If you look at your last paystub, you will almost certainly see a deduction for Social Security. That’s because — with very few exceptions — all workers and employers pay into Social Security through a dedicated payroll tax, with the expectation they will receive supplemental income during their retirement years.
However, few know how much they’ll receive in benefits, how the amount is calculated, or their full retirement age. In fact, only 14 percent of workers know how much Social Security they'll be getting when they retire, according to a 2017 survey by Fidelity Investments. Many also don’t realize that the program doesn’t exist solely to serve retirees — others benefit from the program as well, thanks to expansions to the original Social Security Act.
Needless to say, there is a great deal of misconception and confusion surrounding the benefit. So today, we dive into the basics about Social Security: What exactly is it? Who benefits from it? And when did the program first begin in our country?
The Origin of Social Security
Social Security is one of our country’s most important federal programs, but it’s also a relatively young program, with roots tracing back to less than 100 years ago.
The program was born in the midst of the Great Depression, the worst economic crisis in modern history, when the stock market crashed, thousands of banks collapsed, and millions of citizens were left unemployed as a result.
While the Great Depression was universally devastating, the elderly were particularly hard-hit, and poverty among older adults grew dramatically after the Great Depression, according to the U.S. Social Security Administration. There are a few reasons for this.
Our country experienced a major demographic shift in the early 20th century. The traditional way of life went from large families and an agricultural, farm-based society — one where grandparents and elders could expect to be comfortably cared for in their old age — to an industrial society in large cities where people depend upon wages to live, according to the SSA.
Young people left the farm — and their parents — behind, moving to cities en masse to find work.
This change in the way people earned a living and cared for retired relatives, along with a significant increase in life expectancy, put the elderly in a precarious situation with little economic security to depend upon in their golden years.
Timeline of Social Security:
- 1935: President Franklin D. Roosevelt signs the Social Security Act as part of the New Deal.
- 1939: Amendments to the Social Security Act were made, adding Dependents Benefits and Survivors Benefits.
- 1956: Another amendment was made, adding Social Security Disability Insurance for disabled workers and their dependents.
- 1965: Medicare Act was signed into law, providing health insurance for the elderly and poor.
- 1972: The Supplemental Security Income program was founded, providing assistance to people with disabilities and those ages 65 and older who are otherwise ineligible for Social Security benefits.
The nation was in crisis, and something had to be done. In 1934, President Franklin D. Roosevelt announced his intentions to model a solution based on the social insurance programs seen in Europe at the time. That’s how the Social Security Act was born.
Upon signing the act, President Roosevelt said, “We can never insure 100 percent of the population against 100 percent of the hazards and vicissitudes of life, but we have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age."
Additional amendments were made in the decades following the initial signing of the Social Security Act, adding protections for the families of deceased workers, disabled workers and their family members, and people with little income and resources who have a disability or are 65 years or older.
Now, 82 years later, Social Security has 61 million beneficiaries, including 43.9 million retired workers and their dependents, 10.7 million disabled workers and their dependents, and 6 million survivors of deceased workers, according to the SSA.
Survivors Benefits Explained
If a family’s breadwinner dies, Social Security survivors benefits can help provide income for the worker’s surviving dependents. The worker’s widow or widower can receive benefits at retirement age, and children under the age of 18 can also receive Social Security survivors benefits if a working parent dies. Similar to Social Security Disability, survivors benefits are funded by the Social Security taxes all workers pay into.
Supplemental Security Income (SSI) Explained
While SSD benefits specifically pertain to people who have previously been employed and paid Social Security taxes, but can no longer work due to disability, Supplemental Security Income provides benefits regardless of prior work history. Another major difference between SSD and SSI is that while SSD benefits are funded through the Social Security taxes that all workers pay, SSI is financed by funds from the U.S. Treasury, according to the SSA.
SSI provides monthly benefit payments for people who have low income and few resources and are ages 65 or older, blind, or disabled. These benefits may also be available for families with children who have severe disabilities and limited resources, regardless of the parent’s ability to work, and parents can receive these benefits as long as their child is disabled and unable to support themself financially.
Denied Benefits? We May Be Able to Help
While Social Security benefits provide a crucial safety net for our country’s citizens, it’s not always easy to get the benefits to which you’re entitled. The application and appeal process can be disheartening for many, but it’s important not to lose hope.
“Most claims are denied after the initial application is filed. The process for appealing a claim can be complicated and confusing, causing some people to just give up,” said Zadel. “But an experienced attorney gives a claimant an advantage in this process. Hiring an experienced attorney helps to avoid missed deadlines, common filing mistakes and denials for technical reasons.”
If you applied for Social Security Disability or Supplemental Security Income and your claim was denied or lowballed, we may be able to help. Fill out our free, no-risk case review form today to learn how a Social Security disability benefits attorney could help you appeal a denied claim.