Social Security is a federal retirement plan that pays a monthly amount according to how long the retiree worked and at what age he retired. This program also provides for disabled people and surviving families.
The Social Security program functions based on contributions made during a beneficiary's employment in the form of FICA tax withholding. Retirees can start collecting Social Security benefits at 62 and must begin collecting before age 70. Waiting until age 70 to collect Social Security raises the payments by 8 percent per year. A retiree reaching full retirement age as of 2015 receives a maximum monthly benefit of $2,663.
Social Security is also a form of life insurance. Underage children may collect 75 percent of a deceased parent's Social Security until they reach adulthood. Widowed spouses can begin collecting a reduced benefit at age 60 or receive the full pension amount after retirement age.
Social Security disability payments are also paid on a monthly basis, but beneficiaries must be unable to work for more than $1,000 per month and have a disability considered severe enough to affect common work activities. This program is only available after five months of disability and discontinues after recovery. Children disabled before the age of 22 can collect Social Security disability based on the parents' earnings record. Disabled adults that reach retirement age switch their payments over to retirement benefits, calculated at the same amount as previous monthly payments.