Social Security began in 1935 as a federal insurance program

President Franklin D. Roosevelt signed the Social Security Act into law on August 14, 1935, during the Great Depression. The program was designed to provide income to workers who were retired, unemployed, or unable to work due to disability. The first monthly benefit check went out in January 1940 to a retired worker in Vermont.

The original program was much narrower than it is today. It covered only workers in commerce and industry — not farm workers, domestic workers, or the self-employed. Spouses and children could receive benefits based on a worker's record, but those provisions came later. The program has expanded several times since 1935 to cover more people and more types of benefits.

Key Takeaways

  • Social Security was created by federal law in 1935 and first paid benefits in 1940, making it one of the oldest federal programs still in operation.
  • The program originally covered only certain workers in commerce and industry, excluding farm and domestic workers until later expansions.
  • Survivor benefits for spouses and children were added in 1939, before the program paid its first retirement check.
  • Disability benefits were added in 1956, expanding the program beyond retirement and survivor income.

Why Social Security was created during the Depression

Before 1935, there was no federal safety net for retired workers or people who could not work. Many older Americans lived in poverty. Families were expected to care for elderly relatives, but the economic collapse of 1929 left many families unable to do so. Unemployment was widespread, and there was no national program to help people who lost their jobs.

Roosevelt's administration designed Social Security as an insurance program, not charity. Workers and employers both paid into a fund, and workers received benefits based on what they had paid in. This framing — that you were getting back what you had contributed — made the program politically acceptable at the time. The payroll tax started at 1 percent on both worker and employer, split equally.

How the program changed after 1935

The Social Security Act of 1935 was amended several times in the decades that followed. In 1939, Congress added survivor benefits — payments to the spouse and children of a worker who died. This change happened before the program paid its first retirement check, reflecting a shift in how lawmakers thought about the program's purpose.

In 1956, disability benefits were added, allowing workers under age 65 who could not work due to a medical condition to receive monthly payments. This was a major expansion because it moved Social Security beyond retirement and survivor income into a broader disability insurance program. In 1965, Medicare was created as a companion program, providing health insurance to Social Security beneficiaries age 65 and older.

Coverage also expanded over time. Farm workers and domestic workers were brought into the system in 1950. The self-employed were included in 1954. By the 1960s, Social Security covered most American workers, though some groups — including federal employees with their own pension system and certain state and local government workers — remained outside the program.

The payroll tax and how it funds the program

Social Security is funded by a payroll tax that appears on your pay stub as FICA (Federal Insurance Contributions Act). As of 2024, the tax rate is 12.4 percent of wages — 6.2 percent withheld from the worker's paycheck and 6.2 percent paid by the employer. Self-employed people pay both portions themselves, for a total of 12.4 percent.

The tax applies only to wages up to a certain limit, which changes each year. In 2024, that limit is $168,600, meaning high-income workers do not pay the tax on earnings above that amount. The money collected goes into two trust funds: the Old-Age and Survivors Insurance Trust Fund (OASI) and the Disability Insurance Trust Fund (DI). These funds pay out current benefits and hold reserves.

When you can start receiving Social Security benefits

The age at which you can receive full retirement benefits — called full retirement age — depends on the year you were born. For people born in 1943 or later, full retirement age is between 66 and 67. You can claim benefits as early as age 62, but your monthly payment will be permanently reduced. If you wait until after your full retirement age, your monthly payment increases for each year you delay, up to age 70.

Disability benefits have no age requirement — you can receive them at any age if you have a medical condition that prevents you from working and is expected to last at least 12 months or result in death. Survivor benefits go to your spouse and children regardless of age, though there are limits on how many family members can receive benefits based on your work record at the same time.

How many people receive Social Security today

Social Security is now one of the largest federal programs. As of 2024, over 67 million people receive monthly benefits — retirees, disabled workers, and family members of workers who have died or retired. The program pays out roughly $1.3 trillion per year in total benefits.

For many older Americans, Social Security is the main source of income in retirement. The average monthly benefit for a retired worker is around $1,900, though this varies based on your work history and the age at which you claim. For disabled workers and survivors, the average is lower, typically between $1,200 and $1,500 per month.

Frequently Asked Questions

Did Social Security exist before 1935?

No. Before 1935, there was no federal Social Security program. Some states had their own unemployment insurance programs, and a few large employers offered pensions, but there was no national system. The 1935 law created the first federal program of its kind in the United States.

Who was not covered by Social Security when it started?

The original 1935 law excluded farm workers, domestic workers, government employees, and the self-employed. These groups were added gradually over the next 20 years. Some federal employees and certain state and local government workers still have their own pension systems instead of Social Security.

How much did the first Social Security check cost?

The first monthly benefit check, paid in January 1940, was for $22.54 — a modest amount even by 1940 standards. The recipient was Ida May Fuller, a retired teacher from Vermont. She had paid into the program for only three years before retiring.

Can Social Security run out of money?

The trust funds that pay Social Security benefits have reserves, but those reserves are projected to be depleted sometime in the 2030s if no changes are made to the program. If that happens, incoming payroll taxes would cover only about 80 percent of scheduled benefits. Congress would need to act — either by raising taxes, reducing benefits, or changing the program — to prevent a shortfall.

Is Social Security the same as Medicare?

No. Social Security provides monthly income to retirees, disabled workers, and survivors. Medicare is health insurance for people age 65 and older and some younger disabled people. They are separate programs, though they are often administered together and many people receive both.