Social Security is a bedrock program in the United States. Social Security is an entitlement program that pays millions of people an income each month.
This is part of a 4 part Social Security series.
Part 1 - Social Security: The Foundation
History
Social Security was signed into being in 1935 by President Franklin D. Roosevelt (FDR).
Ida May Fuller was the first person to draw on Social Security when she filed for benefits on November 4, 1939. Check number 00-000-001, was issued to Ida May Fuller for $22.54 (equivalent to $416 in 2020) and dated January 31, 1940.
While running an errand, she went into the local Social Security office to ask about possible benefits.
"It wasn't that I expected anything, mind you, but I knew I'd been paying for something called Social Security and I wanted to ask the people in Rutland about it." - Ida May Fuller
Ida passed away in 1975 and had been paid total benefits of $22,888.92. The social security taxes she paid in for the 3 years before filing was a total of $24.75
You can see her Social Security earnings history on SSA.Gov
Social Security Funding
Social Security is funded by a 12.4% tax. Half is paid by employers, the other half is paid by employees. If you draw a W2 paycheck, you’ll clearly see 6.2% being withheld for Social Security.
Folks that end up becoming contractors or self-employed often are surprised by how much their Social Security tax increases compared to when they were employees.
Medicare is a part of the Social Security program and is taxed at 2.9%, split evenly between employer and employee.
Not all earnings are taxed by Social Security. For 2021, only the first $142,000 of wages were subject to Social Security taxes. You can find the table at this link to maximum taxable earning.
In 2020, 65 million people received Social Security payments and upwards of 175 million people paid payroll taxes into this program. ~2.7 workers per Social Security beneficiary.
You can see your earnings history and full details on the Social Security website - http://www.ssa.gov/myaccount
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