There is a widespread notion that your Social Security benefits are based on the payroll taxes you (and your employer) pay into the system.
The taxes are just taxes like any other taxes, they just appear related to your benefits. The benefit formula is governed by the Social Security law which can be changed by Congress independent of tax changes.
Keep in mind:
- Many people collect Social Security never having paid any taxes
- Your benefits do not cease after you have collected an amount equal to the taxes you paid
- After your initial benefits are determined, they increase based on the effects of future COLAs
- Payroll taxes are only a portion of Social Security funding
- Multiple spouses can collect full benefits based on the earnings of an ex-spouse.
- An individual pays in taxes only a small portion of the benefits they – and dependents – are likely to collect over a lifetime.
- If the Social Security trust is depleted, taxes will be sufficient to pay only 75-77% of earned benefits.