Understanding Social Security

Social Security will always have a role in retirement and benefits planning. For some it may be a major source of retirement income, and for others it will supplement your own retirement savings.

The Social Security Administration celebrated its sixty-fifth anniversary in August of 2000. The Social Security Act was passed by Congress and signed into law by President Roosevelt on August 14, 1935, This new act created a social insurance program designed to pay retired workers age 65 or older a continuing income after they retired. Early on, benefits were only paid to the primary worker. A 1939 change in the law added survivor benefits and benefits for the retiree's spouse and children. In 1956, disability benefits were added. In 1972, the supplemental Security income (SSI) program was added. This program provides as minimum income for poor individuals whether or not they are collecting Social Security benefits.

A major change came about in April 2000. President Clinton signed into law the Senior Citizens' Freedom to Work Act of 2000, eliminating the earnings test for those beneficiaries at or above normal retirement age.

In the past, Social Security benefits had always been conditional on the requirement that the beneficiary be substantially retired, meaning you could earn only a limited amount of money while receiving Social Security benefits. If you exceeded that amount, you would lose some of your Social Security benefits. With the new Freedom to Work Act, however this is no longer the case.

The Medicare program was created in 1965. Medicare is a health insurance program for the retied population over the age of 65, persons of any age with permanent kidney failure, and certain disabled individuals. This program is now administrated by the Health Care Financing Administration (HCFA) in the Department of Health and human Services. The Social Security tie with Medicare can be found at Social Security Administration (SSA) offices around the country.