Courtesy: Social Security Administration
Jane Yamamoto-Burigsay is Social Security’s public information specialist in Hawai‘i.
Seeing taxes taken out of your paycheck can be a little disappointing at first time. However, you can take pride in knowing that you are making an important impact each week when you contribute to Social Security. Understanding how important your contribution is takes some of the sting away because your taxes are helping millions of Americans — wounded warriors and the chronically ill and disabled, and it is protecting you and your family for life.
By law, employers must withhold Social Security taxes from each worker’s paychecks. While usually referred to as “Social Security taxes” on an employee’s pay statement, the deduction is sometimes labeled as “FICA,” which stands for Federal Insurance Contributions Act, a reference to the original Social Security Act. In some cases, you will see it labeled as “OASDI,” which stands for Old Age Survivors Disability Insurance.
The taxes you pay now translate into a lifetime of protection — for retirement in old age or in the event of disability. And when you die, your family (or future family) may be able to receive survivors benefits based on your work, as well.
Because you may be a long way from retirement, you might have a tough time seeing the value of benefit payments that could be many decades in the future. Keep in mind, however, that the Social Security taxes you’re paying can provide valuable disability or survivors benefits now in the event the unexpected happens. Studies show that of today’s 20-year-olds, about one in four will become disabled, and about one in eight will die before reaching retirement.
Be warned: If an employer offers to pay you “under the table,” you should refuse. It’s against the law. They may try to sell it as a benefit to you since you get a few extra dollars in your pay. But you’re really only allowing the employer to cheat you out of your Social Security credits.
To learn more about Social Security and exactly what you’re building up for yourself by paying Social Security taxes, take a look at our online booklet, How You Earn Credits, at www.socialsecurity.gov/pubs/10072.html.
To read the rest of this article, please subscribe to The Herald!