Social Security

A Brief History

Social Security was signed into law in 1935. At the time, its focused on providing for certain Americans in need of assistance, and it provided retired people, aged 65 and older, with an income. Up until 1940, recipients received their funds in one large payment, unlike the monthly payments recipients receive in today. In 1956, disabled workers and children began to receive benefits. In 1961 the eligible age for retirement benefits was lowered to 61, although this change only applied to men, since women had been given this option a few years earlier.

In the 1960’s, the government added medical benefits in the form of Medicare, which was designed to allow program recipients access to medical care. The 1970’s brought with it an automatic cost of living allowance every year, in order to keep payments in line with inflation, and in the 1980’s Social Security had its first viable encounter with a financial predicament.

Social Security Today

Several reforms from the Clinton administration in the early 2000’s made changes to the regulations surrounding monetary benefits. Nowadays recipients can continue to work while receiving benefits, whereas previously recipients would receive reduced benefits if they chose to continue working. When George W. Bush entered the presidential office, he created a commission to explore various methods of strengthening Social Security, citing growing concern over the programs financial sustainability.

People who receive benefits now, or who are close to being eligible to receive benefits, are not likely to be effected by the predicted shortfalls, but some experts claim there is a viable likelihood that benefits will eventually run out as more and more people retire.

Numbers and Fraud

Social Security numbers were first issued in 1936. Back in those days, they had no way of knowing that in the future these numbers would be highly sought after by unscrupulous people intent on stealing other people’s identities. There are several steps consumers can take in order to protect their number from theft, including:

• Not carrying the number in a wallet
• Shredding any documents containing personal financial information
• Never giving a number to an unknown source
• Remaining vigilant regarding who has access to all personal information

Contrary to popular belief, two people are occasionally issued the same number. These errors can be corrected, but they must be reported first.

What the Future Holds

Social Security will undoubtedly require some type of reform in the future; otherwise, people who are now in their thirties will receive reduced benefits in their sixties, with benefits steadily decreasing as the years pass. Social Security taxes are likely to steadily increased in order to handle all the outgoing payments. Many financial experts have laid out their own reform plans, but so far, most reform plans have been met with great resistance from the general public.

The very best thing for Americans to do is to create their own retirement plans and not count on government facilitated programs the sole source of retirement income. The Social Security Administration recommends people rely on three sources of retirement income:

• Pension plans
• Personal savings accounts
• Social Security benefits

Despite the panic, it is likely this benefit will still be in place when today’s graduates retire, but in all likelihood, it will have been reformed many times before then and will probably not pay out the same amounts in benefits as it does now.