Social Security was created under the Social Security Act as a federal program for disability, retirement and additional benefits. Employees fund their Social Security benefits through special payroll taxes called Federal Insurance Contributions Act tax. Those who are self-employed make their contributions through the Self Employed Contributions Act Tax. In addition to providing benefits directly to employees, Social Security is also intended for the families of individuals who are retired, disabled or deceased. While it might sound like a pension plan, Social Security is actually more of a â€œpay-as-you-goâ€ plan whereas a pension plan is pre-funded, meaning the money is accumulated in advanced before being paid out.
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