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The Social Security Act
From Social Security Disability and You – A Guide to Winning the Benefits You Deserve
By: Charles E. Binder
In January 1935, President Roosevelt received a report from his Council on Economic Security. Their findings became the basis for the bill that FDR brought to Congress, which then became the Social Security Act. Roosevelt cautioned at the time that this new Social Security program would not protect everyone against everything, but that it was an important step in that direction. It addressed the “three fears” of the worker: unemployment, poverty in old age and ill health.
The primary purpose of the Act was to provide economic security for retired workers age 65 or older. Under Title II, the main part of the law, monthly benefits would be paid beginning in 1942, and would be proportional to the payroll taxes put forth by the workers. It was social insurance, not welfare, insofar as each worker was required to contribute to his or her own eventual security. Moreover, it was not designed to relieve individuals completely from their personal responsibilities to provide for themselves. Instead, it was a “floor of protection” for Americans. The Act also created the Social Security Board, which became the Social Security Administration (or “SSA”) in 1946. SSA remained part of the Department of Health and Human Services until 1994, when President Clinton signed a bill making the Administration an independent agency.
By 1950 the program, was moving along rather smoothly. Monthly benefits had been paid to retired workers and their dependents since 1940. The Administration tells us that the first retirement check went to Ida May Fuller of Vermont. It was in the amount of $22.54. By the time of her death in 1975, Ms. Fuller received more than $22,000 from Social Security benefits. During her three years of covered employment she paid a total of $24.75 in FICA taxes. This huge return that Ms. Fuller received illustrates an important point about Social Security – namely, that it is not an individual retirement system where you receive exactly what you put in or what you put in plus interest. Instead, payroll taxes on current workers and employers pay for those employees who have retired. So the amount that you out in and the amount that you can collect in benefits do not always line up.