The Social Security website (ssa.gov) provides an interesting history of social security developments throughout the ages, leading up to passage of the Social Security Act in 1935. America’s first attempt to implement a social security program occurred in 1862, when a Civil War Pension Program was created to provide benefits linked to disabilities “incurred as a direct consequence of…military duty.” Widows and orphans of fallen soldiers qualified to receive pensions equal in amount to that received by disabled veterans. In 1890, the link with service-induced disability was broken and the benefits became available to any Civil War veteran who became disabled. In 1906, old-age was introduced as a single qualification for benefits. By 1910, more than 90% of remaining Civil War veterans were receiving program benefits, though they only constituted 0.6% of the population. Young wives were attracted to elderly veterans whose pensions they could inherit, such that some “surviving widows” received benefits until 1999.
I’d like to believe we learned something from that, but apparently not. In 1882, the Alfred Dodge Company initiated the first deduction/interest pension program. By 1932, between state and private pension plans, only 5% of the elderly were receiving any type of retirement pension. The “extended family” had picked up most of the slack, but during the 1920’s young adults were moving to the cities in search of jobs and most extended families disappeared. The Great Depression created a massive call for action. Signed into law on August 14, 1935, the Social Security Act provided unemployment insurance, old-age assistance, aid to dependent children, and grants to the states to provide various forms of medical care. Initially, retirees received an adjusted lump sum. Ernest Ackerman retired one day after the Social Security program began. Five cents was withheld from Mr. Ackerman’s final check and he received a seventeen cent lump sum payment.
1937 to 1940 was intended to build up the Trust Fund account and provide a minimum period for participation in order to qualify. The first person to “qualify” and receive a monthly distribution was Ida May Fuller. She worked as a legal secretary, retired at 65, and made contributions to the program for three years. She received her first check on January 31, 1940 in the amount of $22.54 and lived to be 100 years old. The total tax she paid into the program in those three years was $24.75 and over the course of her lifetime she collected a total of $22,888.92 in Social Security benefits. Maybe we should consider electing mathematicians instead of politicians.
I am a Baby Boomer. I have been continuously employed for more than 40 years, paying 6.2% into Social Security on gross earnings of more than $3,000,000. That’s more than $186,000 paid into the “Fund.” Last time I checked, if I work until I’m 66 and a couple months, I’m supposed to receive about $2,200 per month. Without adding any type of interest to the gross Social Security tax paid, if the government just returned my principal paid, I’d have income provided for more than seven years before surpassing what was paid in. Unlike Ida May, who went into the red on day 33 after starting to collect. And that’s if I wait. Meanwhile the Administration’s talking about social security payment reductions, benefit reductions, and more. Let’s just say I’m damn glad I’ve been squirreling away physical precious metals for years. Call the experts at American Bullion to protect and grow your assets. Call (800) 653-GOLD (4653) NOW!