How Social Security Works

Social Security Benefits

Social Security is not just about paying retired people a monthly income. The program acts as insurance for Americans who encounter difficult financial situations. This includes (but is not limited to):

  • insurance for retirement
  • insurance for the surviving spouse and children of someone who dies
  • insurance for disability
  • veterans benefits
  • unemployment insurance
  • food stamps and other forms of welfare

This chart shows the distribution of the most common types of Social Security benefits:

The Medicare program is also a part of the Social Security system. To learn about the various situations that qualify for Social Security benefits, see Social Security Online.

Still, Americans in retirement make up the largest segment of Social Security beneficiaries, and for most of them, Social Security benefits comprise a large percentage of their income once they retire.

So let's start by discussing how people receive retirement benefits and how the amount of the benefit is determined.