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Ask Rusty: Why Must I Pay into SS when I’m Collecting Benefits?

By Russell Gloor

Date:

Dear Rusty: I am collecting full Social Security benefits at age 72 and also working full time. Why is the federal government still taking money from my paycheck? I have written to Social Security experts on this issue, and they tell me “It’s the law.” That is not a good answer for me. About $4,400 was taken from my pay in 2023 for Social Security and, yes, I get a pittance of a COLA increase, but not equal to what I pay. No one has been able to fully explain the federal government’s thought process on taxing me for Social Security when I am receiving full Social Security benefits. Can you?

Signed: Working Senior

Dear Working Senior: Far be it from me to try to explain the federal government’s thought process on anything, but I can explain why those already collecting Social Security (SS) benefits must continue to pay SS payroll taxes while working. 

It actually goes back to 1935 and the panel commissioned by President Franklin Delano Roosevelt (FDR) to create America’s Social Security program. Said panel determined how the program would be financed, Congress approved it, and FDR signed it. That methodology was essentially this: 

 Workers who earn (and their employers) must contribute to SS via payroll taxes to fund the program (we now know this as “FICA” for employees and “SECA” for the self-employed). When the program first started, certain employees and their employers were required to each contribute 1 percent of the employee’s first $3,000 of earnings. Obviously, those amounts have risen over the decades. And, for clarity, only certain workers originally participated in Social Security, which has also changed over the decades so that now nearly everyone who works must pay Social Security payroll taxes. 

 Starting in 1937 and still today, SS payroll taxes paid by those now working are used by the federal government to pay benefits to those who are currently receiving. Said another way, Social Security is a “pay as you go” program where income from those working (and their employer) is used to pay benefits to those receiving benefits. Payroll taxes collected aren’t put into a personal account for the worker; rather they are used to meet current SS payment obligations. Any excess money collected is invested in special-issue government bonds as reserves for future use (although current annual SS income is less than annual program costs — a topic for another day). 

So, the financing method enacted in 1935 and started in 1937 still applies — those who work and earn (and their employers) must pay into the system to fund benefit payments to those who are now receiving — and that includes those workers who are already collecting their Social Security. FYI, there was a time when, if people worked after starting their SS benefits, they lost all of their benefits. Fortunately, that rule no longer exists, so those who are collecting SS benefits can now continue to get benefits if they work, but they must also still pay into the program from their work earnings to help pay benefits to SS recipients. 

 I hope this provides some insight for why you must continue to contribute to Social Security even after you have started collecting your benefits. It is a result of how the program is financed — predominantly by workers through payroll taxes on their earnings (and to a lesser extent from interest on Trust Fund reserves and income tax on Social Security benefits). With very few exceptions, everyone who works helps pay benefits to those who are now receiving.  


Russell Gloor is a national Social Security advisor at the AMAC Foundation, the nonprofit arm of the Association of Mature American Citizens (AMAC). The 2.4-million-member AMAC says it is a senior advocacy organization. Send your questions to: ssadvisor@amacfoundation.org.

Author’s note: This article is intended for information purposes only and does not represent legal or financial guidance. It presents the opinions and interpretations of the AMAC Foundation’s staff, trained and accredited by the National Social Security Association (NSSA). The NSSA and the AMAC Foundation and its staff are not affiliated with or endorsed by the Social Security Administration or any other governmental entity.

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