Final answer:
The retirement benefit of Social Security is based on the worker's lifetime earnings, with benefits available upon reaching retirement age, currently 67 for those born after 1959. It operates as a government-run program, with funding primarily from payroll taxes paid by both employees and employers.
Step-by-step explanation:
The Social Security Administration considers a worker's earnings throughout their entire work history to determine their retirement benefit. The amount of money a worker receives as their Social Security retirement benefit is based loosely on the worker's lifetime earnings. Workers who have completed a minimum number of years of work may claim retirement benefits upon reaching retirement age, which was originally set at 65 but has increased to 67 for workers born after 1959. An additional consideration is that under certain circumstances, survivors of qualifying workers, such as spouses and minor children, may also claim these benefits. Social Security is a crucial part of financial security for millions of Americans, who rely on it to avoid poverty in old age, especially as healthcare and long-term care costs increase and personal savings diminish.
Furthermore, Social Security is a government-run retirement program primarily funded through payroll taxes, where both employees and employers contribute 6.2% of wages up to a certain threshold, ensuring participation and a guaranteed future benefit. The potential problems facing the sustainability of Social Security include demographic shifts and the balance between incoming payroll taxes and outgoing benefits.