Who's Really Paying for Your Social Security Benefits?
Social Security has a lot of people worried right now. With tens of millions of Americans collecting benefits right now and many more expecting to do so in the future, the financial strain on the program has increased dramatically in recent years. Demographic shifts have added more people than ever before to Social Security's rolls, and after having built up an impressive multi-trillion dollar balance in trust funds, the federal government projects that it might use up that balance over the next decade and a half.
In trying to figure out what to do, it's vital to know where Social Security's funding comes from right now. Much of the money that goes toward paying benefits comes from a single source, but a couple other key contributors also play a pivotal role. Below, we'll go into more detail about exactly who's paying for your Social Security benefits.
Social Security's primary funding source is a payroll tax that gets withheld directly from most workers' paychecks. The federal government takes 6.2% of your pay out of your check to cover Social Security, and it also charges your employer a matching 6.2% amount. Those who are self-employed pay the entire combined 12.4% amount as part of their self-employment tax liability. The tax gets imposed on wages and earnings up to a certain maximum amount each year, with 2020's limit set at $137,700.
Source Fool.com
