by,
Ravindra Loomba
Social Security is a term interpreted differently in some parts of the world as compared to its implied definition within US. In plain English, the phrase simply means that people are secure in their 'social' environment!
Therefore, it is not surprising that when I mention to a relative outside USA that we have social security, his response is 'all of us are secure here as well' !. He is interpreting the phrase according to its meaning in plain English.
Within USA, Social Security is a government agency that provides financial security to retired, poor and disabled people by making funds available to them provided they meet certain criteria. The current working population pays taxes called FICA which is a flat tax of about 6.2% deducted from their salaries which funds all different programs of Social Security mentioned above.
A worker making USD 50,000 a year will pay about $3,100 as FICA in that year.
A worker making USD 100,000 a year will pay about $6,200 as FICA in that year.
I have paid fair share of FICA during my working years as a software professional.....
MEDICARE
[Note: FICA and MEDICARE taxes are in addition to the Federal and State Income taxes].
In addition to FICA (see previous post), there is an additional flat tax of 1.45% for Medicare that each employee pays and is directly deducted from their salaries each pay period. The Medicare tax funds the health insurance benefits provided to retired and people with disabilities !
A person making USD 100,000 a year will pay $1450.00 in Medicare taxes in that year !
The total of FICA and Medicare taxes is 7.65 % .
