Social Security

Social Security

Social Security is a public program designed to provide income and services to individuals in the event of retirement, sickness, disability, death, or unemployment. In the United States, the word social security refers to the programs established in 1935 under the Social Security Act. Societies throughout history have devised ways to support people who cannot support themselves. In 1937 the government began issuing Social Security identification cards to all citizens. Each card had a unique number that the government used to keep track of a person’s earnings and the taxes collected from those earnings that went to finance Social Security benefits. The Social Security Act is an act in which taxes would be deducted from workers earnings to finance both old age benefits and unemployment compensation. The government began collecting Social Security taxes in 1937 and putting them in a trust fund. It was a fund that the government could use to pay benefits, cover administrative costs, and invest in securities to earn interest.

Since 1935, the U.S. government has modified the Social Security Act more than 20 times by major amendments. One of the first amendments, passed in 1939, added benefit support for the family members of retired workers and for survivors of deceased workers. In 1956, under President Dwight Eisenhower, the U.S. Congress added monthly benefits for disabled workers to Social Security. Along with the amendment of 1939 for benefits to family members and survivors, this new amendment created the form of Social Security that still exists today, which is known as Old-Age, Survivors and Disability Insurance (OASDI). In 1965, President Lyndon Johnson signed an amendment that created Medicare. Medicare is a program that provides hospital insurance to the elderly, along with supplementary medical insurance for other medical costs. During the 1970s and 1980s, concern arose about the financial integrity of the Social Security trust funds. The balance was shifting between money coming in from taxes and benefits going out of the funds. The administration of President Ronald Reagan passed a set of major legislative changes to Social Security laws in 1983. These changes included the cancellation and, in some cases, taxation of certain benefits. The Congress also improvised a slight increase in the full retirement age, raising it from 65 to 67 for individuals born in 1960 or later. As originally passed, the Social Security Act prohibited payment of retirement benefits to senior citizens who continued to earn income from regular employment. Amendments in the 1950’s, 1960’s, and 1970’s defined specific earnings limits and allowed benefit payments to be reduced rather than entirely eliminated when these limits were exceeded. Since 1983, those 70 or older have been able to continue working without any earnings limits. Amendments to the Social Security Act passed in 1996 relaxed earnings limits for senior citizens who had reached full retirement age. Amendments in 1999 created stronger incentives and better supports for the disabled to engage in productive work. In 2000 Congress entirely eliminated the earnings limit for seniors who had reached the full retirement age, giving more seniors the freedom to work without reducing their Social Security benefits.

Several federal agencies today support and administer the various Social Security programs. The programs associated with Social Security include Old-Age, Survivors, and Disability Insurance (OASDI), Medicare, Unemployment Compensation, and Supplemental Security Income (SSI). For people who have worked for a living, OASDI and Medicare provide support during their older years and when they have stopped working. Unemployment Compensation provides temporary financial help during periods between jobs. SSI provides income to people who cannot work for various reasons. The OASDI program provides benefits for the aged, for the disabled, and for survivors of deceased workers. The rate of these contributions is based on the taxable earnings of employees, up to a maximum taxable amount, with the employer contributing an equal amount. Self-employed people contribute twice the amount levied on employees. In the interests of fairness and saving money in Social Security trust funds, the government has structured Social Security benefits to provide more support to poorer citizens and less to wealthier citizens, in relation to income earned during working years. In other words, those who earned low wages or salaries receive a larger percentage of their former income in benefits than do recipients who had higher incomes. Medicare health insurance for the elderly is split into two parts, hospital insurance and supplementary medical insurance (SMI). Medicare hospital insurance pays for inpatient hospital services, nursing home and hospice care, and home