August marks the program’s 89th anniversary

EDITOR’S NOTE: The following is an informative summary of the Social Security program upon which many of us (including me) rely. It was sent to the Clinch Valley Times by Ginger Thompson of AARP

***********

In the fabric of society, few programs have woven themselves as deeply into the American culture as Social Security. The economic devastation of the Great Depression further exposed society’s vulnerabilities, with millions of older Americans in poverty and many more at risk of financial ruin.  In response, the Social Security Act was signed into law to better ensure a measure of income security for older Americans in retirement. 

Over the subsequent decades, it has matured into a vital source of guaranteed, 

inflation-adjusted income for millions of retirees who pay in and earn their Social Security through payroll taxes they and their employers contribute throughout their working lives.  Social Security also enjoys widespread support across all ages and demographic groups.

Today, nearly 1.6 million Virginians receive Social Security. Most of those age 65 or older count on Social Security as their largest source of income, and about 25% of households rely on Social Security for 90% or more of their income. 

With 90% of people saying Social Security is important to their retirement security, it is helpful to understand how it was created and how it has evolved over time.

Here’s a timeline of significant events in the history of Social Security:

Aug. 14, 1935: President Franklin Roosevelt signed the Social Security Act into law.

Aug. 10, 1939:  The program was broadened to include benefits for workers’ dependents and survivors.

October 1950: Congress authorized the first cost-of-living adjustment (COLA), an increase of 77 percent.

September 1960: President Eisenhower signed a law amending the disability rules to permit payment of benefits to disabled workers of any age and to their dependents.

June 30, 1961: All workers are now allowed to retire early at age 62, albeit at a reduced Social Security benefit. Previously, benefits could not be claimed until the normal retirement age of 65.

Oct. 30, 1972: President Nixon signed the Social Security Amendments making the cost-of-living adjustment automatic each year,

April 20, 1983: President Ronald Reagan signed into law sweeping changes to Social Security aimed at addressing the imminent Social Security funding gap. These included moving up scheduled increases in the payroll taxes that fund Social Security, gradually raising the normal retirement age to 67, and making 50 percent of Social Security benefits taxable for recipients with incomes above $25,000 for an individual and $32,000 for married couples filing jointly.

Aug. 10, 1993: President Bill Clinton signed the Omnibus Budget Reconciliation Act, a large deficit reduction package of tax increases and spending cuts that included a provision raising the share of Social Security benefits subject to income tax from 50 percent to 85 percent for beneficiaries with incomes above $34,000 (single) or $44,000 (couple).

May 6, 2024:  According to the Social Security Trustees report, Social Security can pay full benefits until 2035. That doesn’t mean Social Security payments would end, but they would be funded only by each year’s payroll tax revenue. The Trustees estimate that would cover about 83 percent of scheduled benefit payments.

The history of Social Security is a testament to the promise between the government and its citizens. From its humble beginnings during the Great Depression, Social Security has stood the test of time, having never missed a payment, providing a foundation of retirement security to generations of Americans.

The following information illustrates how important Social Security is to Virginians:

Who Receives Benefits

• Retirement benefits: The largest group of beneficiaries in Virginia are its 1,147,511 retired workers, who account for 72.4 percent of all Social Security beneficiaries in the state.
• Disability benefits: Virginia has 199,120 residents who receive Social Security disability income, representing 12.6 percent of the state’s Social Security beneficiaries.
• Spousal and survivor benefits: In Virginia, 144,084 spouses, former spouses, widows, widowers, and parents of deceased beneficiaries account for 9.1 percent of the state’s Social Security beneficiaries. An additional 94,479 children, representing 6 percent of the state’s Social Security beneficiaries, receive benefits.

Impact

• Economic engine. Annual Social Security benefits to Virginians pump at least $27.6 billion into the state economy, with $21 billion paid annually to those receiving retirement benefits and their eligible family members, $3.1 billion via survivor benefits, and an additional $3.5 billion paid through the disability program. Recipients buy goods and services with their Social Security benefits, increasing business sales—which help the companies making those sales and the firms that supply them. The result is more jobs and income to businesses and workers in Virginia. 
• Reduced poverty. Social Security lifted 333,000 Virginians 65 or older out of poverty from 2018 through 2020. In fact, 31.8 percent of the state’s residents in this age group would be in poverty but for Social Security benefits; that number falls to 7.3 percent when Social Security income is included. Nationally, the program lifted 16.1 million people 65 and older out of poverty, reducing the proportion below the poverty line from 37.8 percent to 9 percent.

Average Benefits

• Retirement benefits: The average Social Security retired worker benefit in Virginia is $1,598 monthly (about $19,200 annually). The national average monthly retirement benefit is $1,544.
• Disability benefits: In Virginia, the average Social Security disabled worker benefit is $1,291 per month (about $15,500 annually). The national average monthly disabled worker benefit is $1,277.

Reliance

• At least half of income. 483,567 Virginia residents, or 36 percent of individuals 65 and older, live in families that rely on the program for at least half of their income.
• More than 90% of income. 259,474 Virginia residents, or 19 percent of individuals 65 and older, live in families that rely on the program for at least 90 percent of their income.
• Black individuals rely more on Social Security income. Overall, 29 percent of Black Virginia residents 65 and older live in families that rely on Social for at least 90 percent of their income as compared with 18 percent of white residents.

For more information about the program, visit https://www.aarp.org/socialsecurity

##############