The History of Social Security

As a nation, the United States has long been considered the freest country in the world. Due to America's growing and diverse population, federal programs like Medicare and Social Security were developed to help older working citizens in need. Before the adaptation of these programs, people were unable to get access to things like medical care or even food and housing unless they were able to afford them completely out of pocket in their golden years. Thanks to Social Security, retired Americans now have the ability to get some money from the government. In order to understand how Social Security works, it's important to know more about its history.

The colonists who arrived in America brought much of their experiences from British law with them. Those who were poor and destitute were often forced to live in poorhouses. The idea was to make living in substandard conditions so uncomfortable that it would force those in need to work harder in order to improve their lifestyle. Although wealthier people paid taxes, at the time, this money was not distributed to any kind of assistance programs to help the less fortunate. It was not until much later, during the Civil War, that the first form of aid was doled out by way of paying pensions to soldiers who fought during the war. As the decades progressed, some companies developed pension plans for older employees to help them receive some kind of income once they retired. But there were still no concrete governmental programs in place to help those who could not work and those who were older and had no ongoing income.

The Great Depression of the 1930s created a whole new series of problems for America. Even working-class people found themselves homeless and unable to provide for their families. It was clear that people were suffering and needed a helping hand. In 1933, a California man by the name of Francis Townsend pushed for a plan that would help aging people develop a savings plan. This was known as the Townsend Plan, and it proposed a $200 monthly pension for retired people over the age of 60. The plan was to be funded with the help of a national sales tax. Other similar plans suggested included one by author Upton Sinclair. Some people formed groups to try and rally together to create a national pension plan, but it wasn't until President Franklin D. Roosevelt was in office that an officially adopted measure would be put into place. Originally, the plan was called "social insurance." Workers were able to contribute to a fund that they could take from later in life after retirement.

Social Security was finally put into law in 1935. The purpose was to pay retired workers aged 65 and older an ongoing pension payment so they would be able to continue living without fear of poverty. It even gave the states grants to help assist people with disability and medical care. Because the American population was living longer, Roosevelt knew something needed to be done to help support seniors who had worked their entire lives and helped contribute to society. Originally, Roosevelt assumed the program would only provide temporary relief as more employees would be able to get retirement help thanks to company-founded contributory plans. He assumed that eventually the program would dissolve as the economy improved and people were able to regain well-paying employment. But Social Security stayed, and it has adapted many times over the following decades.

In order to track Social Security payments, a number system was developed so each citizen had some kind of identifier. This number is what we all know as our Social Security number, and this system was first created in 1937. For the next three years, payments were given to people in single lump sums. In 1940, the payments changed over to monthly installments. The program adapted in other ways as well, including paying recipients a cost of living increase as time went on and the addition of the disability payments program in 1954, put forth by President Dwight Eisenhower. Medicare did not come into the picture until 1961, and it helps give Americans aged 65 and older access to health care. Over the next several decades, there have been many different adaptations and changes to the way Social Security benefits are paid and the age of retirement has increased several times, forcing many older Americans to work longer. There has been an ongoing debate over the future of the program and the country's ability to sustain it financially. Currently, some in government want to abolish it completely and return to a more privately funded system, while others feel it should remain in place to help support aging citizens in need. Each camp has their own argument for either cutting the program back or expanding it, and with the national debt at an all-time high, the debate about the future of the Social Security program is one that still rages on today.

For more information about the history, details, and possible future of Social Security, refer to the following resources: