Social Security is a federally managed retirement and insurance account. It’s a retirement account in the fact that once a person retires the program will pay out a portion of your salary until you die. And it’s an insurance account in the fact that it provides security to an employee if they are separated from their employment for various reasons.
To fund Social Security both you and your employer pay into the program in equal amounts. Which means that the amount that is withheld from your paycheck, your employer pays the same amount. If you are self-employed or perform contract work, then you are obligated to pay both portions of Social Security.
Unlike Income Taxes, your Social Security liability is based on your gross pay, and your commitment cannot be reduced. Currently, the Social Security rate is 6.2% of your gross salary.
In this portion of the activity, you will use the average starting salary of the jobs you selected and determine your Social Security withholding.