Introduction to the U.S. Social Security system
Social Security is a major social program that provides benefits to multiple groups of people within the United States. These benefits include payments for pensions, disability, and unemployment compensation just to name a few. The majority of social security beneficiaries are retired workers and the remaining are pension recipients, disabled workers, dependent spouses, and children of retired or deceased workers respectively (Hyman, 2011). Social Security is financed through a taxpayer payroll tax, in addition to an employer’s portion that is matched and paid directly to the government on a quarterly basis. The employer portion of Social Security is usually not transparent to employees, but is a requirement for companies by law. In addition, self-employed individuals are also required by law to pay their own portions of OASDI and Medicare. Overall, the eligibility requirements for Social Security benefits are based on paying a tax through a place of employment and can be collected once workers have reached their assigned retirement age or become disabled. The employee and employer contribution rate is 6.2% (7.65% include FICA), up to the maximum wage base of $113,700.
Introduction of the Canadian Social Security system
The Canadian Social Security system is broken down into three levels: Old Age Security (OAS), The Canada Pension Plan (CPP), and the private pension/savings. The first level (OAS) provides citizens that meet certain residence requirements with a modest monthly pension once they reach the retirement age of 65 (Totrov, 2014). Under the Canadian Social Security system, all citizens that meet the retirement age automatically receive retirement benefit. OAS is financed through general tax revenue. The second level (CPP) provides citizens with a monthly retirement pension as early as 60, if they have paid into the system (Totrov, 2014). CPP contributions are calculated based on minimum and maximum range amount. This range is established from Canadian statistics (Totrov, 2014). In addition, CPP includes disability and death benefits. The third level private pension/savings; is an optional choice for Canadian citizens who wish to increase their retirement accounts. Overall, the first two levels, OAS and CPP make up the countries public retirement system.
Comparison of the systems
The Canadian and United States Social Security systems both share three common objectives for providing retirement planning for their citizens who are elderly or disabled. First, both systems are in some way financed with taxpayer’s dollars (CEN, 2014). Second, both systems require that citizens reach the minimum retirement age of 65. Third, both systems provide a basic retirement option, which means that its citizens are encouraged to save additional retirement funding in a private account. All in all, both Social Security systems share the similar of objective of caring for their elderly workers and...