“Social Security” is a foreign and scary phrase for many young people. Though many of said young people may have a Social Security card, odds are most can’t say exactly what purpose it serves, or how it benefits them. However, the program is an important foundation of American financial coverage, and key to planning for the future.
Over 80 Decades of Coverage
The concept of Social Security officially started in 1935, when President Franklin D. Roosevelt signed the Social Security Act. The legislation was supposed to provide coverage for elder, unemployed and handicapped citizens. In a society where, if you could not work, you could not survive, the Act was supposed to be a safety net for all of those that were unable to make money on their own. Soon after, everyone who needed assistance got a number, from the same number system that’s on today’s Social Security cards.
Social Security was not the first kind of program to provide financial assistant to those in need. After the Great Depression, when many Americans were struggling, some private companies did their best to cover expenses where needed. Still, it was not a government-wide program, because the government itself did not have enough money to really help its citizens.
FDR’s Social Security to Trump’s
Social Security has changed a lot since the Act was signed, 84 years ago. The Social Security Act established the Social Security Board, to administer funds and take care of all of the administrative business. Since 1946 and to this day, the Board has been replaced by the Social Security Administration, which is the place one would go to in order to obtain or replace a Social Security card.
Today, Social Security administers three major programs: retirement, survivors, and disability, in addition to running Medicare, a healthcare program for older Americans. One would get money from the program by being either over 65, a war veteran, or having a certified disability making them unable to work. The money to support all of those people comes from the working population’s payroll taxes. Over the years, the Social Security Trust Fund has done a good job for a long time at accumulating a surplus. However, the fact that so many baby boomers are now retiring and needing funding, and also that people are on average living longer, is making the trust lose money quickly.
Also, because money for Social Security comes from people who are able to work, you need a Social Security card in order to legally be employed in the United States. That way, your employer can use your information to take out taxes, part of which go to the Federal Insurance Contributions Act, the Act that essentially collects money for Social Security and Medicare.
What’s in store for you?
If you are not currently benefiting from Social Security, odds are you will eventually, when you retire. Though the program is losing money, and will face an arduous future, it is likely to continue. Research says that, when today’s teenagers retire, they will most likely get about 3/4 of what retirees are getting today. So, you might not be getting the long end of the stick, but it won’t be nothing either. The best way to prepare for your future retirement is to start saving as soon as you get regular income, to ensure that you are covered in case you are not able to work anymore.