Social Security is funded through the Federal Insurance Contributions Act (FICA) tax, which is a payroll tax. Employers and employees are responsible for making equal FICA contributions. Covered workers are eligible for retirement and disability benefits. If a covered worker dies, his or her spouse and children may receive survivors' benefits. Social Security accounts are not the property of their beneficiary and are used solely to determine benefit levels. Social Security funds are not invested on behalf of beneficiaries. Instead, current receipts are used to pay current benefits which are typical of some insurance and defined-benefit plans.

            One key component to the social security debate is political ideology. Conservatives argue that Social Security reduces individual ownership by redistributing wealth from workers to retirees and bypassing the free market. Social Security taxes paid into the system cannot be passed to future generations, thereby preventing the accumulation of wealth in some degree. Conservatives tend to argue for a fundamental change in the structure of the program. Also, some conservatives argue that the Constitution does not permit Congress to set up a savings plan for retirees. The conservative opinion is pro-privatization. A privatized system would allow the set up of individual accounts for the worker. Also, this would allow leeway in decisions about the securities in which their accounts are invested.

            Liberals argue that government has the obligation to provide social insurance, through mandatory participation and broad program coverage. During 2004, Social Security constituted more than half of the income of nearly two-thirds of retired Americans. Liberals tend to defend the current program, preferring tax increases and payment modifications.

            The liberal position is typically anti-privatization. Some argue that privatization would not address the long-term funding challenge for Social Security. Diverting pay roll taxes or other sources of government funds to fund private accounts would foster a large deficit and borrowing. Another concern of privatization is the current economic crisis. Privatization could lead to households losing more assets.