--- title: Explaining How Social Security Works | TIME description: Ever wonder how the social security system works? Jill Schelsinger has your explanation. canonical: https://time.com/video/5TgIqT69/ og:title: Explaining How Social Security Works og:description: Ever wonder how the social security system works? Jill Schelsinger has your explanation. og:url: https://time.com/video/5TgIqT69/ og:image: https://cdn.jwplayer.com/v2/media/5TgIqT69/poster.jpg?width=720 og:type: video.other twitter:card: summary_large_image twitter:title: Explaining How Social Security Works twitter:description: Ever wonder how the social security system works? Jill Schelsinger has your explanation. twitter:image: https://cdn.jwplayer.com/v2/media/5TgIqT69/poster.jpg?width=720 --- # Explaining How Social Security Works > Sponsored content. Supplied in partnership with TIME. 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They are at time.com/newsletters and are separate from a paid subscription. ## Video: Explaining How Social Security Works [Watch (HLS stream): Explaining How Social Security Works](https://cdn.jwplayer.com/manifests/5TgIqT69.m3u8) (1:45)  _Published 2016-08-01. Ever wonder how the social security system works? Jill Schelsinger has your explanation._ --- Jul 27, 2023 8:32 PM UTC --- ## More From This Series [All Videos](https://time.com/video/) [Is Social Security Going Broke? ](/video/t4gxLcls/) ### Is Social Security Going Broke? [Will Social Security Be There for Me?](/video/D7u6xtpa/) ### Will Social Security Be There for Me? [Social Security's Earnings Test Explained](/video/jj7Qw79b/) ### Social Security's Earnings Test Explained --- ## Transcript [ MUSIC ] 81 years ago, amid the Great Depression, President Franklin D. Roosevelt signed the Social Security Act, which established a national plan to provide economic security for the nation's workers. About 60 million people are now receiving social security benefits 43 million retired workers and their family members. 6 million survivors of deceased workers, and 11 million disabled workers and their family members. US workers pay for the social security program through payroll taxes. The earnings that every employee in the system up to a certain amount are subject to a 6. 2 % tax. This year, the social security wage base is $ 118, 500. As an employee, the maximum you would pay into social security is around $ 7, 350. That's 6. 2 percent of 118 five. Meanwhile, your employer has to pay another 6. 2 %. If you're self- employed, you have to pay as both the employer and the employee for a total of 12. 4 %. Social Security is at pay- as- you- go system. That means, money that workers who contribute into the system today pays for the benefits that retirees currently receives. When the government gets more money from taxes than is necessary to fund the Social Security obligations, as it did in the 1990's. It creates a surplus, one that exist to this day. But with baby boomers retiring in large numbers the surpluses are on track to shrink and eventually disappear. [ MUSIC ] ```json {"@context":"https://schema.org","@type":"VideoObject","name":"Explaining How Social Security Works","description":"Ever wonder how the social security system works? Jill Schelsinger has your explanation.","thumbnailUrl":"https://cdn.jwplayer.com/v2/media/5TgIqT69/poster.jpg?width=720","uploadDate":"2016-08-01T18:38:39.000Z","contentUrl":"https://cdn.jwplayer.com/manifests/5TgIqT69.m3u8","embedUrl":"https://time.com/video/5TgIqT69/","duration":"PT1M45S","potentialAction":{"@type":"SeekToAction","target":"https://time.com/video/5TgIqT69/?jw_start={seek_to_second_number}","startOffset-input":"required name=seek_to_second_number"}} ```