Social Security: Your Safety Net, Your Peace of Mind 9968875644 : Security and stability of living
As explained in the paragraphs on the postwar social security changes, the present objective of social security is to ensure the entire citizens sound and anxiety-free lives through implementing social security systems to help them in case of instability of living and to prevent such instability. Social Security: Your Safety Net, Your Peace of Mind
In the period immediately after World War II, the main objective of social security was to give relief for the needy and to prevent poverty, as shown in the recommendations made by the Advisory Council on Social Security in 1950. The objective was based on the concept stated in the Constitution of Japan (“All people shall have the right to maintain the minimum standards of wholesome and cultured living”).
The public assistance system fulfilled the function of relief for the needy, and the social insurance system represented the function of preventing poverty. Also in the recommendations made by the Advisory Council in 1962, mainly concerning relief for the needy and prevention of poverty, plans on social security systems were made targeting each of social groups classified into the needy, low-income class, and general- income class. Social Security: Your Safety Net, Your Peace of Mind
Presently, however, the social security objective has exceeded the range of relief for the needy and prevention of poverty, and is changing to wider security of national life. In accordance with the elevation of the living standard, the benefit levels ensured by the social security systems have also exceeded the levels for ensuring the minimum level of living, which was the level to be attained in the relief for the needy and prevention of poverty
For example, the social welfare services including the welfare services for the elderly and the public pensions provided in proportion to the pre-retirement income are not just for preventing poverty. They are provided to improve the living quality; to support independence; and to compensate for the lack of earning ability after retirement.
The “life with a minimum standard of health and culture” ensured under the public assistance system does not simply mean a living for existence. It means to lead a respectable life as a human being. The minimum level of living ensured under the system is not therefore fixed and will be changed and improved in relation to social and economic situations, to the living standard of the citizens and to the social background. Social Security: Your Safety Net, Your Peace of Mind
Social security, however, does not ensure people the minimum level of living without condition. In the society of free economy, it is basically each one’s responsibility of self-help effort to maintain and manage his/her life. In preparation against unforeseen events to which an individual citizen cannot easily deal with for himself/herself, social security ensures ways of living towards a stable life through systems established based on the idea of social solidarity.
Use required for federal tax purposes : Social Security: Your Safety Net, Your Peace of Mind
Social Security card with legend “for Social Security and tax purposes” (1961)
Internal Revenue Code section 6109(d) provides: “The social security account number issued to an individual for purposes of section 205(c)(2)(A) of the Social Security Act [codified as 42 U.S.C. § 405(c)(2)(A)] shall, except as shall otherwise be specified under regulations of the Secretary [of the Treasury or his delegate], be used as the identifying number for such individual for purposes of this title [the Internal Revenue Code, title 26 of the United States Code].”
The Internal Revenue Code also provides, when required by regulations prescribed by the secretary of the treasury or their delegate:
Inclusion in returns: Any person required under the authority of this title to make a return, statement, or other document shall include in such return, statement, or other document such identifying number as may be prescribed for securing proper identification of such person.
Furnishing number to other persons: Any person with respect to whom a return, statement, or other document is required under the authority of this title to be made by another person or whose identifying number is required to be shown on a return of another person shall furnish to such other person such identifying number as may be prescribed for securing their proper identification.Social Security: Your Safety Net, Your Peace of Mind
According to U.S. Treasury regulations, any person who, after October 31, 1962, works as an employee for wages subject to Social Security taxes, Medicare taxes, or U.S. federal income tax withholdings is required to apply for “an account number” using Form SS-5.
A taxpayer who is not eligible to have a Social Security Number (SSN) must obtain an alternative Taxpayer Identification Number (TIN).
Types of Social Security cards
Four different classifications of Social Security cards are issued. Such cards are issued by geographic location (SSN Area Number) to:
persons of natural birth within the territorial boundaries of any one of the member States of the United States of America;
persons who become U.S. citizens by oath, or birth within the exclusive legislative or territorial jurisdiction of the U.S. government;
persons who become U.S. permanent residents;
persons with certain restrictions.
There are two restricted types of Social Security cards:
Social Security: Your Safety Net, Your Peace of Mind
One reads “not valid for employment.” Such cards cannot be used as proof of work authorization, and are not acceptable as a List C document on the I-9 form.
The other reads “valid for work only with DHS authorization”, or the older, “valid for work only with INS authorization.” These cards are issued to people who have temporary work authorization in the U.S. from the Department of Homeland Security[26] — the nation’s border agency. They can satisfy the I-9 requirement, if they are accompanied by a work authorization card.Social Security: Your Safety Net, Your Peace of Mind
The cards commonly display the cardholder’s name and number.
In 2004 Congress passed The Intelligence Reform and Terrorism Prevention Act; parts of which mandated that the Social Security Administration redesign the SSN card to prevent forgery. From April 2006 through August 2007, the SSA and Government Printing Office (GPO) employees were assigned to redesign the Social Security number card to the specifications of the Interagency Task Force created by the commissioner of Social Security in consultation with the secretary of Homeland Security.
The new SSN card design utilizes both covert and overt security features created by the SSA and GPO design teams.
Key reasons why SSN is important: Social Security: Your Safety Net, Your Peace of Mind
Identification : Social Security: Your Safety Net, Your Peace of Mind
Due to its unique nature, an SSN is used to verify someone’s identity when applying for jobs, opening bank accounts, getting a driver’s license, or accessing healthcare services.
Tax Reporting: Social Security: Your Safety Net, Your Peace of Mind
The SSN is used to file tax returns and track an individual’s income for determining tax liabilities.
Social Security Benefits:
The primary purpose of an SSN is to calculate and distribute Social Security benefits based on an individual’s work history and earnings.
Creditworthiness : Social Security: Your Safety Net, Your Peace of Mind
Financial institutions use SSNs to perform credit checks and assess an individual’s creditworthiness when applying for loans or credit cards.
Government Programs: Social Security: Your Safety Net, Your Peace of Mind
Many government programs, including healthcare, welfare, and student aid, require an SSN for eligibility verification.
Important points to remember about SSNs:
Privacy Concern: Social Security: Your Safety Net, Your Peace of Mind
Because of its extensive use, it’s crucial to protect your SSN and only provide it when absolutely necessary.
Not Public Information: Social Security: Your Safety Net, Your Peace of Mind
Your SSN should not be shared freely and should only be given to trusted entities.
Functions of Social Security : Social Security: Your Safety Net, Your Peace of Mind
Next, social security has the following four functions, and there are a lot of overlaps among the functions. They are a) function as a social safety device (social safety net); b) redistribution of income; c) diversification of risks; and d) social stability and economic stability and growth.
Social safety device (social safety net)
Social security functions as a social security device (social safety net) for ensuring stable and anxiety-free lives in preparation against difficulties that might endanger the stability of living such as illness, injury, need for care, unemployment, retirement without means to earn money, and unforeseen accidents.(Note)
For example, in case of illness or injury, you can easily receive medical services with the medical expenses paid by medical insurance. Even if you retire from your work and have lost the means to earn money yourself, you can receive old-age pensions to lead a stable life. Besides for the needy who cannot be supported by other social security systems, the public assistance system ensures them the minimum level of living.
Thanks to the social safety net provided by social security, each one can lead a vivacious, challenging and attractive life without fearing risks, which eventually leads to the activation of the entire society. Inversely, if the social safety net becomes unstable, people will feel uneasy and many of them will, for example, restrain consumption and save money in preparation against the future anxieties. This will badly affect the economy and the society will be less active.
When we consider the function of Social Security as ‘Social Safety Net’, the level of and method for providing the social safety net should be appropriately determined. As mentioned in 1(1), the benefit level of social security has already exceeded the level of simply preventing poverty.
Besides the safety net should not be a single net: it needs to be formed in multiple layers to prepare against different situations. For example, the mechanisms, financial resources, and security levels should be different for each of the medical safety net against illness and injury, safety net for income security in people’s old age, and safety net for long-term care of people needing such care. Thanks to the existence of the multiple-layered social safety nets comprising of social insurance such as medical and pension insurance and of social welfare including welfare for children,
the elderly, and for people with disabilities, people can lead their daily lives without worries. Among the social security systems, the public assistance system gives protection and ensures the minimum level of living to all the needy who cannot be supported by other social security systems according to their needs. The public assistance system can be said the “last resort” and the “last safety net” for people.
Redistribution of income : Social Security: Your Safety Net, Your Peace of Mind
Under the free economy in which individuals and companies are engaged in economic activities basically at their discretion, each person basically earns income as rewards for his/her production activities. The income levels differ by person, reflecting his/her ability, efforts, positions, etc. The trends of the market economy, however, may not always result in the fair distribution of income to which everyone can be satisfied with. For example, the labor market is more restricted for people with disabilities and for the elderly than for general workers, and the wage levels are generally lower.
For a family with a parent and an infant, the income may be low due to the restrictions on the working hours. If a worker gets ill or injured by an accident and can no longer work, he/she will lose the means to earn money. Besides due to the inheritance system, there are differences in people’s assets regardless of their efforts.
Redistribution of income is an effective measure to reduce income differences and to stabilize the lives of the low-income class in the situations in which the market economy alone cannot ensure social fairness. For the redistribution, the income is transferred among individuals and households through the tax system and social security systems. Specifically,
for the redistribution of income between different income classes, funds are raised from the high-income class to be transferred to the low-income class, or within the same income class, money is transferred from people who can earn income to those who no longer have means to earn income.The redistribution of income includes the provision of medical or child-care services in kind, in addition to the transfer of money.
(Note)
The “safety net” has two meanings. For the first meaning, it represents a net placed over the floor to prevent injuries. For example a safety net is used in a circus to prevent performers standing on the rope placed high above the earth or trapeze performers from getting injured in the event that they fall to the ground. For the second meaning, it represents a mechanism or a device to give assistance to people in difficulties or to prevent people from falling into such difficulties. “Safety net” is often used for the second meaning, not necessarily limited to the field of social security.
For example in the public assistance system, income is redistributed from the people with high income to people with low income through the tax system as the financial resources. In the medical insurance system, income is redistributed from healthy people to unhealthy people and the main financial resources for the redistribution is the insurance premiums. Each person also redistributes his/her income to himself/herself in his/her life cycle: the savings accumulated while he/she has ability to earn income will be transferred to the living expenses in his/her old age or in illness.
It can be said that the public pension system redistributes income from the working generations to the older generations, using the insurance premiums as the financial resources.
Diversification of risks
The basic principle of society is for each one to be independent and to take action at his/her own risk. There may often happen, however, unforeseen events that individuals cannot deal with for themselves such as illness, accidents and unemployment. Social security provides a mechanism for the entire society to deal with such uncertain risks in people’s daily lives, and contributes to the diversification of risks by minimizing the influence exerted by a risk through provision of capitals, etc. It can be said that social security can fulfill its function as a social safety net by effectively promoting the diversification of risks and the redistribution of income.
The representative system that works for the diversification of risks in the social security systems is the social insurance system. The public assistance system and the social welfare system also contribute to the diversification of risks in that public assistance or welfare benefits are provided to support the lives of people who have fallen into poverty or are in need of care for some reasons. Official Site
Social stability, and economic stability and growth
As shown in above, social security has the function to stabilize society and the government by giving a feeling of security to people, giving support when they actually become difficult to live, or redistributing income to reduce earning differentials.
Besides social security mitigates economic fluctuations for economic stability, and supports the growth of economy. For example, continuous provision of fixed amounts of money even in the periods of economic depression as under the public pension system not only stabilizes the lives of old people but also mitigates economic fluctuations (as built-in stabilizer) by encouraging consumption based on pensions as financial resources. Furthermore, the reserve for pensions held under the public pension system has been utilized as the financial resources for fiscal investments and loans to fund the improvement of social capitals and the economic development.
Also on an individual level, social security is economically quite effective. For example, a substantial medical insurance system frees people from anxiety about illness and encourages people to see a doctor at an earlier stage of illness, which will lead to earlier recovery of health. For workers, such promotion of health will contribute to the maintenance and improvement of their working abilities, and to the maintenance and increase of income. Besides substantial childcare or long-term care programs prevent people from quitting their jobs for such reasons as for raising their children or taking care of their families,
and will encourage people (mostly women) who have not been able to work because of childcare or care of their families to work. In terms of employment creation, the fields of health, medical care and welfare alone provide jobs to more than about 3 million people, and it is expected the fields will further grow in accordance with the progress of the aging society, etc. A substantial public pension system reduces heavy pressures on children to give economic support to their old parents, and contributes to free the elderly from anxieties about their lives.
What SSNs are used for? : Social Security: Your Safety Net, Your Peace of Mind
Taxation: SSNs are used to identify individuals for tax purposes
Income reporting: SSNs are used to report wages to the government
Benefits: SSNs are used to track Social Security benefits, such as retirement and disability benefits
Credit reports: SSNs are used to track credit reports
Identification: SSNs are used for other identification purposes
How do I get an SSN?
Complete Form SS-5, Application for a Social Security Card
The SSA will assign you a unique nine-digit number
How should I protect my SSN?
Keep your SSN safe
Only provide your SSN to US government agencies or credible financial institutions when needed
Social Security number
Important : Scammers are everywhere, so it’s important that you keep your information safe and secure. You can avoid scams and report them directly to authorities through the Federal Trade Commission’s we
Components of an SSN
Area Number
The first group of three digits is the area number. It represented the issuing state. States could have more than one number, depending on how many people needed SSNs. Examples of area numbers include 001 to 003 for New Hampshire and 575 to 576 for Hawaii.
Generally, people on the East Coast have the lowest SSNs. Area numbers ascended as the assignment moved westward. So, people on the West Coast tend to have the highest SSNs.
Beginning in 1972, the area number was assigned based on the zip code associated with the mailing address (which isn’t necessarily the place of residence) on the application.
There have been exceptions to the original area number assignment process:
700–728 were assigned to railroad workers until 1963.
586 was assigned to American Samoa, Guam, the Philippines, Americans employed internationally by American companies, and Indochinese refugees (from 1975 to 1979).
729–733 were allocated to the Department for Homeland Security for its Enumeration of Entry program for non-citizens admitted to the U.S. for permanent residence.
666 will never be assigned.
Group Number
The next group of two digits is the group number. Group numbers range from 01 to 99. They weren’t necessarily assigned consecutively. They originally represented the groups of 10,000 numbers issued to a state’s post offices which helped assign SSNs. They came to represent the issuing office.
Serial Number : Social Security: Your Safety Net, Your Peace of Mind
The last four digits in the third group comprise the serial number. They ascended from 0001 to 9999 within each group. The serial number 0000 isn’t used.
Timeline : Social Security: Your Safety Net, Your Peace of Mind
The Social Security number was established as part of a program developed by President Franklin D. Roosevelt to help citizens of the United States following the Great Depression.
Roosevelt signed the Social Security Act in 1935 to help provide Americans with economic stability, especially to people over the age of 65. This included financial benefits that would be based on the amount of income they received before they entered retirement.
The Social Security Board was established to maintain the Social Security Act and to keep on top of record-keeping. This led to the creation in 1936 of a unique nine-digit number assigned to each individual.
In the United States, a Social Security number (SSN) is a nine-digit number issued to U.S. citizens, permanent residents, and temporary (working) residents under section 205(c)(2) of the Social Security Act, codified as 42 U.S.C. § 405(c)(2). The number is issued to an individual by the Social Security Administration, an independent agency of the United States government. Although the original purpose for the number was for the Social Security Administration to track individuals, the Social Security number has become a de facto national identification number for taxation and other purposes.
A Social Security number may be obtained by applying on Form SS-5, Application for a Social Security Number Card
Social Security numbers were first issued by the Social Security Administration in November 1936 as part of the New Deal Social Security program. Within three months, 25 million numbers were issued.
On November 24, 1936, 1,074 of the nation’s 45,000 post offices were designated “typing centers” to type up Social Security cards that were then sent to Washington, D.C. On December 1, 1936, as part of the publicity campaign for the new program, Joseph L. Fay of the Social Security Administration selected a record from the top of the first stack of 1,000 records and announced that the first Social Security number in history was assigned to John David Sweeney, Jr. of New Rochelle, New York. However, since the Social Security numbers were not assigned in chronological order, Sweeney did not receive the lowest Social Security number, 001-01-0001. That distinction belongs to Grace D. Owen of Concord, New Hampshire.
Before 1986, people often did not obtain a Social Security number until the age of about 14, since the numbers were used for income tracking purposes, and those under that age seldom had substantial income. The Tax Reform Act of 1986 required parents to list Social Security numbers for each dependent over the age of 5 for whom the parent wanted to claim a tax deduction. Before this act, parents claiming tax deductions were simply trusted not to lie about the number of children they supported. During the first year of the Tax Reform Act, this anti-fraud change resulted in seven million fewer minor dependents being claimed.
The disappearance of these dependents is believed to have involved either children who never existed or tax deductions improperly claimed by non-custodial parents. In 1988, the threshold was lowered to two years old, and in 1990, the threshold was lowered yet again to one year old. Today, an SSN is required regardless of the child’s age to receive an exemption. Since then, parents have often applied for Social Security numbers for their children soon after birth; today, it can be done on the application for a birth certificate.
Disclimer : This is for informational purposes only. For financial advice or personalized guidance, consult a professional.
