Social Security Act

President Franklin Roosevelt signed the Social Security Act on August 14, 1935, during the Great Depression, when about half of older Americans lived in poverty. It created old-age insurance funded by payroll taxes on workers and employers, along with unemployment insurance and aid to poor families and older adults. The first regular monthly checks went out in January 1940. Amendments in 1939 added benefits for spouses, children, and survivors.

Later amendments added disability insurance in 1956, Medicare and Medicaid in 1965, and in 1972 automatic cost-of-living raises and Supplemental Security Income. The 1983 amendments, passed with bipartisan support when the program was near insolvency, raised payroll taxes, began taxing some benefits, and gradually raised the full retirement age from 65 to 67. In January 2025 the Social Security Fairness Act ended two provisions that had reduced benefits for about 3 million people with government pensions.

Workers and employers each pay 6.2 percent of wages up to a cap, 184,500 dollars in 2026 and 192,300 dollars in 2027, and about 70 million people receive benefits. The 2026 trustees report projected the retirement trust fund would run short in 2032, after which incoming taxes would cover about 78 percent of benefits unless Congress acts. Proposals range from raising or removing the wage cap and raising taxes to raising the retirement age, changing the benefit formula, or investing funds differently.