Social Security, officially the Social Security Act, was signed into law on August 14, 1935, by President Franklin D. Roosevelt, marking its 90th anniversary in 2025. Below is a concise history of its development, key milestones, and evolution.
Origins and Creation (1930s)
The Great Depression (1929–1939) devastated the U.S. economy, leaving millions unemployed and without a safety net. The Social Security Act of 1935 established a federal program to provide economic security through old-age pensions, unemployment insurance, and aid to vulnerable groups like the disabled and dependent children.
The program aimed to protect workers and retirees from poverty by creating a social insurance system funded through payroll taxes. The Act created the Old-Age Insurance program, which provided monthly benefits to retired workers aged 65 and older. Benefits were funded by a payroll tax split between employers and employees, starting at 1% of wages up to $3,000 annually in 1937.
Early Implementation (1935–1950)
Social Security began collecting taxes in 1937, and the first monthly retirement benefit was paid in January 1940 to Ida May Fuller, who received $22.54. Initially, the program covered only private-sector workers in commerce and industry, excluding agricultural workers, domestic workers, and the self-employed, which disproportionately left out women and minorities. In 1939, the program expanded to include survivors’ benefits and dependents’ benefits, making it a broader family safety net.
Expansion and Reforms (1950s–1980s)
Coverage was extended to farmworkers, domestic workers, and some self-employed individuals in 1950. Benefits were increased, and the cost-of-living adjustment (COLA) concept began to take shape. Social Security Disability Insurance (SSDI) was added in 1956.
Under President Lyndon B. Johnson, the Social Security Act was amended in 1965 to create Medicare, providing health insurance for those 65 and older, and Medicaid for low-income individuals.
Congress introduced automatic cost-of-living adjustments tied to inflation in 1972, ensuring benefits kept pace with inflation.
Facing financial strain due to an aging population and economic challenges, Congress passed major reforms in 1983. These included gradually raising the payroll tax rate, taxing some benefits for higher-income recipients, and increasing the full retirement age to 67.
Modern Era (1990s–Present)
The Social Security Administration’s trust fund has faced long-term solvency concerns due to longer life expectancies, declining birth rates, and a growing retiree population. Projections suggest the Old-Age and Survivors Insurance (OASI) Trust Fund could be depleted by 2035.
Discussions about Social Security’s future include raising the payroll tax cap (currently $168,600 in 2025), adjusting benefits, or increasing the payroll tax rate. Privatization proposals have surfaced but remain controversial.
As of 2025, Social Security provides benefits to about 67 million Americans monthly. The average monthly retirement benefit is approximately $2,000, with a maximum of just over $4,000 for those at full retirement age who earned at the taxable maximum for 35 years.
Impact and Legacy
Social Security remains a critical income source for millions, with about 90% of Americans over 65 receiving benefits. However, its future depends on addressing demographic and fiscal challenges to ensure it remains viable for future generations.
