Social Security began in 1935 as a federal insurance program

The Social Security program was created by the Social Security Act, signed into law by President Franklin D. Roosevelt on August 14, 1935. The first monthly benefit check was paid in January 1940 to Ida May Fuller, a retired schoolteacher from Vermont. The program started as a response to the Great Depression, when millions of older Americans had lost their savings and had no way to support themselves.

The original program was much smaller than it is today. It covered only workers in commerce and industry — farm workers, domestic workers, and government employees were not included at first. The first person to receive a benefit had to be at least 65 years old. Over the decades, Congress expanded the program to cover more workers and to add benefits for disabled workers and survivors of workers who had died.

Key Takeaways

  • Social Security was signed into law in 1935 and began paying monthly benefits in 1940, making it one of the oldest federal social insurance programs in the United States.
  • The program was created during the Great Depression to provide income to older workers who could no longer work and had lost their savings.
  • Originally, Social Security covered only workers in commerce and industry; farm workers, domestic workers, and government employees were added later through amendments to the law.
  • The program has grown to include not just retirement benefits but also disability benefits and survivor benefits for the families of workers who have died.

Why the program was created in 1935

Before Social Security, there was no federal safety net for older Americans. Some states had old-age pension programs, but they were small and did not reach most people. When the stock market crashed in 1929 and the Great Depression began, millions of older workers lost their jobs and their savings. Many had no family to support them and faced poverty in their final years.

Roosevelt's administration saw Social Security as a way to restore dignity to older workers and to stimulate the economy by putting money in the hands of people who would spend it. The program was funded by a tax on wages — workers and employers each paid a small percentage of wages into a trust fund, and that money was used to pay benefits to retirees.

How the program worked when it started

The original Social Security program was quite different from what exists today. A worker had to be at least 65 years old to receive a benefit, and the benefit amount was based on how much the worker had earned during their working years. The program did not pay benefits to spouses or children at first — that came later.

In the beginning, very few people received benefits because the program had just started collecting taxes. Ida May Fuller, the first beneficiary, had paid only about $24.75 in taxes during her working years but received $22,888.92 in total benefits over her lifetime. As more workers paid into the system and more retirees became may be able to access, the program grew rapidly.

Expansion of Social Security over time

Congress made major changes to Social Security in 1939, just four years after it was created. These amendments added benefits for the spouses and children of retired workers, and for the families of workers who had died. This turned Social Security from a program that paid only the worker into a family insurance program.

In 1956, Congress added disability benefits so that workers who became unable to work before retirement age could receive monthly payments. In 1965, Medicare was created as a companion program to provide health insurance to people over 65. Over the following decades, Congress made adjustments to the tax rate, the retirement age, and the benefit formulas to keep the program solvent.

The trust funds that support Social Security

Social Security is funded through two separate trust funds: the Old-Age and Survivors Insurance (OASI) Trust Fund and the Disability Insurance (DI) Trust Fund. Workers and employers pay payroll taxes into these funds, and the money is used to pay current beneficiaries. Any money left over is invested in special U.S. Treasury bonds that earn interest.

The program is run by the Social Security Administration, a federal agency that processes claims, maintains earnings records, and sends out monthly benefit checks. The Social Security Administration publishes an annual report on the status of the trust funds, which shows whether the program is taking in more money than it is paying out or vice versa.

How Social Security changed from 1935 to today

The program that started in 1935 has grown enormously. In 1940, about 222,000 people received Social Security benefits. Today, more than 67 million people receive benefits each month. The program now covers nearly all workers — including farm workers, domestic workers, and most government employees — whereas it originally covered only a fraction of the workforce.

The retirement age has also changed. When Social Security began, the full retirement age was 65. Because people are living longer, Congress gradually raised the full retirement age to 67 for people born in 1960 or later. Workers can still choose to receive benefits as early as age 62, but the monthly amount will be smaller. They can also wait until age 70 to receive a larger monthly benefit.

Frequently Asked Questions

Did Social Security exist before 1935?

No. Before 1935, there was no federal Social Security program. Some states had old-age pension programs, but they were limited and did not cover most workers. Social Security was the first major federal program to provide income support to retired workers.

Why was the retirement age set at 65 in 1935?

In 1935, life expectancy was lower than it is today, and 65 was chosen as an age when most workers could no longer work. The program was designed to help workers in their final years, not to provide decades of retirement income. As life expectancy has increased, Congress has gradually raised the full retirement age.

Has Social Security always paid benefits to spouses and children?

No. The original 1935 law paid benefits only to retired workers. In 1939, Congress amended the law to add benefits for spouses and children of retired workers, and for families of workers who had died. This made Social Security a family insurance program rather than just a retirement program.

Who runs Social Security today?

The Social Security Administration, a federal agency, runs the program. It processes claims, maintains records of workers' earnings, and sends out monthly benefit checks. You can contact the Social Security Administration by phone, online, or in person at a local office.