When Did Social Security Start

Fact #: Social Security Is More Than Just A Retirement Program It Also Provides Important Life Insurance And Disability Insurance Protection

Over 65 million people, or more than 1 in every 6 U.S. residents, collected Social Security benefits in January 2022. While older adults make up about 4 in 5 beneficiaries, another one-fifth of beneficiaries received Social Security Disability Insurance or were young survivors of deceased workers.

In addition to Social Securitys retirement benefits, workers earn life insurance and SSDI protection by making Social Security payroll tax contributions:

• About 96 percent of people aged 20-49 who worked in jobs covered by Social Security in 2020 have earned life insurance protection through Social Security.
• For a young worker with average earnings, a spouse, and two children, thats equivalent to a life insurance policy with a face value of nearly $800,000 in 2020, according to Social Securitys actuaries.
• About 89 percent of people aged 21-64 who worked in covered employment in 2020 are insured through Social Security in case of severe disability.

The risk of disability or premature death is greater than many people realize. Some 7 percent of recent entrants to the labor force will die before reaching the full retirement age, and many more will become disabled.

How Do Benefits Work And How Can I Qualify

While you work, you pay Social Security taxes. This tax money goes into a trust fund that pays benefits to:

• Those who are currently retired
• To people with disabilities
• To the surviving spouses and children of workers who have died

Each year you work, youll get credits to help you become eligible for benefits when its time for you to retire. Find all the benefits Social Security Administration offers.

There are four main types of benefits that the SSA offers:

• Learn about earning limits if you plan to work while receiving Social Security benefits

History Of Social Security In The United States

A limited form of the Social Security program began as a measure to implement “social insurance” during the Great Depression of the 1930s, when poverty rates among senior citizens exceeded 50 percent.

The Social Security Act was enacted August 14, 1935. The Act was drafted during President Franklin D. Roosevelt’s first term by the President’s Committee on Economic Security, under Frances Perkins, and passed by Congress as part of the New Deal. The Act was an attempt to limit what were seen as dangers in the modern American life, including old age, poverty, unemployment, and the burdens of widows and fatherless children. By signing this Act on August 14, 1935, President Roosevelt became the first president to advocate federal assistance for the elderly.

The Act provided benefits to retirees and the unemployed, and a lump-sum benefit at death. Payments to current retirees are financed by a payroll tax on current workers’ wages, half directly as a payroll tax and half paid by the employer . The act also gave money to states to provide assistance to aged individuals , for unemployment insurance , Aid to Families with Dependent Children , Maternal and Child Welfare , public health services , and the blind .

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Efforts To Keep Social Security Solvent

These efforts didnt prevent the program from facing a serious financial crisis in the 1980s, however, and President Ronald Reagan created a commission to examine how to keep Social Security in the black. In 1983, he signed legislation that gradually increased the retirement age to 67, taxed Social Security benefits and provided Social Security benefits to federal workers.

After taking office in 2001, President George W. Bush appointed another Social Security Commission with its top priority being Social Security reform. No revolutionary changes were made to keep the program solvent long-term. Still, the Bush administration extended disability benefits and food stamps to qualified immigrants and their children, eliminated wage credits for the military and expanded Medicare prescription drug coverage.

President Obamas administration temporarily reduced the Social Security tax rate from 6.2 to 4.2 percent in 2011 and 2012. The move helped ease financial strain on American workers but did little to stop the risk of Social Security going into future debt.

Claim Of Discrimination Against The Poor And The Middle Class

Workers must pay 12.4 percent, including a 6.2 percent employer contribution, on their wages below the Social Security Wage Base , but no tax on income in excess of this amount. Therefore, high earners pay a lower percentage of their total income because of the income caps because of this, and the fact there is no tax on unearned income, social security taxes are often viewed as being regressive. However, benefits are adjusted to be significantly more progressive, even when accounting for differences in life expectancy. According to the non-partisan Congressional Budget Office, for people in the bottom fifth of the earnings distribution, the ratio of benefits to taxes is almost three times as high as it is for those in the top fifth.

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You Can Claim Social Security Benefits Earned By Your Ex

The end of a marriage doesnt spell the end of being able to get get a Social Security benefit based on your former spouses earnings. You can still receive a benefit based on his or her record instead of a benefit based on your own work record, so long as you were married at least 10 years, you are 62 or older, and you are currently unmarried. And guess what: If you’ve made multiple trips to the altar, you can pick which spouse’s benefits you want to claim, based on what’s most beneficial to you.

Like a regular spousal benefit, you can get up to 50% of an ex-spouses benefit less if you claim before full retirement age. And the beauty of it is that your ex never needs to know because you apply for the benefit directly through the Social Security Administration. Taking a benefit on your ex-spouses record has no effect on his or her benefit or the benefit of your exs new spouse. And unlike a regular spousal benefit, if your ex qualifies for benefits but has yet to apply, you can still start collecting Social Security based on the exs record, though you must have been divorced for at least two years.

Note: Ex-spouses can also take a survivor benefit if their ex died after the divorce, and, like any survivor benefit, it will be worth up to 100% of what the ex-spouse received. If you remarry after age 60, you are still eligible for the survivor benefit.

A Reader Poses A Question Thats Trickier Than It Seems

One of the things I think Im pretty good at is answering questions about federal retirement, but a recent email about Social Security left me stumpedtwice.

Greg, a longtime federal employee, wrote to me:

Social Security benefits max out at age 70, I get that. But filing too soon loses a portion of the maximum amount, and filing too late loses a whole monthly benefit. I have searched all over, and nowhere can I find out exactly what the best date is to request benefits begin. My wife reaches age 70 in the middle of April and we were wondering how to maximize her benefit by selecting the best starting date.

I thought Greg was asking a very common question: When is the best time to file for Social Security retirement? So I replied as follows:

There are a lot of theories about claiming Social Security benefits. Social Security has a fact sheet on this question as well. There are many factors that can influence the best time for you:

• Are you married or single?
• What is the age difference between you and spouse, if married.
• What is the income difference between you and your spouse, if married.
• Do you have children age 18 or younger?
• Are you widowed?
• Are you still working or fully retired?
• Do you have other sources of retirement income that could bridge the time between retirement and a later application for Social Security?
• Do you have good health and family history that shows longevity?

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The Social Security Act Of 1935

After the Civil War, many disabled veterans began to receive benefits from the government. Though it would be many years before the Social Security Act was passed and Social Security benefits officially began, this was the beginning of true Social Security programs in America. These Civil War pensions had many similarities to the Social Security laws that would eventually be passed, and they laid the groundwork for the way that Social Security works today. By the 1930s, the Great Depression was in full swing. Many politicians said that this was just another dip in the economic cycle, and they suggested that Congress do nothing. However, President Franklin D. Roosevelt knew that something must be done. He assembled the Committee on Economic Security to study the problem and suggest a solution. So, when was the Social Security Act passed?

Finally, the Act established a Social Security Board. The job of this board was to inform people about the Social Security Act including both employees, employers, and the public. They also needed to establish local field offices for running the Social Security System. A few years later, this board was replaced by the current Social Security Administration.

Other Changes To Expect In 2023

Aside from larger monthly payments and higher earnings limits, there are a few other Social Security changes to expect next year, including:

• Higher maximum benefit amount: In 2022, the maximum you can receive from Social Security is $4,194 per month. Next year, due to the COLA, that number will increase to a whopping $4,555 per month — a boost of $361 per month.
• Higher maximum taxable earnings limit: This limit is the highest income subject to Social Security taxes, and in 2022, it’s $147,000 per year. In 2023, that limit will increase to $160,200 per year. That means high earners will pay Social Security taxes on more of their income starting in January.
• Increases in other benefits: The annual COLA doesn’t just affect retirement benefits. If you’re receiving other types of Social Security — such as spousal or divorce benefits, disability benefits, or survivors benefits — you’ll also collect higher payments in 2023.

Next year’s COLA will be the largest in more than four decades, and beneficiaries will receive some much-needed relief with higher payments in 2023. When you know exactly what to expect, it will be easier to prepare for these big changes.

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What Will Happen When Social Security Runs Out

If no changes are made before the fund runs out, the most likely result will be a reduction in the benefits that are paid out. If the only funds available to Social Security in 2033 are the current wage taxes being paid in, the administration would still be able to pay around 75% of promised benefits.

How To Receive Federal Benefits

To begin receiving your federal benefits, like Social Security or veterans benefits, you must sign up for electronic payments with direct deposit.

If You Have a Bank or Credit Union Account:

• Call the Go Direct Helpline at .

If You Don’t have a Bank or Credit Union Account:

• Direct Express debit card – a pre-paid debit card. Get help by calling the Go Direct Helpline at .

Make Changes to an Existing Direct Deposit Account:

On Go Direct’s FAQ page, learn how to make changes to an existing direct deposit account. You also may contact the federal agency that pays your benefit for help with your enrollment.

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How We Got Social Security Numbers

And why theyre probably not going anywhere.

Social Security numbers serve as sort of a national ID for American citizens, but it wasnt always that way. When economist Edwin Witte helped develop the Social Security Act of 1935, the numbers were solely a way to keep track of the new retirement payment system.

Witte and his colleagues knew they needed an ID number, not just a name, says John Wittewho, in addition to being a professor emeritus of political science at the University of Wisconsin-Madison, is Edwins grandson. That way even if people had the same name or birthday as others, their payments could be tracked with an individual number.

Even so, the assignment of Social Security numbers, or SSNs, was controversial. The U.S. government had never distributed individual numbers like this before, and some were very frightened of giving the government the ability to have a number to track people, Witte says.

Despite some Republicans contention that it was government overreach, the Social Security Act passed in the Democrat-led Congress in August 1935 and the first SSN was issued sometime in mid-November 1936, says Dorothy J. Clark, a Social Security spokesperson.

President Franklin D. Roosevelt signs the Social Security Act on 14th August 1935.

Fact #: Social Security Provides A Guaranteed Progressive Benefit That Keeps Up With Increases In The Cost Of Living

Social Security benefits are based on the earnings on which people pay Social Security payroll taxes. The higher their earnings , the higher their benefit.

Social Security benefits are progressive: they represent a higher proportion of a workers previous earnings for workers at lower earnings levels. For example, benefits for a low earner retiring at age 65 in 2021 replace about half of their prior earnings. But benefits for a high earner replace about 30 percent of prior earnings, though they are larger in dollar terms than those for the low-wage worker.

Many employers have shifted from offering traditional defined-benefit pension plans, which guarantee a certain benefit level upon retirement, toward defined-contribution plans s), which pay a benefit based on a workers contributions and the rate of return they earn. Social Security, therefore, will be most workers only source of guaranteed retirement income that is not subject to investment risk or financial market fluctuations.

Once someone starts receiving Social Security, their benefits increase to keep pace with inflation, helping to ensure that people do not fall into poverty as they age. In contrast, most private pensions and annuities are not adjusted for inflation.

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What Is The Average Social Security Monthly Check

Social Security offers a monthly benefit check to many kinds of recipients. As of August 2021, the average check is $1,437.55, according to the Social Security Administration but that amount can differ drastically depending on the type of recipient. In fact, retirees typically make more than the overall average.

Social Security Is Staring At Its First Real Shortfall In Decades

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By Jeff Sommer

A slow-moving crisis is approaching for Social Security, threatening to undermine a central pillar in the retirement of tens of millions of Americans.

Next year, for the first time since 1982, the program must start drawing down its assets in order to pay retirees all of the benefits they have been promised, according to the latest government projections.

Unless a political solution is reached, Social Securitys so-called trust funds are expected to be depleted within about 15 years. Then, something that has been unimaginable for decades would be required under current law: Benefit checks for retirees would be cut by about 20 percent across the board.

Old people not getting the Social Security checks they have been promised? That has been unthinkable in America and I dont think it will really happen in the end this time, because its just too horrible, said Alicia Munnell, the director of the Center for Retirement Research at Boston College. But action has to be taken to prevent it.

Benefit cuts would be devastating for about half of retired Americans, who rely on Social Security for most of their retirement income. A survey released in May by the Federal Reserve found that a quarter of working Americans had saved nothing for retirement.

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Early Forms Of Social Security

A large segment of American citizens received an early form of social security decades before President Franklin D. Roosevelt signed the Social Security Act of 1935.

Starting in 1862, hundreds of thousands of veterans disabled in the Civil War and their widows and orphans could apply for a government pension for veterans. In 1890, the law was amended to include any disabled Civil War veteran, regardless of how the disability occurred. In 1906, the law was amended again to include old age as a criterion.

Company pension plans came on the scene in 1882 when the Alfred Dolge Company created a pension fund for its employees. A handful of companies followed suit, but few employees received even a nickel. Most of the companies went out of business before the pensions could be distributed, or the pensions were never dispersed.

Find Your Social Security Full Retirement Age

You can claim your Social Security benefits a few years before or after your full retirement age, and your monthly benefit amount will vary as a result. But first you have to know what it is.

• Your Guide to Roth Conversions

Also known as normal retirement age, your Social Security Full Retirement age is the age at which youre entitled to 100% of the Social Security benefits youve earned. FRA is 66 for beneficiaries born between 1943 and 1954 it gradually increases to 67 for beneficiaries born in 1960 or later. If you take benefits before FRA, your benefits will be reduced. If you file at age 62, for example, benefits will be as much as 30% lower. More on that in a moment.

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