young workers just need to remember that, with a little luck and the passage of time, they also will reach retirement age.
The taxes they now pay go on an earnings record at the Social Security Administration – a record that will track their earnings throughout a working lifetime. And some day, when they are eligible for Social Security benefits, the amount of money they will get back from Social Security will depend almost entirely on that earnings record.
Of course, there is really no way to keep young workers – or older workers- from complaining about all the deductions in their paycheck. No one really likes to pay taxes. But when it comes to Social Security taxes, first-time workers just need to realize that those taxes will some day translate into potentially valuable Social Security benefits.
And “some day” is often sooner than we think.