What Is Social Security?

Social Security, also known as the Old-Age, Survivors and Disability Insurance program, provides monthly benefits to qualifying retirees and disabled individuals. In some cases, you can qualify for either spousal benefits or survivor benefits.

The Social Security program is funded through payroll taxes. In 2025, employers and employees pay 6.2% of wages up to the taxable maximum of $176,100. If you’re self-employed, you’ll pay 12.4% in taxes, according to the Social Security Administration.

Each year, there is also a cost-of-living adjustment for Social Security benefits. The COLA for 2025 is 2.5%, the lowest increase since 2021.

If you meet specific qualifications, Social Security will send you monthly benefits. The qualifications vary depending on whether you need retirement, disability or survivor benefits. In all cases, you need a specific number of credits to qualify, and you earn the credits by working.

In 2025, you earn one credit for every $1,810 in covered earnings. You can earn a maximum of four credits per year. For example, by earning $7,240, you receive four credits, the maximum amount available in one year.

Source: Social Security Administration

For January 2025, the estimated average Social Security retirement benefit was $1,976 per month or $23,712 per year.

Retired workers, disabled individuals, spouses, children, widows and widowers can benefit from Social Security. As of June 30, 2024, 75.4% of those receiving benefits from Social Security were retired workers, according to the Social Security Administration.

In January 2025, retirees made the highest average benefit amount at $ $1,978.77 a month when compared to an aged widow/widower or disabled individual. The average monthly survivor’s Social Security benefit amount was $1,835.82 for an aged widow or widower. And the average monthly disability benefit was $1,580.67.

Social Security benefits have been taxable as income tax since 1983.

“Social Security benefits are generally subject to federal income tax; however, the extent to which they are taxed depends on the individual’s income level and filing status,” Andrew Lokenauth, founder of Fluent in Finance, told RetireGuide.

“For example, if you have other sources of income such as wages, interest or dividends, a portion of your Social Security benefits may be subject to federal income tax. But it’s worth noting that as of 2021, not all states tax Social Security benefits and not all recipients are required to pay taxes on them,” Lokenauth added.

Most Americans on Social Security must pay income taxes on their Social Security benefits. You may have to pay taxes on 50% to 85% of your Social Security income, depending on your income.

Spousal, survivor and disability benefits follow the same basic income tax rules as Social Security benefits. However,  benefits for people with low incomes and limited resources are not taxed.

You can contact the Social Security Administration online, in person or over the phone at 1-800-772-1213.

To find a Social Security office near you, use the Social Security Administration’s office locator tool.

Depending on which service you need, other resources may be available. For example, if you need to replace a Social Security card or report a lost check, refer to the Social Security Administration’s list of online services.

The best way to prevent Social Security fraud is to remain vigilant and not share personal information with strangers who contact you. Scammers will pretend to be government officials in an attempt to get your information.

The Social Security Administration will only contact you via text or email if you’ve opted to receive these communications. The only texts or emails sent will be regarding programs, services or a login verification to access your Social Security account. They will never ask for a return call to an unknown number or for personal information.

According to an article from Yahoo, scammers may claim that you must pay a fee or provide personal information to receive the COLA increase. This is not true. If someone calls asking you to pay a fee or requests private information for a COLA increase, it is a scam.

If you aren’t sure if a call or email from Social Security is legitimate, hang up and report it to the Office of the Inspector General.

Social Security is expected to run out of cash reserves in 2033, according to the Old-Age and Survivors Insurance Trust Fund, which is the retirement benefits account managed by the Social Security Administration.

However, this doesn’t mean the program would be bankrupt and unable to pay out benefits. If Congress does nothing to reform the system by 2033, Social Security would still be able to pay 77% of promised benefits until 2090.

Social Security has run out of cash reserves before. Congress reformed the program in the 1980s by taxing benefits based on income levels and gradually increasing the full retirement age from 65 to 67.

Medicare and Social Security are both federal programs. Because they are both associated with retirement in the United States, people often think they are part of the same organization, but they are not.  Different agencies run the programs within the federal government.

Medicare provides coverage for inpatient and outpatient care, nursing care, prescription drugs and medical supplies to people 65 or older. Social Security oversees paying qualified individuals’ retirement, disability, family and survivor benefits.

Editor Hannah Alberstadt contributed to this article.