Social Security started in 1935 as part of President Franklin D. Roosevelt's New Deal
The Social Security Act was signed into law on August 14, 1935. The program began collecting payroll taxes from workers and employers that same year, though the first monthly benefit checks did not go out until January 1940. This five-year gap existed because the program needed time to build up a reserve of funds and establish the administrative systems to track workers and calculate benefits.
The original program was much narrower than what exists today. It covered only workers in commerce and industry — about 60 percent of the workforce. Farm workers, domestic workers, government employees, and the self-employed were excluded. The first person to receive a Social Security benefit was Ida May Fuller, a retired legal secretary from Vermont, who received a check for $22.54 in January 1940.
Key Takeaways
- Social Security was created by law in 1935 but did not pay out its first checks until January 1940.
- The program originally excluded farm workers, domestic workers, and government employees, though coverage has expanded since then.
- The payroll tax that funds Social Security has been collected since 1935, even though benefits were delayed.
- Understanding when Social Security started helps explain why your benefit amount depends on your work history and when you were born.
Why there was a five-year delay between the law and the first checks
Social Security needed time to build its financial foundation. The program operates on a pay-as-you-go system: current workers' payroll taxes pay current retirees' benefits. In 1935, there were no retirees yet because the program had just started. The government had to collect taxes for five years to accumulate enough money to begin paying benefits without when ready running short.
The delay also allowed the Social Security Administration to hire staff, set up field offices across the country, and create the systems to track individual workers' earnings records. Each worker needed a Social Security number and an account showing how much they had paid into the system. This administrative work took years to complete, especially before computers existed.
How coverage has expanded since 1935
The original 1935 law left out most farm workers, domestic workers, railroad workers, and all government employees. Over the following decades, Congress gradually expanded the program to cover these groups. By 1956, farm workers and domestic workers were added. Railroad workers had their own system but it was coordinated with Social Security. Federal employees hired after 1983 now pay into Social Security, though those hired before that date typically receive pensions instead.
Today, about 96 percent of all workers pay Social Security taxes. The main groups still excluded are some state and local government employees who have their own pension systems, and certain religious groups that have opted out. This expansion means that someone born in 1940 had a very different Social Security system available to them than someone born in 1980.
What the original benefit amounts looked like
Ida May Fuller's first check of $22.54 in 1940 was not unusual for that era — the average monthly benefit was around $25. These amounts reflected both the lower wages of the 1930s and the fact that the program was designed as a supplement to savings and pensions, not as a sole source of retirement income. The benefit formula was also much simpler: it was based on total lifetime earnings, with no adjustments for inflation.
By contrast, the average Social Security retirement benefit today is several hundred dollars per month, adjusted annually for inflation. The benefit formula has become more complex, taking into account your 35 highest-earning years and the age at which you claim. Understanding that Social Security started as a modest supplement helps explain why many people today find that benefits alone do not cover all their expenses.
How the 1935 start date affects your benefits today
The year Social Security started matters because it created the foundation for how benefits are calculated now. Your benefit amount depends on your Primary Insurance Amount, which is based on your average earnings over your 35 highest-earning years. The program only counts earnings after 1950 (when the current benefit formula began), so workers who started their careers before 1950 have fewer years of earnings counted.
The 1935 start date also explains why there is a full retirement age tied to your birth year. Congress has gradually raised the full retirement age from 65 (for people born before 1938) to 67 (for people born in 1960 or later). This change was made in 1983 to account for longer life expectancy, but it only applies to people born after a certain date because those already receiving benefits could not have their checks reduced.
The difference between when Social Security started and when you can claim it
Many people confuse the year Social Security began as a program (1935) with the age at which they can claim benefits. You can claim reduced benefits as early as age 62, your full retirement age (which varies by birth year), or delayed benefits up to age 70. These ages have nothing to do with 1935 — they are rules set by Congress and adjusted over time based on life expectancy and the program's finances.
Your own work history is what matters for your benefits, not the program's history. If you started working in 1980, you have been paying into a system that has existed for decades. Your benefit will be calculated based on your earnings record from 1980 onward, not from 1935.
Why Social Security's 1935 start affects its finances today
The 1935 start date created a system where early generations of workers received far more in benefits than they paid in taxes. Ida May Fuller paid about $25 in total payroll taxes but received over $22,000 in lifetime benefits — a return that later generations cannot expect. This happened because the program started with no reserve and when ready began paying people who had worked only a few years.
Today, the program faces a different challenge: there are fewer workers paying taxes for each retiree receiving benefits. In 1960, there were about 5 workers for every retiree. Today, that ratio is about 3 to 1. This shift is not because Social Security started in 1935, but because people live longer and birth rates have fallen. Understanding the program's history helps explain why policymakers have discussed changes to payroll tax rates, benefit formulas, or retirement ages.
Frequently Asked Questions
Did Social Security exist before 1935?
No. Before 1935, there was no federal Social Security program. Some states had their own old-age pension programs, and some private employers offered pensions, but there was no national system. The 1935 law created the first federal program of its kind in the United States.
Why do people say Social Security started in 1940 instead of 1935?
The law was passed in 1935, but the first benefit checks were paid in January 1940. Some sources refer to 1935 as the start date (when the law was signed), while others use 1940 (when benefits actually began). Both dates are correct depending on what you are measuring — the program's creation or its first payments.
Has Social Security changed much since 1935?
Yes. Coverage has expanded to include farm workers and domestic workers. The benefit formula has become more complex. The full retirement age has been raised. Spousal and survivor benefits were added. Cost-of-living adjustments were added in 1975. The program today is much larger and more comprehensive than the original 1935 version, though the basic idea — a payroll tax that funds retirement, disability, and survivor benefits — remains the same.
Does knowing when Social Security started change how much I will receive?
No. Your benefit amount is based on your own earnings record and the age at which you claim, not on when the program began. However, understanding the program's history can help you make sense of why the benefit formula works the way it does and why there are different rules for different birth years.