Payroll & Benefits · Glossary
What is Social Security?
Quick definition
A US federal program providing retirement, disability, and survivor benefits, funded by payroll taxes.
Full explanation
Social Security is a US federal insurance program that provides retirement, disability, and survivor benefits. Workers pay 6.2% of wages (employers match), up to the annual wage base ($168,600 in 2026). Benefits are calculated from the 35 highest-earning years. Full retirement age is 67 for those born after 1960. Claiming at 62 gets reduced benefits (70-75% of full); delaying to 70 gets the maximum (124% of full). Average monthly benefit in 2026 is ~$1,900. The program is projected to face funding shortfalls in the 2030s, possibly requiring benefit cuts or tax increases. Social Security replaces ~40% of pre-retirement income for the average earner.
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Calculators that use or explain Social Security.
Related terms
More from Payroll & Benefits
Gross vs. Net Pay
Gross = total earnings before deductions. Net = what actually hits your bank account after taxes and withholdings.
Tax Bracket
A range of income taxed at a specific rate. Higher income does not mean all of it is taxed at the higher rate.
401(k)
A US employer-sponsored retirement plan that lets employees save pre-tax dollars. Often includes employer matching.
Roth IRA
An individual retirement account funded with post-tax dollars; withdrawals in retirement are tax-free.
Overtime Pay
Wages paid at a higher rate (typically 1.5×) for hours worked beyond the standard 40-hour workweek.
Severance Pay
Compensation paid by an employer to an employee upon termination, often based on years of service.
Last reviewed: June 15, 2026 • Category: Payroll & Benefits