If you’re an employer or employee in the United States, chances are high that you want to know who started Social Security. This long-lived program was created by U.S. government as part of the early 20th century “New Deal.” President Franklin Delano Roosevelt advocated a new social welfare policy known as Social Security in the 1930s Depression years.
President Theodore Roosevelt introduced the idea of social insurance earlier in the century. He believed that older or disabled workers needed a financial safety net. Congress stalled until the economic collapse of the 1930s decade prompted action.
Social Security Act
President Roosevelt believed that U.S. government was obligated to provide for vulnerable citizens and families. It’s certain that the moribund Depression economy also benefited by infusing new spending power. The Social Security Act, signed into law in August 1935, includes two components: public assistance and social insurance-retirement benefits for workers. Read more about the history of Social Security at https://www.ssa.gov/history/briefhistory3.html.
Workers didn’t receive monthly Social Security retirement benefits checks until the 1940s. The first beneficiaries received a single lump sum payment. The first Social Security beneficiary decided to retire a day after Social Security was signed into law. He received just USD 0.17 as his retirement benefit.
Over the years, Congress has sought to help Social Security retirees by adding cost of living adjustments (COLA). During inflationary periods, COLA adjustments help retirees to pay for life’s basic requirements.
Congress has also wanted to maintain a level playing field for Social Security retirees:
They voted on wage limits and payroll contribution percentages required by employers and employees.
Over time, Congress has also argued about the age at which an individual can claim full Social Security retirement benefits.
Today, Social Security Full Retirement Age (FRA) is age 66 for people born in 1954 or earlier.
U.S. citizens in need can obtain cash relief provided by several Social Security Administration (SSA) programs. Social insurance offers retirement benefits to those who’ve paid into the Social Security system during their working years. In addition, it provides both survivor and/or dependent coverage for the worker’s spouse and children.
Social Security Retirement Benefits
Social Security’s Old-Age Insurance is one of the three primary social insurance benefits of the Social Security Act. It’s administered by Social Security’s Old-Age & Survivors Insurance Trust Fund. The program distributes monthly benefits to U.S. retired workers. It’s designed to prevent a worker’s loss of income and financial stability in old age. These benefits are indexed according to inflation to maintain the retiree’s financial buying power.
Legally employed workers must pay Social Security tax (as FICA-OASDI tax) into the SSA system to receive retirement benefits. This basic income is intended to replace some or part of the worker’s income when he or she retires. SSA calculates the retiree’s benefit according to a statutory formula. Social Security retirement benefits aren’t intended to pay for the individual or family’s full financial requirements.
The concept of FICA tax is now more than 80 years old. Checking your Social Security tax and earnings credits is a relatively easy tax. Visit My Social Security Account to check your Social Security statement. There’s no need to wait for a hard copy of your statement today.
Enhancements to Social Security
Other important social insurance and public assistance programs have been created for Social Security beneficiaries over the years:
During President Lyndon B. Johnson’s administration, an important Social Security enhancement provided additional security for U.S. retirees. Medicare was created to help retirees age 65 and older to pay for health care.
In President Richard Nixon’s administration, Social Security benefits were extended to include Supplemental Security Income (SSI) to primarily support younger than retirement age (less than 65 years old) disabled people.
Today’s beneficiaries age 65 and older also receive Medicare social insurance under the Social Security Act. Part A provides a compulsory hospital benefit. Part B supplements the beneficiary’s payments to doctors, laboratories, and so on. Part D, an optional coverage, helps retirees to pay for prescription medicines. In some circumstances, low income retirees’ Medicare costs are covered by state healthcare funds.