Social Security: If It’s Still Around, Wait
Social Security has come a long way. Will it last?
Social Security Act
The Social Security Act was signed into law on Aug. 14, 1935, by President Franklin D. Roosevelt. Social Security calculates benefits on the average of the 35 best earning years. Low or zero earning years will reduce the benefit.
Half of all people begin social security at age 62, which is the earliest possible date. Life-expectancies have increased dramatically over the years, and 50% of the people will live longer than their life-expectancy by definition, and some much longer.
First Social Security Check
The first person to receive a social security payment was Ernest Ackerman, but he did not receive a monthly benefit. During the initial roll-out of social security, between January 1937 and December 1939, people who paid into the system received a lump-sum payment when they retired. Mr. Ackerman got a whopping lump-sum payment of 17 cents. Not bad considering he only contributed a nickel.
First Monthly Social Security Check
Ida May Fuller was the first person to receive a regular monthly social security payment. Her monthly payment was more than Ernest Ackerman’s lump sum. Beginning on Jan. 31, 1940, she received $22.54 each month. She collected benefits (with no payment increase for the first ten years) until she passed away at the age of 100, in 1975.
Disability Benefits
For an adult, disability under social security law is based on one’s inability to work because of a debilitating condition. To be considered disabled, social security must determine that because of one or more disabling conditions you are unable to do the work you previously performed, and unable to adjust to any other work which exists in significant numbers in the national economy. Also, your disability must last, or be expected to endure, for at least a year, or to result in death. Social security pays only for total disability. No benefits are payable for partial disability or short-term disability (less than a year). Although there were discussions about disability benefits between Congress and the White House as early as 1936, social security disability benefits did not become law until 1956.
Supplemental Security Income Benefits (SSI)
Social Security began making SSI payments in 1974. SSI pays benefits to people 65 or older who have low income, limited resources, disabled, or are blind. Learn more about how SSI can help at www.socialsecurity.gov/ssi.
Social Security Number
Until June 2011, the first three digits were assigned based on the geographical region in which the person resided. Generally, numbers were assigned beginning in the northeast and moving westward. So people on the east coast have the lowest numbers and those on the west coast have the highest numbers. The remaining six digits in the number are more or less random and facilitated the manual bookkeeping operations that began with the creation of social security in the 1930s. As of June 2011, all numbers are randomly assigned without regard to region.
Are Social Security Benefits Taxable?
Yes, for some people with higher incomes. About one-third of those receiving Social Security benefits must pay taxes on some of their Social Security benefits, depending on the amount of their taxable income. Learn more at www.socialsecurity.gov/planners/taxes.htm.
Married or Thinking About It?
Spouses leaving the workforce need a minimum of 10 contributing years to earn enough credits to be eligible for social security on their own earnings record. If you remarry before you reach age 60 (or age 50 if disabled), you cannot receive benefits as a surviving spouse while you are married. However, if you remarry after you reach age 60 (age 50 if disabled), you will continue to qualify for benefits on your deceased spouse’s social security record. The “Claim Now, Claim More Later” strategy that many married couples take advantages of currently costs the Social Security Administration, by some estimates, close to $10 billion annually.
When?
A poll conducted by Allianz Life Insurance showed three in five people age 44 to 75 are more afraid of depleting their assets than they are of dying. Once you factor in not just spousal benefits, but also survivor’s benefits, it turns out there are over 70,000 different scenarios by which you might take social security. Singles and couples on average forsake $180,000 and $323,000 by taking social security at age 62 rather than waiting until age 70 for singles; ages vary amongst couples. Nevertheless, 75% of Americans still elect to collect social security at 62.
