The Social Security system requires workers to pay a portion of their income to the system to support current retired workers. Once workers retire, they receive benefits accumulated from the payments of others who are still working.
In addition to retirement benefits, Social Security benefits are also paid to the children of disabled workers and to a deceased worker's beneficiaries. Children under the age of 22 may also be covered if they are disabled.
A worker may choose to begin collecting Social Security benefits between the ages of 62 and 70. If benefits are paid beginning at age 62, the benefits are reduced. As of 1983, workers born in 1960 or later must wait until age 67 to receive full retirement benefits. Workers born between 1938 and 1960 can receive full retirement benefits at various ages depending upon their year of birth.
The Social Security Act was signed into law in 1935. At that time, many more people were working than retired, so the system was able to operate with a surplus. The surplus money is used by the federal government to buy United States Treasury bonds. Once the surplus is exhausted, the government must begin borrowing Social Security payments through the collection of additional tax revenue to continue the program.