Happy 90th Birthday – Social Security

On August 14, 1935, President Franklin D. Roosevelt signed the Social Security Act into law. Ninety years later, on August 14, 2025, the nation paused to honor its legacy. In his original signing statement, Roosevelt called the act “a cornerstone in a structure which is being built but is by no means complete.” He was right.

For nine decades, Social Security has stood as one of America’s most enduring promises: that after a lifetime of work, citizens should not face old age in poverty. Today it pays benefits to more than 72 million Americans — retirees, disabled workers, and survivors — distributing over $1.6 trillion annually. Yet its future is clouded by financial strain, demographic shifts, and political gridlock. As we celebrate its 90th birthday, the question looms: will Social Security be strong enough for its 180th?

From the Great Depression to Today: A Brief History

Social Security was born in the depths of the Great Depression, when one out of every two elderly Americans lived in poverty. Influenced by grassroots pressure like the Townsend Plan and fueled by Roosevelt’s New Deal, Congress crafted a federal insurance system to provide retirement benefits funded by payroll contributions.

Key milestones along the way include:

• 1939 Amendments: Extended benefits to spouses, widows, and dependents, making it a family-based program rather than an individual one.
• 1965 Amendments: Introduced Medicare and Medicaid, expanding the safety net for health care.
• 1972 Reform: Added automatic cost-of-living adjustments (COLAs) tied to inflation, ensuring benefits kept pace with rising prices.
• 1983 Amendments: A bipartisan rescue under President Reagan and Speaker Tip O’Neill. These changes gradually raised the full retirement age, increased payroll taxes, and extended coverage to more federal workers. They temporarily restored solvency but foreshadowed today’s challenges.
• 2025 Social Security Fairness Act: Repealed the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO), restoring benefits for millions of public-sector retirees. While celebrated for fairness, it also added strain to the trust fund.

From its modest beginnings, Social Security has evolved into the backbone of American retirement — for many, the single largest source of income in old age.

A Human Lens: Ida May Fuller and Today’s Choices

Every program needs a face, and for Social Security that face is Ida May Fuller.

In January 1940, Ida, a retired legal secretary from Vermont, picked up the very first Social Security check: $22.54. She had contributed only $24.75 in payroll taxes but lived to age 100, collecting nearly $23,000 in benefits. Her story captures the insurance nature of Social Security: a community pooling of resources to ensure dignity in old age.

Fast-forward to today, and the questions facing recipients are less about eligibility and more about when to claim.

• Claiming at 62: The earliest possible age, but with a 25–30% permanent reduction. A $2,000 monthly benefit at 67 shrinks to about $1,400–$1,500.
• Claiming at 67 (Full Retirement Age): No reduction, but no bonus either — the full $2,000 in our example.
• Claiming at 70: With delayed retirement credits of about 8% per year, the same worker could boost their monthly benefit to around $2,480 — nearly a 25% increase.

For those with health concerns or limited savings, claiming early may make sense. But there’s another factor too often ignored: the spouse.

When one spouse dies, the survivor inherits the higher of the two benefits. That makes the higher earner’s claiming decision critical. In our example, if the higher earner takes benefits at 62, the widow may be left with $1,400/month. If he delays until 70, she could inherit $2,480/month — a $1,000 difference for the rest of her life.

So when people say, “My family doesn’t live long,” the better question might be, “But what if my spouse does?” Social Security is not just retirement insurance — it is longevity insurance for families.

Current Challenges: The Solvency Squeeze

Despite its success, Social Security faces a stark financial reality. The Old-Age and Survivors Insurance (OASI) Trust Fund is projected to be depleted by 2033 (or 2034 under alternate assumptions). Without reform, benefits will be automatically cut by about 20–23%.

Why? Three forces collide:

1. Demographics: Baby Boomers are retiring, birth rates are lower, and people live longer. In 1950, there were 16 workers per retiree; today there are fewer than three.
2. Economics: Payroll taxes fund the system, but wage growth hasn’t kept pace with benefit promises.
3. Policy choices: Expansions like the 2025 repeal of WEP/GPO and tax relief for seniors, though popular, reduce revenue and accelerate depletion.

The result is a program under strain — still delivering, but on an unsustainable trajectory.

Potential Paths Forward: Securing the Next 90 Years

Reform is not optional. The only question is which combination of changes lawmakers will choose. Options include:

• Raise Payroll Taxes: An immediate increase of about 3.44 percentage points (from 12.4% to 15.84%) would restore 75-year solvency. If delayed until 2034, the required hike grows to over 4 points.
• Adjust Benefits: Gradually raising the full retirement age beyond 67, modifying COLAs, or reducing benefits for high earners.
• Lift the Wage Cap: Currently, only wages up to ~$168,600 (2025) are taxed. Eliminating or lifting the cap could inject substantial new revenue.
• Personal Accounts or Equity Investing: Some advocate investing part of the trust fund in equities or creating optional personal savings accounts. Critics warn this could undermine stability and politicize retirement security.
• Balanced Solutions: Most experts believe the eventual fix will be a blend of tax increases and modest benefit adjustments, much like the 1983 compromise.

Conclusion: A Promise Worth Keeping

At 90, Social Security remains one of the most popular and effective government programs in American history. It has cut elder poverty dramatically, supported widows and orphans, and given generations of workers confidence that their contributions matter.

But anniversaries are not just for celebration — they are also for reflection. Without timely reform, today’s workers could face deep benefit cuts in just a decade. With courage and foresight, we can secure the program for another 90 years.

Ida May Fuller could never have imagined the scale Social Security would reach when she picked up her $22 check in 1940. But she would recognize its purpose: to ensure that no American grows old without dignity. That is a promise worth keeping — for ourselves, for our spouses, and for the generations yet to come.

Anyway, I trust you enjoyed this historical walk thru Social Security.  The bottom line is that Social Security remains the single largest retirement income component for the great majority of American’s, thus it is imperative that people make the correct and educated decision as to when to claim benefits.  Which is why, I still do what I do!