A Short History of Social Security in the USA: Background information when reading Boomsday

A Short History of Social Security in the USA

This article relates to Boomsday

• The Social Security Act was signed into law by President Roosevelt on August 14, 1935.
• In the 1960s the age when men were eligible for retirement benefits was lowered to 62 and health coverage was extended to Social Security beneficiaries aged 65 or older.
• One in six Americans (45 million) receives a Social Security benefit, almost 1 in 3 beneficiaries are not retirees.
• About 98% of all workers are in jobs covered by Social Security.
• In 1985 the Social Security Trust Funds were moved "off-budget" so that the funds earmarked for the Social Security system would be tracked separately from the rest of the budget.
• In 1996 the Social Security Trustees' Report stated that the Social Security system would start to run deficits in 2012, and the trust funds would be exhausted by 2029.
• Social Security is the single largest item in the federal budget, consuming over 22% of total expenditures (17% of the budget is spent on national defense, 0.5% is spent on training and employment, and 2.5% is spent on food and nutritional assistance).
• In 1999 the Social Security Retirement System's unfunded liability increased by $752 billion year on year to $19 trillion.
• Social Security surpluses will continue until 2014, at which time the program will no longer take in enough money to cover benefits. The government will have borrowed over $3 trillion from the trust funds. To repay the $3 trillion, the government will have to either cut spending by $3 trillion, raise taxes on every family in America by $43,000, or increase the national debt by an additional $3 trillion ($3 trillion is, incidentally, a lower estimate of the cost of the War in Iraq to mid 2008 which, if invested in Social Security, could have shored up the system for 75 years).
• The worker-to-beneficiary ratio has fallen from 16.5-to-1 in 1950, to 3.3-to-1 today. Within 40 years it will be 2-to-1.
• The % of taxable earnings contributed to Social Security has risen from 1% in 1956 to 10% in the 1970s, and is now at 15.3%, and likely to rise again soon.
• The USA is not alone - most countries in Europe, as well as Japan, have problems equally or more serious than the USA.

Information primarily from the official website of the US Social Security Administration, specifically the history and Q&A pages.

Filed under Society and Politics

This "beyond the book article" relates to Boomsday. It originally ran in April 2007 and has been updated for the May 2008 paperback edition. Go to magazine.