The social insurance programme, known as Social Security (United States), is one of the most important safety nets for retired American workers, disabled people, and survivors of deceased wage‑earners.
And it all goes back to the Great Depression of 1929. With widespread job loss and elderly poverty, the US government under President Franklin D. Roosevelt began to craft a national social‑insurance programme. On August 14, 1935, the Social Security Act was signed into law.
The Great Depression And Birth Of Social Security
By the end of World War I, the United States had shifted from a largely agrarian society to an urban, industrialised nation. By the early 1930s, most Americans relied on cash wages for their livelihood. The Great Depression devastated this system.
By 1932, unemployment soared to 34% of the non-agricultural workforce. Between 1929 and 1932, national income fell by 43%, and per capita income dropped by 19%. For millions, decades of savings vanished almost overnight.
This economic collapse had severe consequences for the elderly. Many faced the prospect of spending their remaining years in destitution. At the Depression’s peak, a significant portion of older Americans depended on family or friends for support. Poorhouses and relief agencies, funded mainly by local charity, were overwhelmed and unequipped to address the unique needs of the aged.
Recognising the urgent need for a stronger solution, the Social Security system was established on August 14, 1935, when President Franklin D. Roosevelt signed the Social Security Act into law.
Initially covering only workers in commerce and industry, the programme allowed individuals to earn retirement benefits based on their average covered earnings. Benefits were withheld from those still working, and no provisions were made for spouses or children. Workers who died before 65, or before receiving benefits equal to their contributions plus interest, received lump-sum refunds.
Payroll taxes were first collected in January 1937. The first monthly benefit checks were issued on January 1, 1940, with Ida M. Fuller, a retired legal secretary from Vermont, becoming the first recipient.
Her initial payment amounted to $22.54.
From the organisational side, the initial agency overseeing the programme was the Social Security Board (SSB), created in 1935 as an independent agency. By 1946, the SSB was replaced by the current Social Security Administration (SSA).
Important Dates
· 1935: Social Security Act signed and Social Security Board (SSB) established.
· 1937: Payroll tax collections begin.
· 1940: First monthly benefits start.
· 1946: SSB is replaced by the current Social Security Administration (SSA).
· 1994: SSA designated as an independent agency through legislation.
Benefits offered By Social Security
· Retirement Benefits: To qualify, a person must be at least 62 years old and have worked while paying Social Security taxes for at least 10 years. These benefits help provide financial stability during retirement.
· Disability Benefits: Monthly disability benefits are available for people who are blind or have a qualifying disability and have a sufficient work history.
· Survivor Benefits: Survivor benefits offer financial support to certain family members of a deceased worker who paid into Social Security. Eligible recipients include spouses, ex-spouses, children, and dependent parents.
· Family Benefits: Family benefits provide monthly payments to family members of someone entitled to retirement or disability benefits. These may include spouses, ex-spouses, children, and in some cases, grandchildren.
· Supplemental Security Income (SSI): SSI provides monthly payments to those with limited income and resources who are blind, have a disability, or are age 65 or older.
· Medicare: Medicare is health insurance for people age 65 or older, those with end-stage renal disease (ESRD), or those receiving Social Security disability benefits.
Future Challenges And Projections For Social Security
According to the 2025 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) Trust Funds, the combined OASI and DI reserves are projected to be depleted by 2034 under intermediate assumptions. At that point, continuing income would cover only 81% of scheduled benefits.
Specifically, the OASI Trust Fund alone is expected to run out in 2033, leaving income sufficient to pay just 77% of OASI benefits.
The Trustees have urged lawmakers to address these shortfalls. Phasing in necessary changes gradually would allow multiple generations to share in revenue increases or benefit adjustments while giving workers and beneficiaries time to adapt.
In 2025, Social Security is expected to serve 70 million beneficiaries and 185 million covered workers and their families. With informed discussion, creative solutions and timely legislation, the programme can continue to safeguard retirement, disability and survivor benefits for future generations.
In short, the system still works, but without reforms, the size of benefits may shrink, or taxes may rise, or both.
Lessons From History And The Road Ahead
The history of Social Security is a remarkable story of how the government stepped in during a crisis to provide retirement, disability and survivor benefits, and how that system has evolved over the years.
However, the future is less certain. For workers, retirees and policymakers alike, the coming decade is likely to be crucial. The choices made now will shape not only the solvency of Social Security but the retirement security of millions of Americans.