Social Security started on August 14, 1935, when President Franklin D. Roosevelt signed the Social Security Act into law during the depths of the Great Depression. Payroll tax collection began on January 1, 1937, and the first recurring monthly benefit check was issued on January 31, 1940. What launched as a retirement program for workers in commerce and industry has grown, through a series of major amendments, into the retirement, disability, survivors, and health insurance system that touches nearly every American household today.
The Social Security Act of 1935
By the mid-1930s, the Depression had wiped out the savings of millions of families. Banks had failed, unemployment was staggering, and older Americans who could no longer work had almost nowhere to turn. Congress responded with the Social Security Act, which Roosevelt signed on August 14, 1935, as Public Law 74-271.1Social Security Administration. Social Security Act of 1935 The law created a system of federal old-age benefits funded by payroll taxes on workers and their employers.
The original act did more than set up retirement benefits. It also authorized federal grants so states could run unemployment compensation programs, provide aid to dependent children, and support maternal and child welfare.1Social Security Administration. Social Security Act of 1935 It was the first time the federal government took direct responsibility for the financial welfare of the aging population.
Coverage was limited at the start. The 1935 law only reached workers in commerce and industry, leaving out roughly half the jobs in the American economy. Agricultural workers, domestic workers, the self-employed, casual laborers, and people working for nonprofits fell outside the system.2Social Security Administration. The Decision to Exclude Agricultural and Domestic Workers from the 1935 Social Security Act Congress did not begin closing those gaps in earnest until the 1950 and 1954 amendments extended coverage to roughly 10 million additional workers, including self-employed farmers and additional farm and domestic employees.3Social Security Administration. Special Collections – Social Security History
First Payroll Taxes in 1937
Turning the law into a working program took time. The Social Security Board, created by the act, had to assign a unique identification number to every covered worker so the government could track lifetime earnings.4Social Security Administration. Organizational History Those nine-digit Social Security numbers quickly became the backbone of the system.
Payroll tax collection began on January 1, 1937. The initial rate was one percent withheld from the worker’s pay, matched by one percent from the employer, applied only to the first $3,000 of annual wages.5Social Security Administration. FICA and SECA Tax Rates The most any worker could owe in a year was $30. The money flowed into dedicated trust accounts, keeping the program self-financed rather than dependent on general tax revenue.
The First Benefits: Lump Sums, 1937 to 1939
Benefits started flowing almost immediately after taxes began, but not as the monthly checks people picture today. From January 1937 through December 1939, the only payouts were one-time lump sums for workers who had contributed to the system but reached retirement age before monthly payments were scheduled to begin.6Social Security Administration. Social Security History FAQs The amounts were small, calculated as a percentage of total covered wages.
The very first recipient was Ernest Ackerman, a Cleveland streetcar motorman who turned 65 one day after payroll taxes took effect. His wages for that single day were $4.96, and the Social Security tax withheld was five cents. He applied for and received a lump sum of seventeen cents, representing 3.5 percent of his covered earnings.7TIME. Social Service: Lump Sum Thousands of other workers received similar small settlements during this startup phase while the government built up reserves to sustain ongoing monthly payments.
Monthly Checks Begin in 1940
The 1939 amendments to the Social Security Act reshaped the program from a retirement savings plan for individual workers into a family economic security system.8Social Security Administration. 1939 Amendments Two changes stand out.
The amendments moved the start date for monthly benefits from January 1942 to January 1940, getting regular checks into retirees’ hands two years ahead of schedule.9Social Security Administration. Social Security 1939 Amendments They also added two new categories of benefits: payments to the spouse and minor children of a retired worker, and survivor benefits paid to a worker’s family if the worker died.8Social Security Administration. 1939 Amendments
Ida May Fuller of Ludlow, Vermont, became the first person to receive a monthly Social Security check. Check number 00-000-001, dated January 31, 1940, was for $22.54.10Social Security Administration. Ida May Fuller – Social Security History Fuller lived to 100 and ultimately collected far more in benefits than she ever paid in taxes.
Disability, Medicare, and SSI Come Later
The Social Security most Americans know today was built in stages. For its first two decades, the program only paid benefits to retired workers and their families. Workers who became too disabled to hold a job before reaching retirement age were out of luck. That changed on August 1, 1956, when President Eisenhower signed the Social Security Amendments of 1956, creating Social Security Disability Insurance.11Social Security Administration. Social Security and the “D” in OASDI: The History of a Federal Program Insuring Earners Against Disability The first disability checks went out in July 1957, and Congress broadened eligibility in 1960 by removing the age-50 minimum.12Social Security Administration. Social Security Amendments of 1956: A Summary and Legislative History
Health insurance joined the system next. On July 30, 1965, President Lyndon B. Johnson signed the Social Security Amendments of 1965, adding Medicare as Title XVIII of the Social Security Act to provide hospital and medical insurance for Americans 65 and older. Medicaid, a separate program administered jointly with the states, extended health coverage to low-income individuals and families.13National Archives. Medicare and Medicaid Act (1965)
For Social Security’s first 35 years, benefit amounts stayed fixed unless Congress voted to raise them. In 1972, President Nixon signed Public Law 92-336, authorizing automatic annual cost-of-living adjustments beginning in 1975.14Social Security Administration. Social Security History The same 1972 legislation created Supplemental Security Income, a federally administered program providing cash assistance to aged, blind, and disabled individuals with limited income and resources. SSI took effect on January 1, 1974, and, although the Social Security Administration runs it, the money comes from general tax revenue rather than the Social Security trust funds.15Social Security Administration. 1972 Social Security Amendments
Where Social Security Stands Today
What began as a modest retirement program covering roughly half the workforce now pays retirement, disability, and survivor benefits to about 71 million people. The payroll tax rate is 6.2 percent from the worker and a matching 6.2 percent from the employer, applied to earnings up to $184,500 in 2026. A worker at or above that ceiling pays $11,439 in Social Security taxes for the year.16Social Security Administration. Contribution and Benefit Base The COLA for 2026 is 2.8 percent.17Social Security Administration. Social Security Announces 2.8 Percent Benefit Increase for 2026
The program’s long-term finances are a real concern. According to the 2025 Trustees Report, the Old-Age and Survivors Insurance trust fund can pay full scheduled benefits until 2033. If the OASI and Disability Insurance funds are considered together, the combined reserves last until 2034. After depletion, incoming payroll taxes would still cover a significant share of promised benefits, but not all of them.18Social Security Administration. Trustees Report Summary Congress would need to act before then to avoid automatic benefit cuts.