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When to File
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Filling the Retirement Gap
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Social Security Maximization Report by Maryland Annuity Resource
How Social Security all started!
Civil War Pensions were America’s First “Social Security” Program
Social Security was not around in America until 1935. There was one important precursor that offered something we could recognize as a social security program to one special segment of the American population. After the Civil War, there were hundreds of thousands of orphans and widows, and far too many disabled veterans in need of support.
For the first time in american history, there was a much higher population of disabled, survivors widows, and children with no breadwinners to support them. These circumstances prompted the government to act and led to the development of a generous pension program. The first national pension program for soldiers was passed in early 1776, prior even to the signing of the Declaration of Independence.
The Steps that Created Social Security
Between the years of 1890 and 1920, in the United States we experienced important changes to our social fabric. The Industrial Revolution created a more urban America, shifting population away from rural areas like farms and into cities. In fact in 1890, only 27% of the population lived in cities. By the time 1930 rolled around, this percentage had exactly doubled, to 57%.
This drastic shift away from an rural lifestyle also changed the face of the American family. Rural families were generally extended, with multiple generations living together. In this larger collective, when a family member became elderly, ill or disabled, the group was better able to pull together to take care of this person. With the population shift into urban areas, the nuclear family became more of the norm.
Thanks primarily to better health care and sanitation and the development of effective public health programs, Americans began to live significantly longer. In three short decades, 1900-1930, average life spans increased by 10 years. This was the most rapid increase in longevity in recorded human history. The result was a rapid growth in the number of senior citizens to 7.8 million by 1935.
The net result of this complex set of demographic and social changes was that America was older, more urban and more industrial, and fewer of its people lived on the land in extended families. The traditional strategies for the provision of economic security were becoming increasingly fragile.
Social Security is signed in law
The Social Security Act was signed into law by President Roosevelt on August 14, 1935. In addition to several provisions for general welfare, the new Act created a social insurance program designed to pay retired workers age 65 or older a continuing income after retirement. However, since many changes happened over the years, the new retirement age is 70 and some analysts believe it will even surpass that.
Who Benefited Initially
In the beginning, most women and minorities were excluded from the benefits of Social Security. Job categories that were not covered by the act included workers in agricultural labor, domestic service, government employees, and many teachers, nurses, hospital employees, librarians, and social workers. The act also denied coverage to individuals who worked intermittently. In its early days, these exclusions exempted nearly half of the working population from benefiting from Social Security.
First Payments were in Lump Sum
From 1937 until 1940, Social Security paid benefits in the form of a single, lump-sum payment. The purpose of these one-time payments was to provide some “payback” to those people who contributed to the program but would not participate long enough to be vested for monthly benefits. The first payment ever made by Social Security was to Ernest Ackerman, who retired the day after it was signed into law. His one-time, lump sum payment was for 17 cents.
Monthly Payments & Cost of Living Adjustment (COLA)
On January 31, 1940, the first monthly retirement check was issued to Ida May Fuller of Ludlow, Vermont, in the amount of $22.54. In 1950 a cost of living allowance (COLA) was added to Social Security. Previous to this, distributions had remained the same for the ’40s. This year however, there was just an announcement that increase payments a whopping 1.5% for the 2014 calendar year. With inflation right around 3%, some think Social Security is going backwards.
History of Distributions
In 1940, benefits paid totaled $35 million. These rose to $961 million in 1950, $11.2 billion in 1960, $31.9 billion in 1970, $120.5 billion in 1980, and $247.8 billion in 1990. All figures are in nominal dollars, not adjusted for inflation. In 2009, nearly 51 million Americans received $650 billion in Social Security benefits. As of June 30, 2011, 54.8 million people or 17.6% of the U.S. population were receiving monthly Social Security benefits.
Is Social Security going to be there for you?
We believe that some sort of Social Security will be there, but in todays dollars the maximum amount you can draw is roughly $2500 a month. I was in the army and I do not need much to live. I could live in the woods and hunt my own food, build my own cabin and as long as I am by a water source, I would be ok. At age 65 I really do not want to have to do that. I am positive that my wife would not want that either. In any other time in history, I would have to say that yes, an extra $2500 a month would be ok, but not just that amount. I know I would need more than that, as most of you would as well.
For more than most of us, that $2500 a month equals 40% or more of our retirement income and that is not enough. There are many that say to delay is the best option. How long can you delay benefits and still keep a roof over your head? How long can you keep going on that little? How about medial expenses? There are a wealth of questions that all factor in when we elect to take Social Security and we want to help expose some of those things so you have all of your options.
We suggest planning now, rather than later so find your primary insurance amount, decide what age you will take your first draw, see what other benefit options there are like head of household, and spousal benefit amounts. We are here to help so please contact us and we can get you started on the right path.
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