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What is Social Security?

By Jane Harmon
Updated May 16, 2024
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Social Security is a mandated supplemental retirement system in the US that was established in 1935 as part of Franklin Delano Roosevelt's New Deal. It was motivated largely by the events of the Great Depression, which saw many Americans out of work and the nation's retired elderly often left in the direst of poverty. The intent of the program is to ensure a threshold subsistence level below which any worker who had paid into the program cannot fall.

The Social Security program is funded out of payroll taxes; that is, a certain percentage of a worker's paycheck goes directly into the a fund to help provide benefits to current recipients. This has in recent years become a bone of contention with some current workers, who complain that the system is unsustainable and that after paying into the system their entire working lives, there will be nothing for them to collect in their own retirement years.

Social Security has long been the so-called "third rail" of American politics, an analogy to the electrified third rail on the subway systems. Touch it and you're dead. It is an enormously popular program to a very large and powerful portion of the electorate — the retired and the soon-to-be-retired. Any attempt to change the program runs the risk of incurring their wrath, and elected officials are notably reluctant to anger such a powerful group of voters.

Recent attempts to put the program on a more sustainable footing centered on the notion of privatizing it. That is, it was suggested that workers be allowed to invest their own contributions in the stock market, opting out of the defined benefits of the system in favor of a defined contribution system. One major defect in this proposal is that it never addresses the issue that caused the creation of the Social Security system in the first place — that is, what happens in economic hard times when the payouts from one's private investments diminish or there are widespread business failures that leave retirees with no income at all?

Rhetoric aside, the Social Security system is more solvent than the system reformers would like you to believe. Current estimates are that funds flowing into the system will be greater than or equal to funds flowing out of the system for several decades. Recent shortfalls in private retirement plans, such as those being experienced by the major airlines, have made it clear that whether or not privatizing the program is a good idea, it is certainly politically impossible right now.

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Discussion Comments
By anon261574 — On Apr 16, 2012

The Social Security system as it is, is flawed, because of the fact that the baby boomers are all becoming retirees. Consequently, our current work force will have to try and meet demands that are extremely high. Because of that the current workforce is going to have a hard time paying for their own Social Security, which in the future could be a huge problem.

By anon128061 — On Nov 18, 2010

How can someone who has never worked in the USA get a SS check each month larger than someone who worked and spouse worked. Now this person came from Portugal to Canada to the USA.

By anon125171 — On Nov 08, 2010

I don't believe that the government should make us pay into S.S. They just want to borrow money from us.

By laluna — On Oct 31, 2010

Social Security benefits are not meant to be the sole retirement plan, that should be obvious to everybody. It should be only one small part of a well planned retirement.

The second part is the retirement savings accounts and various investments, and the third one is a pension from the place of work.

We simply do not put enough money into the system, and yet we expect to receive benefits for the rest of our lives.

The money has to come from somewhere, right? If more money is taken out than put in, eventually there will be no money left. There are many reasons why more money is taken out.

1. People live much longer, on average, and receive benefits for many years, for decades, as a matter of fact and receive Social Security benefits.

2. Social Security makes payments to disabled people

3. Social Security pays for minors if a parent dies.

4. Part of Social Security money is allocated for medicare.

At this point a worker puts in about 15% (sometimes split between the company and the worker), and in the past the percentage was much lower.

It is a very simple math, no magic to actually figure this out.

By anon122145 — On Oct 26, 2010

Re: Ahna- your senator says such a thing because he's ignorant and wants to scare you. He is wrong. Did you read this article?

By anon117923 — On Oct 12, 2010

what a bunch of whining uneducated greedy and ignorant comments i have read here today. it is not the government who is "taking over." the government is responsible for providing, balancing and preserving this system.

if you really need to know who is abusing this system, it's the doctors and the lawyers and the ridiculous health care organizations that provide minimal health care to its patients and then hit the taxpayer hard. we blame the people for a prescription drug problem in america but nobody stops to realize that those drugs would never be on the street if it wasn't for a doctor to write that prescription.

it has always been the rich surviving off the poor in this country. it took me five years to get my benefits and in a period of five years my health care professionals raped the taxpayer good and hard and never diagnosed my stage 4 melanoma cancer.

i got that wonderful news once i actually got my benefits and was able to choose my own doctor. by the way there is a cure for cancer: it's called early detection. unfortunately, i guess the way the health care system is set up i didn't have the option of having educated doctors who could have recognized that.

these people raped my government and they literally killed me. just remember this: the doctors responsible for flooding our cities with prescription drugs are the same people who are taking advantage of the welfare, medicare and ssi money. i have medical records to prove it. Anyway, at least I'm not a sheep being led off to the slaughter house anymore. may god bless america before it's too late.

By anon104995 — On Aug 18, 2010

Social security is a rip off. You are paying for people sitting on their lazy butts who claim they can't work because they say they are disabled. People, something needs to be done about this.

Social Security is a confused system. I am disabled and I am getting the run around, but as long as they get paid, they are not worried about you.

By anon92224 — On Jun 26, 2010

Social Security is a good thing for many people. Even with it there are still many that are living under the poverty line. Yet is has gotten bad that many senior citizens are having to stay working longer or find a part time job just to survive. And the US is supposed to be the richest country.

There are people in third world ones who are better off then us; especially with health care. Many people put money into a retirement fund, so they cannot get SS. Why not, when some actually do both? Then there would be more money going around for everyone.

By anon89237 — On Jun 09, 2010

The so-called IOU's in the SS Trust Fund are Treasury bonds. Retirement payments are from what workers have paid into most of their lives. If the government reneges on their obligations, so much for the full faith and credit of the U.S. govt. Savings bonds and other treasury bonds would also be subject to the same sort of robbery by the government.

Be afraid. Be very afraid!

By anon81468 — On May 01, 2010

To number 64802. We all have worked hard to make a living and money was also taken from my pay check to support the "older generation". That's the way the system works. It is your generation now that has squandered the social security. Hopefully there will be enough for you to retire on. Good luck.

By anon71251 — On Mar 17, 2010

I think social security is well needed in our society. Some consumers have need for this assistance.

By anon64802 — On Feb 09, 2010

I want to know what do they plan to do about social security being discontinued for our current generation which the funds are being taken out of our pay checks on every pay period. I mean we all worked hard and I'm sure none of us have worked hard just to support our older generations, just to be left alone to fend for ourselves when we are basically be robbed.

I mean, think of it: They are taking money out of our checks which is supposed to be set aside for us to live off of when we can no longer work. we need to do something about this.

By anon58782 — On Jan 04, 2010

i like this article. thank you very much.

By anon53109 — On Nov 18, 2009

I think what he was getting at is that SS is not meant to be the backbone of retirees. it is designed to be like a floor in which those who paid into ss cannot fall below a particular yearly income.

It was part of the New Deal because so many elderly were falling into deep poverty during the Great Depression so this was made to ensure that they could never fall below a particular point.

It was never intended to replace mature, responsible saving.

By anon36568 — On Jul 13, 2009

Steve Kagen can say something like this cause he is great.

By ahna — On Oct 18, 2008

Seems everyone over age 55 is contacted by AARP. I became a member too. Is AARP liberal or am I just imaging things?

By ahna — On Oct 18, 2008

I come from the state of Wisconsin and our current Senator, Steve Kagen says that social security was never intended for our retirement? I watched a video where he stated this and wonder how he could say such a thing. I know s.s. was part of Roosevelt's doing and I've always believed its sole intention was a retirement funding for the retired. One third of people over 65 rely on S.S. for 90% if their income so how can a Senator say such a thing????

By mendocino — On Mar 16, 2008

Social Security Administration has bilateral pension agreements with a number of countries, such as Italy, Austria, Belgium, and others. If a person has worked in any one of those countries (there are about 21 countries in all at this time) he or she might be eligible for retirement benefits from that country.

A form has to be filled and submitted to Social Security office with necessary documentation. Social Security will forward all paperwork to the country in question. When approved, you get notified directly by the country you have been employed by.

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