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FICA and Social Security. Understanding and knowing what they are for.

Essay By: MorganLitchfield
Editorial and opinion

Social Security, FICA.

Submitted:Jun 15, 2012    Reads: 15    Comments: 0    Likes: 0   

FICA - Federal Ins. Contribution Act tax.

Part of it is for Social Security and the other part is for Medicare. Both empolyer and and employee pay an amount for this,

The full amount for Social Security is 12.4% so both employer and employee pay 6.2%

The part that is paid by the Employer is part of the Payroll Tax. Medicare is a little different, you pay 2.9% or the employer pays 1.45% as part of the Payroll Tax and the employee also pays the same amount.

You add these two together and it comes out to 15.3% that you pay for the FICA Tax.

Now when you refer to Social Security, you are actually referring to OASDI or Old-age, Survivors, Disability Ins.

It provides retirement benifits for when someone finally retires or if someone passes away, provides that money to the surviving family members.

Or if the person does not die, but somehow becomes disabled, social security provides benifits for them as well, hence the same OASDI.

Now people sometimes mistake Social Security for something like a 401(K) or an IRA. Which, is not the case at all.

All it is, is a way for current workers to directly pay for retirement of existing retirees.


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