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.
In the original incarnation of the bill, Social Security benefits were only to be paid to the primary worker. But, before the bill went live, additional benefits for the spouse and children were added.
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.
Every new generation of workers is obligated to care for the previous generation’s retirees. The sum of money that you eventually receive from the government has only a slight relationship to the amount of money that was withheld from your check over the years. From the very beginning, the system has collected over 9 trillion dollars from contributors and paid them out to recipients.
