Final answer:
Social Security, established during the Great Depression as part of the New Deal, is a social insurance program providing financial support to the elderly, disabled, and dependents.
It offers retirement, disability, and Supplemental Security Income benefits, funded through a payroll tax, and reduces poverty among the elderly.
Step-by-step explanation:
Social Security is a comprehensive social insurance program in the United States, officially known as "Old-Age, Survivors, and Disability Insurance" (OASDI). Established during the Great Depression by the Social Security Act of 1935, the program represents a key element of the New Deal.
It was designed to provide financial support to the elderly, unemployed workers, disabled persons, and dependent children, attempting to mitigate the issues caused by inadequate retirement savings and the economic hardships of the time. This system is primarily funded through a dedicated payroll tax.
Benefits are calculated based on an individual's wage history, with lower-income workers receiving a higher percentage of their earnings than higher-income workers. For example, benefits aim to replace about 42% of an individual's pre-retirement earnings, with variations based on income levels.
Social Security plays a crucial role in reducing elderly poverty rates and providing financial stability to millions of Americans.
Aside from retirement benefits, Social Security also offers disability payments for qualifying workers who become unable to work, and Supplemental Security Income (SSI) for individuals with significant disabilities or elderly people with low income.
Over the years, the program has expanded substantially and continues to be a fundamental aspect of the American social safety net, contributing to the economic support of over 48 million citizens.