Franklin D. Roosevelt created Social Security in 1935 during the Great Depression

Social Security began as part of President Franklin D. Roosevelt's New Deal, a set of programs designed to help Americans survive the economic collapse of the 1930s. The program was signed into law on August 14, 1935, as the Social Security Act. At that time, most older Americans had no retirement income, no savings, and no family safety net. Many worked until they could no longer physically do so, then relied on charity or their children to survive.

Roosevelt's administration saw Social Security as a way to give workers a may provide income in old age and to provide support during unemployment. The program was controversial — some people thought it was too radical, while others believed it did not go far enough. But Congress passed it with strong support, and it became one of the most significant laws in American history.

Key Takeaways

  • Social Security was created in 1935 as part of President Roosevelt's New Deal response to the Great Depression.
  • The original program provided retirement income for workers age 65 and older, funded by payroll taxes on current workers.
  • Disability and survivor benefits were added later, in 1956 and 1939 respectively, expanding the program beyond retirement.
  • The program was designed to replace the lost income of workers who could no longer earn wages due to age, disability, or death.

Why the government created Social Security

Before 1935, retirement was a private matter. Workers saved their own money, or they did not retire at all. Many people worked into their 70s and 80s because they had no choice. When the stock market crashed in 1929, millions of Americans lost their savings overnight. Elderly people who had managed to save found their money gone. Younger workers lost their jobs and could not support aging parents.

Roosevelt and his advisors believed the government had a responsibility to prevent destitution in old age. They also saw Social Security as a way to boost the economy — by providing income to retirees, the program would put money in the hands of people who would spend it, creating demand for goods and services. This would help businesses hire more workers and recover from the Depression.

How the original Social Security program worked

The first Social Security checks went out in 1940, five years after the law was signed. The program was funded by a payroll tax — workers and employers each paid a small percentage of wages into a trust fund. When a worker turned 65, they could start receiving monthly payments based on how much they had earned and paid into the system.

The original program only covered retirement. It did not include disability or survivor benefits. A worker had to be at least 65 years old to receive payments, and the average first check was about $22.54 per month — roughly $500 in today's money. The program was designed so that current workers' taxes paid the benefits of current retirees, a system called "pay-as-you-go" that still operates today.

When disability and survivor benefits were added

Social Security expanded beyond retirement in 1939, just four years after it started. Congress added survivor benefits, which meant that if a worker died, their widow, widower, or children could receive payments. This recognized that workers needed protection not just in old age, but also when they died and their families lost their income.

Disability benefits came later, in 1956. This was a major change because it meant the program was no longer just about old age — it now covered workers who became unable to work due to injury or illness before they reached retirement age. Over time, Social Security evolved from a single retirement program into a broader system of income support for workers, retirees, disabled people, and families who had lost a wage earner.

How Social Security changed over the decades

The payroll tax rate has changed many times since 1935. When the program started, workers and employers each paid 1 percent of wages. Today, the rate is 6.2 percent for each. The age at which people could start receiving full retirement benefits also changed — it was 65 when the program began, but it has gradually increased to 67 for people born in 1960 or later.

Congress has also expanded who is covered by Social Security. Originally, the program excluded farm workers, domestic workers, and the self-employed — groups that were disproportionately Black and Latino. Over the following decades, coverage was extended to nearly all workers. The program has also adjusted benefits to account for inflation, so that retirees' purchasing power does not decline over time.

The trust fund and long-term challenges

Social Security is funded by current workers' payroll taxes, which go into two trust funds: one for retirement and survivor benefits, and one for disability benefits. For most of the program's history, more money came in than went out, and the surplus was invested in U.S. Treasury bonds. This reserve was meant to handle years when more people were retired than working.

In recent years, the program has faced pressure because the population is aging — there are more retirees and fewer working-age people to support them. The trustees of Social Security have warned that without changes, the trust funds will eventually run out of reserves. However, even if reserves are depleted, the payroll tax would still bring in enough money to pay most benefits — not all, but most. Congress has not yet made permanent changes to address this long-term challenge.

Frequently Asked Questions

Was Social Security the first government retirement program in the world?

No. Germany created the first government-run retirement program in 1889 under Chancellor Otto von Bismarck. However, Social Security was the first major retirement program in the United States, and it became a model that many other countries copied or adapted for their own systems.

Did Social Security start paying benefits right away in 1935?

No. The law was signed in 1935, but the first Social Security checks were not sent out until January 1940. The five-year delay allowed the government to set up the administrative system, collect payroll taxes, and build up reserves before payments began.

Could everyone receive Social Security when it started?

No. The original program excluded farm workers, domestic workers, railroad workers, and the self-employed. These exclusions meant that many Black workers and Latino workers were left out. Coverage was gradually expanded over the following decades to include nearly all workers.

Why did the government choose age 65 as the retirement age?

When Social Security was created, life expectancy in the United States was around 60 years. Setting the retirement age at 65 meant that relatively few people would live long enough to collect benefits. The age was partly chosen for financial reasons — it kept the program's costs lower in the early years.

Has Social Security ever run out of money?

The trust funds have never been completely depleted, but they came close in the early 1980s. Congress raised payroll taxes and made other changes to shore up the system. Today, the trustees project that the reserves will be exhausted sometime in the 2030s if no changes are made, but payroll taxes would still cover most benefits.