It’s hard to believe that Social Security has been with us for over sixty years – before there was even such as thing as a 401 retirement plan. The first Social Security check went out in the mail in 1940 even though President Roosevelt had signed the Social Security Act into law, five years earlier. Since then, many American seniors have been thankful to receive that monthly financial safety net as they entered their retirement years.
Originally, in the first version of the bill, Social Security benefits were to be paid solely to the principal worker. But, prior to the bill going live, additional benefits for the spouse and child dependents were included.
Quite a few folks erroneously think that the Social Security system is equivalent to an investment annuity, in which you send money to the government. They will then invest it and give you the resulting income in monthly payments for the rest of your life. In fact, however, the system is closer to a government welfare program. The collection of payroll taxes , which finances the Social Security program, is managed under the authorization of the Federal Insurance Contributions Act, better known as FICA. FICA is like the enforcement arm of the system. It ensures that every worker “contributes” his or her fair share to the government pool.
Each new generation of workers is responsible for taking care of the previous generation’s retirees. The amount of money you eventually get back from the government has only a tenuous relationship to the amount of money that was deducted from your check over the years. Since it’s inception, the system has collected from contributors and paid out over nine trillion dollars to recipients.