How did Social Security start? How does Social Security work?

Question

What will be an ideal response?

Answer 1

The Great Depression of the 1930s triggered a crisis in the economic life of the United States. It was against this backdrop that the Social Security Act emerged, signed by President Franklin D. Roosevelt in 1935. The Act created a social insurance program designed to pay retired workers age 65 or older a continuing income. The original Act provided only retirement benefits, and only to the worker. In 1939, amendments were enacted to add two new categories of benefits: payments to the spouse and minor children of a retired worker (dependent benefits) and payments to the family in the event of the premature death of a worker (survivor benefits). Amendments in the 1950s and 1960s allowed disabled workers and their dependents to qualify for benefits. Because of these additional categories of benefits, about 1 in 3 Social Security beneficiaries is not a retiree.
Social Security was never intended as a sole form of income; instead, it was conceived as a supplement to income from a retirement plan, pension, and savings. However, today most employers do not offer a pension plan, and many workers cannot afford to contribute to a retirement plan (e.g., a 401k or a SEP-IRA) or to set aside savings on a regular basis. In 2017, one half of married couples and nearly three quarters of single adults were getting at least half of their income from Social Security; and for about one quarter and nearly one half, respectively, Social Security was virtually their only income. Moreover, Social Security provides critical income to older women and minorities, who are more likely than married and nonminority elders to rely on Social Security for 90% or more of their income.
Social Security is a pay-as-you-go retirement system. The Social Security taxes paid by today's workers and their employers are used to pay the benefits for today's retirees and other beneficiaries. There is considerable debate over whether Social Security trust funds can remain solvent over the long term because people are living longer than ever before. In addition, more than 80 million Baby Boomers started retiring in 2008. By 2050, when the surviving Baby Boomers will be over the age of 85, the population of older adults aged 65 and over is projected to be 83.7 million, about double that in the early 2010s. At the same time, the number of workers paying into Social Security per beneficiary will drop from 2.8 for each 2.1 collecting benefits in 2016 to about 2.1 paying workers for each person collecting benefits in 2034. These demographic changes will strain Social Security financing.