Social Security was created by Congress in 1935 as part of President Franklin D. Roosevelt's New Deal response to the Great Depression

The program did not exist before 1935. The United States had no federal system for retirement income, disability support, or survivor benefits. When the stock market crashed in 1929 and the economy collapsed, millions of older Americans had no savings, no pensions, and no way to support themselves. States ran small, inconsistent relief programs, but there was no national safety net.

Roosevelt won the 1932 presidential election partly on the promise to address this crisis. In his first hundred days in office, he pushed through a series of emergency programs known as the New Deal. Social Security was one of the largest and most permanent of these programs. Congress passed the Social Security Act on August 14, 1935, and Roosevelt signed it into law the same day.

Key Takeaways

  • Social Security was created by an act of Congress in 1935 during the Great Depression, when millions of older Americans had no retirement income.
  • President Franklin D. Roosevelt proposed the program as part of his New Deal, and Congress passed it with bipartisan support.
  • The program was designed to provide retirement income at age 65, survivor benefits for families of deceased workers, and later added disability insurance.
  • The first Social Security check was mailed in January 1940 to a retired secretary named Ida May Fuller, who had paid into the system for only three years.

The people who designed and pushed Social Security through Congress

Roosevelt did not write the law himself. He appointed Frances Perkins, the Secretary of Labor, to lead the effort. Perkins was the first woman to hold a Cabinet position in U.S. history. She chaired the Committee on Economic Security, which studied how other countries handled retirement and wrote the first draft of the legislation.

The committee included Edwin Witte, an economist who became the executive director and did much of the detailed policy work. Witte studied social insurance systems in Germany, Britain, and other nations to understand what worked. The committee also consulted with actuaries and insurance experts to figure out how much workers and employers would need to contribute to keep the program solvent.

In Congress, Senator Robert Wagner of New York and Representative David Lewis of Maryland sponsored the bill. Wagner was a Democrat from a working-class district in Brooklyn and had long pushed for federal social insurance. Lewis was a Democrat from West Virginia who represented coal miners. Both men had seen firsthand the poverty of workers without pensions.

The bill passed with support from both Democrats and Republicans, though some Republicans opposed it as too expensive or too much government involvement in the economy. The final vote in the House was 371 to 33 in favor. The Senate vote was 77 to 6 in favor.

What Social Security was designed to do when it started

The original 1935 law created a retirement program for workers age 65 and older. It also included survivor benefits — payments to the families of workers who died before retirement. The program was funded by a payroll tax split between workers and employers: each paid 1 percent of wages, for a combined 2 percent tax.

The first benefits were not paid until 1940, because the program needed time to collect contributions. The very first Social Security check went to Ida May Fuller, a retired secretary from Vermont, on January 31, 1940. She had paid into the system for only three years but received her first check for $22.54. She lived to age 100 and collected over $22,000 in total benefits.

Disability insurance was not part of the original program. Congress added it in 1956, more than 20 years later, after World War II veterans and industrial workers pushed for coverage if they became unable to work. Survivor benefits for children and spouses were also expanded over time.

How Social Security changed after 1935

The payroll tax rate has increased several times since 1935. In 1960, Congress raised it to 3 percent combined. By 1990, it had reached 15.3 percent combined (12.4 percent for retirement and disability, 2.9 percent for Medicare, which was added in 1965). The tax cap — the maximum amount of wages subject to the tax — has also risen many times to keep pace with inflation and wage growth.

Coverage expanded too. In 1935, the law excluded farm workers, domestic workers, and the self-employed — groups that were disproportionately Black and Latino. Congress gradually added these groups over the following decades. By 1956, most workers were covered, though some state and local government employees and railroad workers remained outside the system.

The retirement age has stayed at 65 for most of the program's history, but Congress changed it in 1983. The law now gradually raises the full retirement age to 67 for people born in 1960 or later. Early retirement at age 62 is still available, but with a permanent reduction in monthly benefits.

Why Congress created Social Security instead of leaving it to states or private companies

Before 1935, retirement was mainly a private matter. Wealthy people had savings or family businesses. Working people relied on their children to support them in old age, or they worked until they died. Some large employers offered pensions, but these were rare and often disappeared if the company failed. Many states had small poor-relief programs, but they were underfunded and stigmatized.

The Great Depression showed that private savings and employer pensions were not enough. Millions of people lost their life savings when banks failed. Companies that went bankrupt left workers with nothing. Roosevelt and Congress concluded that only a federal program with mandatory participation could may provide that workers would have income in retirement.

Social Security was designed as social insurance, not charity. Workers and employers both contributed, and workers received benefits based on their contributions. This model was borrowed from Germany, which had created the first national social insurance system in the 1880s under Chancellor Otto von Bismarck. The idea was that workers had earned their benefits through payroll taxes, so receiving them was not shameful or dependent on a means test.

The debate over Social Security when it was created

Not everyone supported Social Security in 1935. Business groups worried about the payroll tax and said it would hurt hiring. Some conservatives argued that the federal government should not run such a large program. The American Liberty League, a group of wealthy businessmen and lawyers, sued to overturn the law, arguing it was unconstitutional.

The Supreme Court heard the case in 1937. In Helvering v. Davis, the Court ruled 5 to 4 that Social Security was constitutional. The majority opinion said Congress had the power to tax for the general welfare and that the program was a reasonable response to the economic crisis. The decision upheld the law and ended the legal challenge.

Some progressives thought Social Security did not go far enough. They wanted a higher tax rate, higher benefits, and coverage for farm workers and domestic workers from the start. But Roosevelt and Congress chose a more modest program that they believed could pass and survive legal challenge. The program was expanded many times in later decades as political support grew.

How Social Security fits into the broader history of American social programs

Social Security was the first major federal social insurance program in the United States. It came before unemployment insurance (also created in 1935), Medicare (1965), and Medicaid (1965). It established the principle that the federal government could and should provide a safety net for workers and their families.

The program was modeled partly on systems that already existed in Europe. Germany had social insurance since the 1880s. Britain had unemployment insurance and old-age pensions. Canada and Australia had pension programs. But Social Security was the first large-scale federal social insurance program in the United States, and it became a model for other countries.

Social Security also changed the relationship between workers and the federal government. Before 1935, most Americans had little direct contact with federal programs. Social Security created a system where millions of workers paid taxes directly to the federal government and received benefits in return. This made the federal government a central part of American economic life in a way it had not been before.

Frequently Asked Questions

Did Franklin D. Roosevelt invent Social Security by himself?

No. Roosevelt proposed the idea and pushed Congress to pass it, but he appointed Frances Perkins, the Secretary of Labor, to lead the design process. Perkins chaired the Committee on Economic Security, which included economists, actuaries, and policy experts who wrote the actual legislation. Congress then debated and modified the bill before passing it.

Why did Social Security start paying benefits in 1940 instead of 1935?

The program needed time to collect payroll taxes from workers before it could pay benefits. If it had started paying in 1935, there would have been no money in the fund. By 1940, enough workers had paid into the system for five years that the program could begin paying retirement benefits.

Did Social Security cover all workers when it started?

No. The 1935 law excluded farm workers, domestic workers, and the self-employed. These groups were added gradually over the following decades. By the 1950s, most workers were covered, though some state and local government employees remained outside the system until later.

Could Social Security have been created as a private insurance program instead of a government program?

Congress chose a government program because private insurance companies had failed during the Great Depression. When banks and businesses collapsed, people lost their savings and insurance companies went bankrupt. A federal program with mandatory participation was seen as the only way to may provide that all workers would have retirement income.

Has the payroll tax rate stayed the same since 1935?

No. The combined payroll tax rate started at 2 percent in 1935 and has increased many times. It reached 15.3 percent by 1990 and has stayed at that level since then. The tax cap — the maximum amount of wages subject to the tax — has also risen many times to keep pace with wage growth.