Social Security Celebrated Its 88th Birthday: Here Are the 5 Biggest Changes Throughout History
Written by
John Csiszar
Edited by
Gary Dudak
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
Social Security is one of the most beloved government programs in the United States. While most Americans look forward to a lifetime of payments after they retire, many actually depend on these benefits to survive.
According to the Social Security Administration, among elderly Social Security beneficiaries, 37% of men and 42% of women receive half or more of their income from Social Security. A fairly significant 12% of men and 15% of women rely on Social Security for 90% or more of their income.
But when Social Security was enacted in August 1935, it was fairly primitive compared to what it has evolved to today. In honor of the program’s 88th birthday, here’s a quick look at five of the biggest changes that have been made to Social Security over the years.
August 10, 1939
The first major, long-lasting change to Social Security came just four short years after its authorization. On Aug. 10, 1939, the program was expanded to include benefits for workers’ dependents and survivors. These benefits now pay north of $2.8 billion per month to children of retired, deceased or disabled parents.
Surviving spouses can receive 100% of the benefit amount of the deceased worker, or lesser amounts if they are not yet at full retirement age. Here is the breakdown of the current payout system for survivors:
- If you are a surviving spouse at full retirement age or older: 100% of the decedent’s benefit amount
- If you are a surviving spouse, age 60 to full retirement age: 71.5 to 99% of the decedent’s benefit amount
- If you are a surviving spouse, age 50 through 59: 71.5%
- If you are a surviving spouse of any age with a disability, and caring for a child under age 16: 75%
- If you are a child under age 18 (19 if still in elementary or secondary school) or have a disability: 75%
- If you are the only surviving dependent parent(s), age 62 or older: 82.5%
- If there are two surviving dependent parents: 75% to each parent
None of these provisions existed when Social Security was first enacted.
October 1950/July 1975
When Social Security was first created, payment amounts were fixed, with no increases due to the effect of inflation. In fact, the now-familiar annual cost-of-living adjustment (COLA) wasn’t authorized until Oct. 1950. This first adjustment was a giant one, amounting to a 77% increase in benefits. This large sum was a one-time deal, meant to account for more than a decade of stagnant benefits.
When this COLA was first implemented, the idea was that Congress would act every year to increase benefits based on increases in inflation. But requiring Congress to formally authorize a COLA every single year was a burdensome process. This is why the COLA was automated beginning in July 1975, when an 8% increase went into effect.
June 30, 1961
For the first 26 years that Social Security was authorized, workers could only file for benefits once they reached age 65. That all changed on June 30, 1961, when the concept of “early retirement” was first introduced.
After that date, the Social Security Administration had to differentiate between “normal” or “full” retirement age — which was 65 at the time — and “early” retirement, which could begin as early as age 62. Although what’s considered “full retirement age” has changed over time — currently, age 67 for those born in 1960 or later — workers can still file for retirement benefits as early as age 62.
October 30, 1972
It took 37 years after Social Security was first authorized before a very important segment of the program was created: Supplemental Security Income, or SSI. This program provides supplemental income benefits to older adults and people with disabilities who have limited incomes and assets.
As of 2023, monthly SSI benefits top out at $914 for individuals and $1,371 for couples.
April 20, 1983/August 10, 1993
Major changes came to Social Security on April 20, 1983, when President Ronald Reagan enacted recommendations of the National Commission on Social Security Reform. Specifically, three major modifications were implemented to Social Security:
- Increasing payroll taxes that fund Social Security
- Incrementally raising the full retirement age to 67
- Making 50% of Social Security benefits taxable for those with incomes above $25,000 for individuals and $32,000 for joint filers
This marked the first time that Social Security benefits became taxable in any way.
Taxation levels were modified once again 10 years later under President Bill Clinton when he signed the Omnibus Reconciliation Act on Aug. 10, 1993. This legislation boosted the percentage of Social Security benefits subjected to taxation from 50% to 85% for individuals earning above $34,000 and joint filers earning above $44,000. Those limits remain in place as of 2023.
More From GOBankingRates
