Franklin D. Roosevelt signed Social Security into law on August 14, 1935

Social Security began as part of President Franklin D. Roosevelt's New Deal, a set of programs created during the Great Depression. The Social Security Act was passed by Congress and signed into law in 1935. The program started paying benefits in 1940, five years after it was created. Roosevelt designed it to provide income to older workers, people with disabilities, and survivors of workers who had died.

The when ready reason for Social Security was the economic crisis of the 1930s. Millions of Americans had lost their savings, their jobs, and their homes. Many older people had no way to support themselves. Before Social Security, families relied on their children to care for aging parents, or older people worked until they could not. There was no national system. Roosevelt and Congress created Social Security to give workers a foundation of income in retirement, not as a complete replacement for savings or pensions, but as a floor beneath which no one would fall.

Key Takeaways

  • Social Security was created by Congress and signed by President Franklin D. Roosevelt on August 14, 1935, during the Great Depression.
  • The program began paying retirement benefits in 1940 and was designed to provide income to workers over 65, people with disabilities, and families of deceased workers.
  • Before Social Security, older Americans had no national safety net and depended on family support or continued work.
  • The original program was funded by a payroll tax split between employers and workers, a structure that remains today.

The people who shaped Social Security's design

Secretary of Labor Frances Perkins led the effort to design Social Security. She worked with a cabinet committee and outside experts to build the program. Perkins pushed for a system that would be permanent and funded by workers themselves, not by general tax revenue. She believed workers would see it as an earned benefit, not charity, and would support it more strongly if they paid into it.

The Committee on Economic Security, created by Roosevelt in 1934, did much of the detailed work. The committee included government officials, economists, and social workers. They studied how other countries handled retirement and disability. Germany had a social insurance system dating back to the 1880s. Britain had unemployment insurance. The committee borrowed ideas from these programs but built something different for the United States.

Congress debated the bill for months. Some members thought it was too generous and would cost too much. Others thought it did not go far enough. The final law was a compromise. It created a system where workers and employers both paid into a fund, and benefits were based on how much a worker had earned and paid in.

How the original program worked

When Social Security began in 1940, it was smaller than it is today. Only retirement benefits existed at first. The program paid benefits to workers who reached age 65. The first monthly payment went to Ida May Fuller, a retired schoolteacher from Vermont, on January 31, 1940. She received $22.54.

The original payroll tax was 1 percent on workers' wages, split between the worker and the employer. That money went into a trust fund. When a worker turned 65 and stopped working, they could claim a monthly benefit based on their average earnings. The benefit amount was calculated using a formula Congress set.

In 1956, Congress added disability benefits. Workers who became unable to work before retirement age could now receive payments. In 1965, survivor benefits were expanded so that more family members of deceased workers could receive payments. These changes made Social Security broader than Roosevelt's original design, but the basic structure remained the same.

Why Social Security was controversial from the start

Not everyone supported Social Security when it was created. Business groups worried about the payroll tax. Some politicians said the government should not run such a program. Others argued that the benefit amounts were too low or that the program should cover more people.

The Supreme Court tested the law's legality. In 1937, in the case Steward Machine Co. v. Davis, the Court ruled that Congress had the power to create Social Security and that the payroll tax was constitutional. That decision settled the legal question, though political debate about the program's size and scope has continued ever since.

A separate debate involved who was covered. The original law left out farm workers and domestic workers, groups that included many Black Americans in the South. Congress gradually expanded coverage over the decades, but these exclusions meant that many workers did not build up Social Security credits in the early years.

How Social Security changed after 1935

The payroll tax rate has risen many times since 1935. It is now 12.4 percent total (6.2 percent from the worker, 6.2 percent from the employer). The age at which workers can claim full retirement benefits has also changed. For workers born in 1960 or later, the full retirement age is 67, not 65. Congress raised it gradually starting in 1983.

The benefit formula has been adjusted many times. Congress has also added cost-of-living adjustments, or COLAs, so that benefits keep pace with inflation. In 1972, Congress made COLAs automatic, meaning they happen every year without a new vote.

The trust fund itself has faced challenges. In 1983, the program was running short of money. Congress raised the payroll tax and changed the rules about how benefits are taxed for higher-income retirees. These changes were meant to keep the program solvent for decades. Today, the trust fund is again facing long-term funding questions, and Congress periodically debates how to address them.

Frequently Asked Questions

Did Roosevelt invent the idea of Social Security?

Roosevelt did not invent the concept. Germany created a social insurance system in the 1880s under Otto von Bismarck. Britain had unemployment insurance. Roosevelt and his advisors studied these programs and adapted the idea for the United States. Frances Perkins and the Committee on Economic Security designed the specific structure that became American Social Security.

Why did Social Security exclude farm and domestic workers at first?

The original law was written to cover workers in industry and commerce. Farm and domestic workers were left out partly because they were harder to track and collect taxes from, and partly because of political pressure from Southern lawmakers who did not want the program to cover Black workers in those occupations. Coverage expanded gradually over decades.

Has Social Security always worked the same way?

No. The original program in 1940 only paid retirement benefits to workers over 65. Disability benefits were added in 1956, and survivor benefits were expanded in 1965. The payroll tax rate, the full retirement age, and the benefit formula have all changed multiple times since 1935.

What would have happened if Social Security had not been created?

Without Social Security, older Americans would have relied on family support, private pensions (which were rare), personal savings, or continued work. Many would have lived in poverty. Some states had their own old-age information programs, but they were small and varied widely. Social Security created a national floor of income for the first time.