You are a worker in the United States and every month you contribute to the Social Security Administration to retire. Do you know what percentage they discount and what is the limit?
The money you and employers contribute serves, in addition to building your pot, to pay monthly payments to a total of 71 million SSA beneficiaries, including 64 million retirees and survivors, as well as 7 million Income beneficiaries Supplemental Security Insurance (SSI), which in 2024 will have a 3.2% increase in their monthly payments for the 2023 cost of living adjustment (COLA). However, the nearly 200 million people who work and pay Social Security taxes have higher limits in the OASDI program.
WHAT IS US SOCIAL SECURITY?
Social Security is a federal government program that is responsible for providing a source of income to people when they retire and that they have contributed to for many years of their lives. That is, if the employee is unable to work or due to disability. Similarly, this system can provide financial assistance to your legal dependents after your death. It also provides monthly payments and other benefits to adults and children with disabilities or blindness who have income and resources below certain financial limits, as well as to people 65 years of age or older. yet without disabilities with low income and financial resources. The latter is through the Supplemental Security Income (SSI) program.
HOW MUCH SHOULD YOU DECUT FROM YOUR SALARY FOR SOCIAL SECURITY PAYMENT?
According to information shared on the SSA web portal, employers and employees each pay 6.2% of wages up to a maximum tax of $160,200 in 2023. For self-employed workers the payment is 12.4%.
The payroll tax rates set by law for the Old-Age, Survivors, and Disability Insurance (OASDI) program apply up to a certain amount of income, called benefits or the maximum tax, which increases as the average wage increases. This 2023, as we mentioned, is US$160,200, so the maximum annual employee contribution is US$9,932.40, just like their employer. By 2024 it will be US$168,600. Therefore, an employee with a salary equal to or greater than that salary will contribute US$10,453.20 to the OASDI program and his employer will contribute the same amount.
This limit seeks to prevent workers from paying more in taxes than they receive in benefits.
WHAT IS THE TAIL?
The cost of living adjustment (COLA) is based on the increase in the Consumer Price Index (CPI-W). It is calculated annually from the third quarter of the previous year and the current one. If there is no increase, there is no COLA.
The purpose of COLA is to ensure that the purchasing power of Social Security and Supplemental Security Income (SSI) benefits is not eroded by inflation. The 2023 COLA is 3.2%.