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A social security system is a government program that is used in many countries around the world. It came about as a way to help workers keep their economic security in times of trouble. Should a worker become sick, ill, or die, that worker or his family may be able to get benefit checks from the government. In general, the program pays out money to eligible individuals who have worked for a certain amount of time. The amount of money paid is dependent on many factors, including how much the person has worked and how old he is when applying for benefits.
When people think of the social security system, they may think about the old age benefits the program divvies out to retired workers. The system, however, may also pay out benefits to those who have become disabled as well as to the widows, widowers, or children of those eligible workers. Eligibility has to do with several factors. Some factors may include how long the worker worked, how old the worker is, and, for spouses, how long they were married. For those claiming disability, the nature of the disability may also be a factor.
In some countries, the benefits paid into the social security system are actually not paid by the workers receiving the benefits. Rather, the benefits are paid into the system by current workers. The benefits are taken out of current workers’ paychecks through social security taxes. The money is then paid out at the same time to the people receiving the benefits. This type of structure may cause the system to become insolvent, however.
The social security system structure in the United States was largely successful after its inception in 1935, but a problem emerged. After World War II, the country experienced a spike of births. These children, who are sometimes known as the Baby Boomer Generation, have grown and worked and will approach retirement. Thus, they may be eligible to receive social security benefits. The generation that follows and should support them according to the system may not be large enough to do so, however.
Other countries, such as some countries in the Organization for Economic Cooperation and Development (OECD), are facing or have faced similar types of problems with their social security systems. These countries have or are reforming their systems in order to be able to support their retiring individuals.