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History and Facts about Social Security

At Newmyer Wealth Management, we are frequently asked about Social Security and I thought it may be fun to share some history and facts about Social Security.


General Advice on When to Start Social Security Benefits

 

My general advice is to wait until age 70 to maximize your benefits because of the additional benefits you could receive.  This advice is based on several factors, including your current age, potential life expectancy, employment status, accumulated assets, and your need for benefits to cover regular expenses.  Each situation is unique, so personalized advice is essential.


Understanding the Social Security System

Here are some key points about the history and structure of Social Security:


  • Origins: The Social Security Act was signed into law by President Franklin D. Roosevelt in 1935.

  • Initial Taxation: Social Security taxes began in 1937, with employees and employers each paying 1% of the employee's income.  Monthly benefits started in 1942.

  • Account Funds: The Act established two provisions for aid: "Grants to States for Old-Age Assistance" and "Federal Old-Age Benefits."

  • Eligibility: Initially, benefits were available to those who reached age 65 or January 1, 1942, whichever was later.

  • Life Expectancy in 1935: At the time, the average life expectancy was 60 years for men and 64 years for women.

  • 1939 Amendments: These added benefits for spouses and minor children of retired workers (dependents' benefits) and survivors' benefits in case of a worker's premature death.

  • 1954 and 1960 Amendments: These introduced a disability insurance program, initially for workers aged 50-64 and disabled adult children, later expanded to include disabled workers of any age and their dependents.


A Word from President Roosevelt

When signing the Social Security Act on August 14, 1935, President Roosevelt said: “We can never insure one hundred percent of the population against one hundred percent of the hazards and vicissitudes of life, but we have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age.”


This program was visionary for its time. Initially, few people reached the age of 65 to collect benefits, given the lower life expectancy.  Today, life expectancy has increased by approximately 10 years for men and 12 years for women, putting more strain on the Social Security system as more people live longer and collect benefits for extended periods.

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