Introduction
In a society, no matter how advanced, there will always be people who face challenges. It is imperative that such a society gets its act together and deliver some form of sustained assistance to such troubled members. Members of the society can face financial challenges arising out of medical needs, discontinued income, housing challenges, death and disability, retirement and many others. Therefore, with such a daunting challenge, the government should respond with a welfare program that should include cash assistance, healthcare/medical provisions, housing subsidies, energy subsidies, food assistance, and education assistance among many others depending on an individual’s specific needs. The great depression of 1930s brought such challenges to majority of Americans and the idea of a social security program gained traction as explained by Martin and Martin (2005) . It is on the principles of this reasoning that President Franklin Roosevelt initiated the social security system and the development of the United States Social Security systems has been evolving since 1935. This paper will evaluate the U.S Social Security program by first unravelling its history, then discuss its current structure, and finally offer a discussion of benefits in terms of how they are calculated and their various forms.
History of the U.S Social Security Program
After the United States being ravaged by the great depression which occurred in the early 1930s, President Franklin D. Roosevelt constituted The Committee on Economic Security (CES) in 1934 which was a cabinet-level group as explained by Jacobs (2010). The committee, Jacobs (2010) continues, got the task of designing and reviewing the prospects of having an economic security system for the most vulnerable at the time who were mostly the elderly and the disabled. A need for cushioning the unemployed was also mooted and in 1935, the committee presented its report to President Roosevelt. As explained by King and Cecil (2006), the plan contained in the report eventually became the Social Security Act and was passed into law by the Congress in 14 th August, 1935. The need for the intervention was prompted by the need to provide economic security through structured programs that delivered public assistance or welfare programs for distressed citizens. With the great depression came the loss of private savings and bank failure which further catalyzed public suffering.
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The concept of social security was not new to the United States. According to Anders and Hulse (2006), the concept of Social Security had been deployed in other advanced nations as well as to different to workers. According to the Social Security Administration (SSA) (2019), after the Civil War, there were various categories of people who were considered for retirement programs, for instance, government employees, veterans, and workers in hazardous occupations had the very rudimentary form of social protection. After the passage of the act, monthly benefits were provided to vulnerable populations, especially those who were above 65 years and older and had no means of income. Such an income was calculated on the basis of the individual’s tax contribution during their working age. Payments were to begin being effected in 1942 and a lump sum was paid to anyone who was retiring between 1937 and 1942. According to King and Cecil (2006), the lump sum payments were made especially because majority of the people did not have enough contributions to the Social Security to warrant a monthly payment.
Starting in 1937, the Social Security Act outlined, both employers and employees were to contribute 1% payroll tax on the first $3,000 of annual earnings and this was scheduled to increase beginning 1940 to reach a peak of 3% of each of the contributors, that is, a total of 6% by 1949 (Social Security Administration, 2019). The benefits outlined in the Act required that payouts be withheld until 1942 so as to create a considerable reserve in its earliest years. The scheduled rise in percentage contribution were delayed due to legislation issues and the 1% tax rate was applied until 1950 (Social Security Administration, 2019). Further, in its earliest stages, the Social Security Act failed to deliver on its overall objectives effectively making some of its features to be absent for public use, for instance, disability and medical coverage as described by the Social Security Administration (2019). With time, the program went ahead to capture the interests of children who have lost their parents, widows and widowers, the unemployed, and those with medical care problems due to financing.
Current Structure of the U.S. Social Security Program
The current stature of social security in the United States is more defined and touches on different facets of life and the misfortunes that can befall an ordinary person. As it stands now, Social Security is responsible for the management and provision of a considerable portion of retirement security. Therefore, majority of the elderly derive significant security in their retirement. According to an article that appeared on Forbes, Biggs (2017) expressed that social security provided 38% of the total incomes to people of age 65 and above in 2009, a figure that rises every year since 1962. The number of people aged 65 and above who received the majority of their income stood at 66% in 2009 (Biggs, 2017). Such figures underline the importance of social security.
The different programs of social safety net are not availed to any wishing or deserving person as a free gift. The major benchmark for the program to determine what one ought to receive is hinged on the amounts an individual contributed during their productive years. According to the Social Security Administration (2019), the number of retired people who received benefits from social security in June of 2019 were 44.5 million with 3.1 million dependents receiving a total of $67.7 billion. The disabled on the beneficiary list of the administration in the same month were 8.5 million and had 1.6 million dependents and received a total of $11.1 billion in one month alone (Social Security Administration, 2019). In essence retired workers and their dependents account for 73.2% of total benefits paid, disabled workers account for 14.5% and survivors of deceased workers account for 12.3% of total benefits paid (Social Security Administration, 2019). Further, an estimated 178 million workers are covered under the program in 2019 (Social Security Administration, 2019).
Calculation of Benefits
To arrive at an individual’s benefits, the Social Security Administration makes calculations based on a number of steps. The major determinant of benefits, according to the Social Security Administration (2019c), is the actual earnings that an individual accumulated over their active life. Second, the administration calculates the average indexed monthly earnings in the highest earning 35 years of the individual as expressed by Social Security Administration (2019c). To complete the calculation, the administration applies a formula to the determined earnings in the second steps to determine the basic benefits an individual should receive. The amount matures at the age of 65.
Other Benefits of the Program
The Social Security has four basic categories of benefits, they are retirement benefits, disability, dependents, and survivors’ benefits.
Retirement Benefits
This kind of benefit is meant for workers who have been in employment and have all along covered by the Social Security to make them eligible for when they retire at the age of 62 or above.
Disability Benefits
These benefits are accorded to individuals who have not yet acquired retirement age but have been categorized as disabled under the Social Security Program out of different reasons as prescribed by the administration. An individual can only receive that which is almost equal to what retirement benefits would have been.
Dependent’s Benefits
Dependents’ are individuals who are spouses or children of retired or disabled workers who qualify to be covered by Social Security. The benefits are owed to the dependents whether or not they are wholly or partially dependent on the spouse or guardian.
Survivor’s Benefits
These are the spouses of a worker who is qualified for Social Security retirement or disability benefits. Survivor’s benefits are given on the basis of the spouse earning record.
Supplemental Security Income (SSI)
This resource is availed to disabled adults, children, and persons over 65 with limited incomes and resources
Conclusion
The Social Security program in the United States has been around for a considerable amount of time serving and rescuing vulnerable Americans from the grip of financial suffering due to specified and unavoidable circumstances. The program should not be confused with free handouts as it is based on an established way of calculating benefits. The contribution of individuals to the scheme during their productive years is critical in determining what an individual should earn. There are different categories of benefits that a deserving and qualified individual is entitled to.
References
Biggs, A. (2017). Retirees’ incomes rising, dependence on social security benefits lower. Retrieved September 14, 2019, from Forbes website: https://www.forbes.com/sites/andrewbiggs/2017/02/09/retires-incomes-rising-dependence-on-social-security-benefits-lower/
Jacobs, A. (2010). Institutional Development in the US Social Security Program. Explaining institutional change , 94-132.
King, T. T., & Cecil, H. W. (2006). The history of major changes to the social security system. The CPA Journal , 76 (5), 14.
Martin, P. P., & Martin, P. P. (2005). Social Security: A program and policy history. Soc. Sec. Bull. , 66 , 1.
Social Security Administration. (2019a). Historical Background and Development of Social Security . Retrieved September 14, 2019, from Social Security History website: https://www.ssa.gov/history/briefhistory3.html
Social Security Administration. (2019b). Fact Sheet: Security Sheet . Social Security Website. Retrieved from https://www.ssa.gov/news/press/factsheets/basicfact-alt.pdf
Social Security Administration. (2019c). Your Retirement Benefit: How It's Figured . Social Security Website. Retrieved from https://www.ssa.gov/pubs/EN-05-10070.pdf
