President Franklin D. Roosevelt, the 32nd president, signed the Social Security bill into law on Aug. 14, 1935. This monumental achievement came only 14 months after he presented a plan for social insurance in a special message to Congress on June 8, 1934. The promise was to create a safety net for elderly, unemployed, and disadvantaged Americans. The Social Security Act aimed to provide financial benefits to retirees over the age of 65 based on lifetime payroll tax contributions. It also established the Social Security Board, later known as the Social Security Administration, to oversee the implementation of the Act.
The creation of the 32-page Social Security Act was the result of the work initiated by the Committee on Economic Security, established by FDR in June 1934. This Act was a cornerstone in the structure being built to support Americans against life’s uncertainties. Two main provisions were included: federal aid to states to provide cash pensions for their needy elderly, and a federal old-age benefits system for retired workers. After signing the Act, FDR appointed a three-person board to administer the program, beginning with payroll tax deductions for enrollees.
In November 1936, registration for the program commenced, marking the start of a significant undertaking. However, certain categories of workers were excluded, such as self-employed professionals, field hands, and domestic workers. Eligible workers had to apply at their local post office and receive a national identity card, now known as a Social Security card. This card, with a unique nine-digit number, was used to track workers’ earnings and benefits.
Over time, the Social Security Act underwent several amendments to expand benefits. In 1940, Ida M. Fuller became the first person to receive a monthly benefit, which amounted to $22.54, equivalent to $420.15 in today’s dollars. The Act was amended in 1939 to include child, spouse, and survivor benefits alongside retirement benefits. The 1950s saw significant changes with substantial benefit increases, expanded coverage, and the launch of disability insurance. The 1960s brought further growth, including the establishment of the Medicare program in 1965.
In October 1972, Congress introduced Supplemental Security Income (SSI), offering cash payments to older individuals, blind individuals, and those with disabilities and limited incomes. By February 2023, about 66 million Americans, or one in every five residents, were benefiting from Social Security. Despite its popularity, the program faces challenges, including a projected shortfall in the trust fund by 2033. This could result in reduced benefits for millions who rely on Social Security.
The demographic shift, with aging baby boomers retiring and fewer workers contributing to the system, presents a critical issue. With just 2.7 workers paying into the program for each Social Security beneficiary, the strain on funding is evident. Addressing these challenges will be crucial to sustaining the integrity and effectiveness of the Social Security program for future generations.
