Social security benefits can be one of the most confusing subjects I have ever run across. Of course, it is a government program and that explains a lot. I am going to try to highlight a few major points about these benefits here so you have a starting point. After reading this you will (hopefully) be able to come up with a list of questions to ask a professional.
The philosophy of social security benefits comes from the fact that society, in general, felt a need to help those that are not able to help themselves. This dates back to the ancient Greeks. Believe it or not, the Greeks would stockpile olive oil. That was their security in times of need. In the Middle Ages the feudal lord had the responsibility of providing for those that couldn’t provide for themselves. As societies continued to grow a system of formal “friendly societies” came about to help the less fortunate. A few of these still exist such as the Freemasons, Odd Fellows, Order of the Elk and Order of the Moose.
The first “poor laws” in America came about in 1601 where a local tax provided support for the towns destitute. Actually as these laws grew the poor were given circumstances as unpleasant as possible to discourage dependence. If you received this relief you would lose all your personal property, the right to vote, and in some cases you were branded (think The Scarlett Letter).
The first actual pension for the disabled and widows and children came about after the Civil War. Until 1910 Confederate soldiers and their families were not eligible for benefits.
From here we evolved to company pensions and the first hint of a nationally funded program began in the 1890’s. Although this first attempt was not successful, several state supported programs were tried but were not effective. There were several proponents of a national security act leading up to the mid 1930’s, but they all differed in implementation. There was the Huey Long plan, the Francis Townsend plan, Father Charles E. Coughlin plan, Upton Sinclair plan, The Ham and Egg plan, The Bigelow plan, and it went on and on.
Finally under the leadership of President Roosevelt in late 1935 the Social Security program was introduced and passed. It was modeled after the social insurance plan of Europe. The original act provided Social Security payments, unemployment insurance, old-age assistance, aid to dependent children and provided grants to states to provide some sort of medical care.
The process of distributing social security numbers began in 1937. In 1937 the first FICA taxes were collected and put into a Special Trust Fund to pay future benefits.
In January of 1940 the first social security benefits were sent out. The first receiptant of them was Ida Mae Fuller.
In her lifetime Mrs. Fuller contributed $24.75 in FICA taxes. She died
at the age of 100 after collecting $22,888.92 in benefits.
There have been regular amendments to the bill. In 1939 it was amended so dependents could be paid in the event of the death of a covered person. In the 1950’s the COLA (cost of living) provision was introduced and in 1954 the disability insurance program was started. 1961 brought the Medicare provisions. In 1977 there started to be concerns over the future funding of the program. As baby boomers began to grow older we now find ourselves in the situation we currently have.
1) Who can get social security?
There are other programs that for which you can get payments. Two examples are the survivors benefit and death benefits.
2) When should you apply for social security?
This question can be very hard to answer. It really depends on your individual situation.
If you are applying for your social security retirement benefits, you qualify to apply at 62. However, you will pay a penalty for taking the benefits early verses waiting until your full retirement.
At what point will the reduction pay off? Well, how long will you live? Actually, assuming you take retirement early at 62 you will be balanced out on the lost amounts if you live to around 78. After that it’s all gravy. But remember, you sacrifice a certain amount of cash flow. See a CPA or financial planner if you have questions as to how it fits into your retirement picture.
If you are applying for Supplemental Social Security or Disability you have a different situation. This process can be very complicated. If you can, I suggest you get the advice of an attorney or an advocate that can help you with the paperwork.
3) What’s the best way to apply?
The social security administration currently has a process where you can apply for your social security benefits on line. Here is the link to their website.
If you are applying for disability for supplemental income, here is the link.
So what do you need to do next? Well, it depends on where you are in the process. If you are nearing retirement, I would suggest going here and getting an estimate of what your social security payment will be.
Next you might want to see how this payment fits into your general retirement picture and what you have to work with.
If you are applying for disability or supplemental, you can go here and try it by yourself. Like I said above, I believe your best bet is to engage help.
There are people that know the social security system inside and out. If you think you need help with it I would suggest looking for an attorney that specializes in Social Security or Elder Law. There are also lots of advocates out there that can help. Usually they are a social worker that understands the system.
Whatever you need from Social Security is available on their website. Unfortunately weeding through the red tape can be overwhelming. Don’t feel alone. Keep moving forward on it and get help if you need it.