According to Money.cnn.com:
A financial safety net for older Americans, Social Security was established in 1935 by the Social Security Act. Before that, support for the elderly wasn't a federal concern - it mostly fell to states, towns and, of course, families.
The
program is based on contributions that workers make into the system.
While you're employed, you pay into Social Security; you receive
benefits later on, when it's your turn to retire. Contributions take the
form of the Federal Insurance Contributions Act (FICA) taxes that are
withheld from most paychecks.
Medicare benefits are commonly considered part of Social Security benefits, although technically Medicare is a separate program.
Medicare contributions are withheld from your paycheck in much the same
way as your Social Security contributions; FICA taxes support Social
Security and Medicare.
For more information from CNN click here: How Does Social Security Work?
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