A Cost-of-Living Adjustment (COLA) is an increase in income that keeps up with the cost of living. It is typically used in wage contracts, pensions, social security benefits, and other financial agreements to counteract inflation.
A COLA is an adjustment in wages or benefits intended to offset changes in the cost of living, typically indexed to metrics such as the Consumer Price Index (CPI).
A 'disability' is a physical or mental impairment that significantly limits one's ability to perform substantial work for a period of at least one year or is expected to result in death. Qualification for Social Security disability benefits is contingent on meeting this definition.
Incentives under the Social Security disability program that encourage disabled workers to return to work. The four specific incentives are trial work period, extended period of eligibility, deductions for impairment-related expenses, and Medicare continuation.
A government program that requires payment to anyone who meets specific qualifications, ensuring those who qualify are entitled to the payments. Examples include Social Security, Medicare, and food stamps.
The Federal Insurance Contributions Act (FICA) is a U.S. federal payroll tax imposed on both employees and employers to fund Social Security and Medicare. Established by the Social Security Act of 1935, FICA contributes to long-term financial support for American retirees and other beneficiaries.
Full retirement age is the age at which a person may first become entitled to full or unreduced retirement benefits. It varies depending on the year of birth, and understanding this concept is crucial for effective retirement planning.
The age at which a Social Security beneficiary can receive full Social Security retirement benefits. It is defined by the Social Security Act of 1935 and its amendments, particularly the 1983 amendment which adjusted full retirement ages based on date of birth.
A General Retirement System encompasses all mechanisms and financial arrangements designed to provide individuals with income or benefits during their retirement years. These systems often include pensions, social security, and personal retirement savings plans.
A Giro is a banking arrangement for clearing and settling small payments, commonly used in Europe. It includes systems like the National Girobank in the UK, Bank Giro, and Bancogiro, along with a colloquial use related to social security payments.
Medicare Hospital Insurance, also known as Medicare Part A, provides coverage for essential hospital and medical services. Eligibility typically requires previous contributions to the Social Security or Railroad Retirement Systems, or sufficient governmental employment.
Modified Adjusted Gross Income (MAGI) is a measure used by the IRS to determine eligibility for certain tax credits, deductions, and additional taxes. It starts with Adjusted Gross Income (AGI) from federal Form 1040 and adds back certain tax-exempt interest income and other deductions.
National Insurance Contributions (NIC) are payments made by employees and employers in the UK primarily to qualify for certain benefits and state pensions.
Off-budget items are federal programs that are not counted toward budget limits due to current law provisions. These programs are typically self-funding, such as Social Security and the United States Postal Service. Additionally, supplemental appropriations for emergencies are considered off-budget.
A pay-as-you-go pension system, also known as an unfunded pension system, finances state retirement benefits through contributions from current workers rather than investing contributions for future benefits.
A paycheck is a check used to pay an employee's wages, containing net wages after deductions for federal and state income taxes, Social Security, union dues, and other benefit adjustments.
Payroll taxes are taxes levied on wages and salaries. They include federal and state income tax, Social Security (FICA), and unemployment insurance.
The Railroad Retirement Act, a congressional act effective from 1935, provides retirement benefits to retired railroad workers and their families from a dedicated fund separate from the Social Security fund.
Retirement is the act of leaving active employment permanently, with income for the remaining years of life typically coming from sources such as Social Security, pensions, and personal savings.
Retirement income refers to the various sources of funds that a retired individual receives, which can include Social Security benefits, pensions, annuities, and investment income. This income is critical for maintaining an individual's lifestyle once they are no longer earning a regular paycheck.
The Self-Employment Contributions Act (SECA) taxes are imposed on the net earnings of individuals from self-employment. These contributions fund Social Security and Medicare programs for self-employed individuals.
The Self-Employment Contributions Act (SECA) is a federal law in the United States that imposes a tax on the income of self-employed individuals for the purposes of funding Social Security and Medicare programs.
Self-employment income refers to the earnings generated by individuals who work for themselves rather than being employed by a company or organization. This income is subject to Social Security taxes if the net profit from the trade or business is at least $400 for the year. In some cases, earnings less than $400 might still be considered for Social Security purposes.
Provision for Social Security (old-age, survivor's, and disability insurance) and Medicare (hospital insurance) for self-employed individuals. The rate is equal to the combined rates paid for Social Security by both employer and employee.
Social Security credits determine a person's eligibility for Social Security programs. Credits are earned by working in a covered job and by paying Social Security taxes.
Supplemental Security Income (SSI) is a federal program designed to provide financial aid to individuals with low income and minimal assets. It offers monthly payments to eligible recipients, including those who are elderly, blind, or disabled.
A program within the Social Security System that provides financial assistance in the form of lump-sum payments and monthly benefits to the eligible survivors of a deceased worker.
A tax credit is a tax incentive that allows certain taxpayers to subtract the amount of the credit from the total they owe the state. It can be used in various contexts such as dividends paid by a company, allowances against a tax liability, and social security payments in the UK.
A transfer payment is a payment made by the government to individuals, which is not in exchange for goods or services. It includes payments such as Social Security benefits, unemployment insurance, and welfare.
An unfunded pension system, also known as a pay-as-you-go pension system, is a retirement plan where current workers' contributions are used to pay benefits to current retirees.
A welfare state is a form of governance in which the government plays a key role in the protection and promotion of the economic and social well-being of its citizens. This is achieved through a comprehensive array of services such as medical care, minimum income guarantees, and retirement pensions.
