19 Surprising Facts About Social Security

As the U.S. endures the most significant economic downturn since the Great Depression, at least retirees know they have one well-worn safety net borne from that era: Social Security. Though it remains a lightning rod for criticism in some political circles, it's a crucial chunk of most seniors' retirement income, especially in these uncertain times. Here's a short primer.

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When it was signed into law by President Franklin D. Roosevelt in 1935, the Social Security Act provided retirement benefits only for workers in commerce and industry. Agricultural, domestic, and self-employed workers were initially excluded, as were certain other groups of employees. Survivors' benefits and benefits for dependents weren't added to the program until 1939, and disability benefits weren't added until 1956.

Ida May Fuller, born in 1874, had Calvin Coolidge as a classmate and went on to work as a teacher and a legal secretary. In 1940, she became the first person to receive a monthly Social Security check, in the amount of $22.54. However, the first person to get any Social Security benefits at all was Ernest Ackerman, who retired one day after the program began paying lump-sum benefits in 1937. His payout was 17 cents.

It seems like a no-brainer that the Social Security Administration would be based in Washington, D.C., but it's actually up the road in Baltimore. It's not for lack of trying — the agency's would-be building in the nation's capital was twice swiped by other entities. First, in the mid-1930s, the Public Works Administration moved into a building meant for Social Security. Then, a building finished in 1941 meant for Social Security was instead given to the War Department during World War II.

In 1938, a wallet manufacturer had the not-so-bright idea to use the real Social Security number of a company secretary on a sample card inserted into its wallets. The wallets were sold by Woolworth's, and roughly 40,000 people eventually claimed the number as their own. In fact, a dozen people still claimed the number as late as 1977. (Never fear: The hapless secretary was issued a new number, but not before being harassed by the FBI.)

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Your nine-digit Social Security number may seem random, but assuming you were born before the middle of 2011, the first three digits were determined by ZIP code. The second two digits represented a group number, and the last four digits were a serial number. Today, numbers are randomized in order to combat fraud and identity theft.

It's understandably tough to get a new Social Security number. For instance, you might be issued a new one if you're a victim of identity theft or abuse related to your current number. However, you can also claim "religious or cultural objections to certain numbers or digits." Of course, this goes beyond simply disliking the number 7, for instance — you'll have to provide "written documentation in support of the objection" from your religious or cultural group.

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Though conspiracy theorists are adamant that Social Security numbers are purposefully recycled, the opposite is true: Your number dies with you, at which point it's publicly available via the Social Security Death Index. There are enough numbers to last roughly another century without reusing numbers or changing the current nine-digit system

Social Security was never intended to function as a beneficiary's sole source of income, but the National Institute for Retirement Security has found that 40% of recipients have no other monthly income. Still, Social Security is only intended to replace about 40% of a beneficiary's pre-retirement income.

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Social Security accounted for a whopping $1 trillion, or 23% of the budget, in 2019, according to the nonpartisan Center on Budget Policy and Priorities. In 1940, Social Security was just .29% of the budget, but that number would balloon quickly. It accounted for more than 20% of the budget starting in the mid-1970s.

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A trillion dollars is a ton of money, but keep in mind that the program is almost entirely self-funded, without any significant general revenue funding. Historically, this has always been the case. Moreover, despite theories to the contrary, Congress hasn't actually stolen any money from Social Security, and funds collected from Social Security taxes haven't been used for defense, healthcare, or anything else.

Age 65 has taken on a mythical sense of importance for retirees, and it is still the age when you're eligible for Medicare coverage. But if you want full retirement benefits, the magic number is actually 66 or 67, assuming you were born in 1943 or later. And while it's true that you can opt to receive benefits as early as age 62, the monthly payments will be reduced.

In July 2020, the average Social Security retired worker benefit was about $1,516 a month. How does that stack up with other nations? Not terribly well. For the average worker, that represents about 40% of pre-retirement income, but two-thirds of other developed nations manage to do better, according to the Center on Budget and Policy Priorities. For instance, in Italy, the number is closer to 80%; in France, it's just over 60%.

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Social Security isn't just for older folks. In 2017, the program paid out an average of $2.6 billion every month to more than 4 million children. Kids are eligible for benefits when they have a parent who is disabled, retired, or deceased. These young recipients won't be getting rich off what they receive, however. In July 2020, average benefits ranged from $376 a month for the children of disabled workers to $887 for the children of deceased workers. 

While some people lump Medicare and Social Security together, the former wasn't signed into law until 1965, by President Lyndon B. Johnson. And while the Social Security Administration determines eligibility for Medicare and coordinates enrollment, that's about it. Otherwise, Medicare is administered separately, by the Department of Health and Human Services, and is funded by a separate payroll tax and trust fund.

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Even the Social Security Administration can't resist a good cat video. In 2013, the feds began using cats in YouTube videos to promote how easy it is to apply for benefits online. It seems that retirees can't resist cat videos, either, as the felines have racked up more than 1 million views.

Despite the doom-and-gloom prognosticating of TV pundits, Social Security isn't going "bankrupt." However, it is true that the system's trust fund reserves are expected to be exhausted in 2037, after which point taxes will be able to fund only about 76% of benefits, barring legislative action. What's primarily to blame for the shortfall? Falling birth rates, meaning there are no longer enough workers to support beneficiaries.

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In 1940, when Social Security first began paying ongoing monthly retirement benefits, there were 159 covered workers for every one beneficiary. That ratio has been steadily declining ever since; in 1945, there were 42 workers for every beneficiary; in 1960, there were 5. Today, there are only 2.8 workers for every beneficiary, and by 2035, there will be only 2.3.

Plenty of people like to grumble that they'll never get as much in Social Security benefits as what they paid into the system, but years of studies have shown that the opposite is true — workers typically get more in benefits than they paid. For instance, the Urban Institute has found "most nondisabled beneficiaries who survive to age 65 are scheduled to receive more in benefits than they contribute in taxes" — and the ratio is more favorable for lower-income workers compared with higher-income workers.

Whatever your feelings on Social Security — that it's too much or not nearly enough — it's a lifeline for many Americans. Without the program, 21.7 million Americans would fall below the poverty line, including nearly 15 million seniors, according to the Center on Budget and Policy Priorities.

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