What Is Social Security?

Understanding a key element of your retirement income plan

What it is

Social Security is part of Old-Age, Survivors, and Disability Insurance (OASDI), a social welfare and insurance program managed by the U.S. federal government. OASDI pays benefits to retirees, as well as to workers who become disabled and to survivors of deceased workers.

Most people who claim Social Security benefits are U.S. citizens, aged 62 or older, who have worked for a qualifying number of years. Your benefits are unique to you and are affected by a number of factors, including:

  • Lifetime earnings
  • Retirement age
  • Marital status
  • Total income in retirement (which affects whether or not your benefits are taxed)
  • Home state (which can determine whether you pay state tax in addition to federal tax on benefits)

What it isn't

Social Security is an insurance program, providing U.S. citizens with financial protection: its purpose is not to provide complete financial support or to represent a total retirement package. Social Security benefits, rather, are an important part of your retirement income plan.

You may be more familiar with how a pension or a personal retirement account works than with how Social Security works. Social Security operates according to rules, restrictions, and allowances that are defined and managed by the Social Security Administration (SSA).

Next steps

Estimate Social Security

Answer 5 simple questions to estimate your benefits.

Have a retirement income plan

Create or fine-tune a retirement income plan in our Planning & Guidance Center.

How Social Security works

What comes in, what goes out, and what gets taxed.