When did Social Security start, and why does it continue to be a big part of American life? Social Security is a hugely popular but increasingly controversial federal program. It was originally created to aid the retired, but it has since expanded to care for the disabled and widowed. Social Security is singlehandedly the largest expenditure on the federal government's budget at 20.8%.
The Beginnings of Social Security
Social Security began as an act signed by President Franklin Delano Roosevelt on August 14, 1935. As part of his New Deal, President Roosevelt enacted Social Security as a way to protect people from the poverty that resulted from old age, disability or widowhood.
It took two years before the Social Security Act was implemented. In 1937, Social Security tax was levied on payroll checks. That same year, over 53,000 beneficiaries were paid a lump-sum death benefit.
The Growing Weight of Social Security
Three years after it became implemented, in 1940, Social Security paid $35 million dollars in benefits. Compare that price to 2009's $650 billion dollars in benefits. Critics of the Social Security program believe that it cannot possibly withstand its own weight. When Social Security began, the ratio of active workers to retirees, survivors and disabled was more balanced than in recent years. In the beginning years of the Social Security Program, there were more workers who contributed to the fund. As the Baby Boomer generation retires, there will be more retirees than workers funding the program, which will produce more stress and higher taxes on future generations. In 1937, Social Security took 2% of payroll earnings. In 2009, Social Security took 15.30% of payroll earnings.
The first person to receive Social Security benefits was Ernest Ackerman. He retired one day after Social Security began and received a lump sum check for 17 cents. Ida May Fuller was the first person to receive a monthly Social Security benefit. Between the years 1937 to 1939, she paid $24.75 to the Social Security fund. Her first benefit check was for the amount of $22.54. When she died at 100 years old, she had received $222,888.92 in benefits. Clearly, this far surpassed the amount she paid into the fund.
The death of a spouse is a difficult time for any family, but it can be worse for a family worried about finances. If your deceased spouse was receiving Social Security benefits at the time of death, or was eligible to receive Social Security benefits, you or your children may be eligible to receive Social Security death benefits.
For many disabled individuals, Social Security disability benefits are the only source of income enabling them to lead a relatively normal life. If you're permanently disabled and curious about applying for Social Security disability benefits, here are the things you need to know.