Thursday, July 11, 2024

Why Was Social Security Created

Don't Miss

Important Amendments To The Social Security Act

Here’s How the Great Depression Brought on Social Security | History

The Social Security Act went through many amendments in its first few years. Most of these amendments found ways to expand the program to include payments to additional people who might need them. The first big amendment came in 1939, just a few years after the Act was initially passed. Initially, the Act only provided for payments to retired workers. However, this first amendment expanded that to include benefits for a spouse or minor children of a retired worker. It also included for payment of survivors benefits or payments to the family of a deceased worker who died prematurely.

During the 1950s there were several Social Security amendments dealing with disability insurance. The disability program was started by these amendments. At first, the Act simply stated that a disability would not wipe out your retirement benefits. However, it was quickly amended again to begin providing cash benefits to workers who experienced a disability that prevented them from working. Another amendment expanded these payments to dependents of those workers.

How To Stop Social Security Check Payments

The SSA can not pay benefits for the month of a recipients death. That means if the person died in July, the check received in August must be returned. Find out how to return a check to the SSA.

If the payment is by direct deposit, notify the financial institution as soon as possible so it can return any payments received after death. For more about the requirement to return benefits for the month of a beneficiarys death, see the top of page 11 of this SSA publication.

Family members may be eligible for Social Security survivors benefits when a person getting benefits dies. Visit the SSA’s Survivors Benefits page to learn more.

Impact Of The Great Depression

The Great Depression left millions of people unemployed and struggling to put food on the table. It struck the elderly especially hard and many states passed legislation to protect their elder citizens.

But most elder-assistance programs of the time were a dismal failure. They were underfunded, poorly run and, in some cases, flat out ignored by officials. Those seniors who received assistance only got about 65 cents a day.

As the depression raged on, government officials and frustrated private citizens alike moved to find ways to help struggling Americans and introduced plans to increase economic security. Most ideas were basically federal or state financed pension plans. Some included all citizens while others included only the elderly.

None of the plans became law however, many had huge followings and initiated spirited dialogue about how to care for the disadvantaged and the elderly.

Don’t Miss: Social Security Office In Sacramento

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.

Going Back To Before Social Security

Our society has changed in unforeseeable ways since Social Security was ...

While Social Security was officially signed into law in 1935, the history of change that led up to the creation of the program go much further back.

Although its hard for many modern Americans to imagine, living conditions used to be very different from what they are now. People used to live a more agrarian lifestylemost people took care of their sustenance and basic needs by working the landnot by working for a salary or wage. As long as you could grow food and keep your home intact, you could provide for yourself.

Also, family groupings used to include not just parents and children, but grandparents and other extended family members. When one family member became too old or infirm to work, the rest would help support them.

However, with modernization and the movement of population from agrarian-focused lifestyles to wage-earning lifestyles working in urban city centers, susceptibility to poverty increased. Many workers were living paycheck to paycheck without a pension plan. When an industrial worker became disabled or too old to keep working, they didnt have the safety net of residual income or extended family resources to support them.

Even when plans were available, not all of them were successful. And, workers had to rely on the company still existing when the time came to collect the pensionwhich wasnt always guaranteed.

It was clear that there was a pressing need for some form of insurance against poverty for Americans.

Don’t Miss: Social Security Disability Housing Assistance

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:

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.

Brief History Of Social Security

The Social Security program was created by the Social Security Act that President Franklin D. Roosevelt signed into law in 1935. The first checks went out in 1940. Originally it paid benefits only to workers 65 and older, but in the 1970s the government altered it to allow workers to claim benefits as early as 62. It also instituted annual cost-of-living adjustments to help Social Security keep pace with inflation.

The program has worked fairly well so far, but many people fear for the future, when there will be fewer workers to support a greater number of Social Security recipients. The latest Social Security Trustees’ Report indicates the program’s trust funds would be depleted by 2034, after which it would be able to pay out only about 76% of benefits to retirees and about 92% to disabled workers.

The government has proposed several possible solutions for ensuring the long-term sustainability of the program, but at present no plans have been set. There’s no risk of the program disappearing in the next decade or two, but it’s possible future benefits may not go as far as they do today. That’s why today’s workers need to prioritize their personal retirement savings, so they can cover most of their expenses on their own.

The Motley Fool has a disclosure policy.

You May Like: Can You Claim Someone On Disability As A Dependent

The Future Of Social Security

The Social Security Act has provided Americans with much-needed financial help when they need it most. For many of Americas most vulnerable, its the only source of income they have.

Still, despite attempts to keep it solvent, the Social Security program faces a major long-term shortfall. The retirement age to receive full benefits continues to increase and many beneficiaries are claiming benefits much later in life to receive maximum payouts, often at age 70.

As partisan politicians continue to debate the problem each year, the Social Security Administrationwhich is now an independent government agencyworks behind the scenes to keep Social Security intact. Administering the program is a monumental and always-changing task.

Each year, the Social Security Administration rolls out changes to the program. In 2018, they announced a two percent cost-of-living adjustment, a taxable earnings increase, an earnings limit increase for beneficiaries who still work and a slight increase in disability payments.

Despite the programs pitfalls, most Americans want Social Security to continue and consider it a retirement lifeline, according to a National Academy of Social Insurance survey. And eighty-one percent of them are willing to pay more taxes to ensure it. Whether politicians are listening and can come up with a viable solution remains to be seen.

Amendments Of The 1970s

Social security intro | American civics | US government and civics | Khan Academy

1972 Amendments

In June 1972, both houses of the United States Congress approved by overwhelming majorities 20% increases in benefits for 27.8 million Americans. The average payment per month rose from $133 to $166. The bill also set up a cost-of-living adjustment to take effect in 1975. This adjustment would be made on a yearly basis if the Consumer Price Index increased by 3% or more. This addition was an attempt to index benefits to inflation so that benefits would rise automatically. If inflation was 5%, the goal was to automatically increase benefits by 5% so their real value didn’t decline. A technical error in the formula caused these adjustments to overcompensate for inflation, a technical mistake which has been called double-indexing. The COLAs actually caused benefits to increase at twice the rate of inflation.

In October 1972, a $5 billion piece of Social Security legislation was enacted which expanded the Social Security program. For example, minimum monthly benefits of individuals employed in low income positions for at least 30 years were raised. Increases were also made to the pensions of 3.8 million widows and dependent widowers.

These amendments also established the Supplemental Security Income . SSI is not a Social Security benefit, but a welfare program, because the elderly and disabled poor are entitled to SSI regardless of work history. Likewise, SSI is not an entitlement, because there is no right to SSI payments.

1977 Amendments

Also Check: Can You Use Short Term Disability For Maternity Leave

What Is The Social Security Act

The Social Security Act established benefits for old-age retirees and the jobless, as well as aid for dependent mothers and children, victims of work-related accidents, people who are blind, and those who have physical disabilities. It was signed into law in 1935 during the administration of President Franklin D. Roosevelt. Previously, such benefits were not provided at all by the federal government, aside from pensions for veterans.

Under the act, the U.S. government started collecting the Social Security tax from workers in 1937 and began making payments in 1940. It laid the groundwork for many aspects of U.S. labor law.

History Of The Social Security Act

The social distress experienced during the Great Depression provided the impetus for the Social Security Act, part of Roosevelt’s New Deal initiatives to help the United States manage the rapid social and economic changes brought on by industrialization and urbanization. Before Social Security, many elderly Americans would slip into poverty in old age.

The Social Security Act has undergone many amendments and court challenges over the years. In 1972, for example, amendments created the Supplemental Security Income program. SSI is a needs-based benefits program that provides people who are disabled, blind, or at least 65 years old and have a limited income, with cash to meet basic needs for food, clothing, and shelter. These benefits are financed by general funds from the U.S. Treasury, not Social Security taxes.

In its initial form, the act included the following key sections :

  • Subchapter I: Provides federal money to be given to states for old-age benefits.
  • Subchapter III: Provides unemployment benefits via grants to states.
  • Subchapter IV: Provides aid to families with dependent children.
  • Subchapter V: Provides maternal and child welfare via a block grant.
  • Subchapter X: Provides benefits for people who are blind.

You May Like: Is Being Visually Impaired A Disability

When Was Social Security Invented

When Social Security was created, the U.S. was just beginning to recover from the Great Depression. Millions of people were still out of work, and there was alarming concern for the elderly and retired Americans who’d lost everything.

The original Social Security Act was signed into law by President Franklin D. Roosevelt on August 14, 1935. The Act created a new federal agency to ensure that American workers would continue to have income after retirement.

Cost Of Living Adjustments

The Taxation of Social Security Benefits Has Created Quite the Dilemma ...

The first COLA came about in 1950. Until then, Social Security payments had remained the same for over 10 years. People were starting to see their dollar buy fewer things, and they were struggling to survive with their existing payments. By the 1970s, Congress saw a need for automatic cost of living adjustments based on the current amount of inflation. This amendment was passed in 1972 with the automatic adjustments starting in 1975. Before this, the House and Senate would need to agree on an increase and pass a special amendment to have the increase take effect. This was too cumbersome, and it was often difficult to get Congress to agree on the amount. Todays formula calls for the calculation of the adjustment to be based on the consumer price index values published by the Secretary of Labor. As consumer prices increased, Social Security payments would also need to increase to provide for the same level of living.

These adjustments are now made on an annual basis. The CPI is observed year over year, and the payments are increased by the same percentage as the CPI increases. For example, if consumer prices increase 2%, then Social Security benefits will increase 2%. In some years, there may be no increase if there is no increase in the CPI. Similarly, benefits will never decrease because of a COLA. If prices go down, then your benefits will remain the same. You can learn more about COLAs and see the historical increases at

Recommended Reading: Can Disability Be Garnished For Child Support

What Does Social Security Do Today

The Social Security Administration manages several programs offering benefits to seniors, disabled workers, and their families.

Retirement benefits. At age 66 or 67 , workers who contributed to the trust fund can apply for Social Security retirement benefits to help with everyday living and expenses and to offset the loss of income from their jobs.

You can retire as early as age 62, but you’ll get reduced payments if you collect benefits before reaching full retirement age. The more money you make and the more Social Security tax you’ve paid in, the higher your retirement benefits will be.

Survivors and death benefits. A worker’s spouse and dependent children can receive monthly payments in certain circumstances. Your family might be eligible for Social Security benefits if you die or become disabled or if your dependent child becomes disabled before age 22. The SSA also pays a small lump-sum death benefit to surviving family members to help pay for funeral expenses.

Disability benefits. Disability benefits help disabled workers who’ve paid into the Social Security trust fund for a certain amount of time. If you’ve paid enough Social Security tax and you have a serious mental or physical disability that prevents you from working, you should qualify for Social Security disability insurance benefits.

Ssa Brief Narrative Organizational History

In 1983, a Congressional Study Panel produced the following brief narrative history of the main organizational changes at SSA for the period 1935-1983.




This Committee was established by President Roosevelt in June 1934 to develop a comprehensive social insurance system covering all major personal economic hazards with a special emphasis on unemployment and old age insurance. TheCommittee’s legislative recommendations were presented to the President in January 1935, and introduced to Congess for consideration shortly thereafter. A compromise Social Security Bill was signed by the President on August 14, 1935.


A three-member Board was established to administer the Social Security Act. It was responsible for old age insurance, unemployment compensation and public assistance titles of the Social Security Act. The Chairman of the Board reported directly to the President until July 1939 when the Board was placed organizationally under the newly established Federal Security Agency. The original Social Security Board consisted of the three member Board, an Executive Director, three Operating Bureaus, five Service Bureaus and Offices and 12 Regional offices.







You May Like: How Much Can You Make On Disability In 2020

Industrial Revolution In America

According to the Social Security Administration, four changes beginning in the late 19th century helped abolish the economic security policies of the time: the Industrial Revolution, Americas urbanization, the vanishing extended family and a longer life expectancy.

Prior to the Industrial Revolution, many people were farmers and managed to support themselves during hard times, and extended family often lived together on family farms and cared for one another as they aged or struggled.

The Industrial Revolution, however, enticed people to flock to cities for jobs that were often threatened by layoffs and recession, leaving many without a way to support themselves if they lost their job. The urbanization of American also found many people leaving their extended family behind to fend for themselves.

As sanitary and general conditions in America improved, the life expectancy of its citizens did, too. When more and more people grew older, many were unable to work or became sick and required care.

Fact #: Most Older Beneficiaries Rely On Social Security For The Majority Of Their Income

Social Security

Social Security provides the majority of income to most older adults. For about half of this group, it provides at least 50 percent of their income, and for about 1 in 4 older adults, it provides at least 90 percent of their income, according to multiple surveys and the Census Bureau study.

Most retirees have modest incomes, save for some at the top of the income spectrum. Most low-income older Americans have very little pension income, if any, according to the U.S. Census Bureau study. Among retiree households in the bottom third of the income distribution, most received no pension income. About 1 in 4 of these households lived on less than $20,000 in 2015, and about half lived on $50,000 or less, according to an Social Security Administration study that also matches survey and administrative data.

Also Check: How Long Is Long Term Disability

More articles

Popular Articles