New Workers: Know Your Number

(May, 2009)

Summer is approaching, and millions of high school and college students will be searching for jobs. The jobs will be as diverse as the people applying for them, but one thing will be the same in all cases: the employer will need to know your Social Security number.

Don't know where your card is? That’s all right—there is no need to apply for a new one. The most important thing is simply to know your number. You do need to make sure that the Social Security number you provide is correct, because it will be used to keep track of your earnings and will directly affect your future benefits. Here's why.

By law, employers must withhold from a worker's paycheck Social Security taxes at the rate of 6.2 percent of gross pay. In addition, a Medicare payroll tax of 1.45 percent of pay must be withheld. The amounts you pay in Social Security and Medicare taxes are matched by your employer. Usually the money that is withheld is referred to as "Social Security taxes" on the employee’s payroll statement. Sometimes the deduction is labeled as "FICA taxes" which stands for Federal Insurance Contributions Act. As a young worker, you might find that Social Security taxes are actually more than state or federal income tax. So let us tell you how that money is being used, and what's in it for you.

The taxes paid now translate to a lifetime of protection, whether you retire or become disabled. And in the event that you die young, your family may be able to receive survivors benefits based on your work. Today you probably have family members—grandparents, for example—who already enjoy Social Security benefits which your Social Security taxes help provide.

Because you're a long way from retirement, you may find it hard to appreciate the value of benefits that could be 40 or 50 years away. But you should know that your Social Security could pay off sooner than you think. Social Security provides valuable disability benefits—and studies show that a 20-year-old has about a three in 10 chance of becoming disabled sometime before reaching retirement age.

Another bit of helpful advice for young workers: if you’re offered a job "under the table" or "off the books," think twice. The person offering it will likely tout the benefits of not paying taxes. But they're the only ones benefiting because they don't have to pay their half of your Social Security tax. In the end, you’re being cheated out of your future benefits when you don't pay taxes on your earnings.

In closing, know your number, but don't carry your Social Security card around with you. It’s an important document that needs to be safeguarded and protected. You should keep it safely at home, in a safe deposit box or wherever you keep your important paperwork, like your birth certificate and personal information. If you haven't already, make it your summer homework assignment to memorize your number. After all, you'll be using it for a lifetime.

If you have questions about Social Security, the best place to go is online—to www.socialsecurity.gov.

Ginny Jordan is a Public Affairs Specialist for the Social Security Administration. Her weekly column on all things Social Security appears in the Sunday Edition of the Sun-Sentinel.

Ginny has agreed to let us reprint her articles here for your convenience.

Thank you Ginny!