9 Facts About Social Security
Social Security has been a pillar of retirement planning since its establishment in 1935. While most of us are somewhat familiar with the program, understanding its finer points can help you become better prepared for retirement. Below are nine intriguing facts about Social Security that you might not know but should.
- The Social Security Trust Fund Is Massive At the end of 2023, the Social Security trust fund reached an astounding $2.8 trillion.¹ This fund ensures that benefits are paid to eligible recipients, bolstering the program’s sustainability—at least for the foreseeable future.
- Not Everyone Qualifies for Benefits While most workers are eligible, there are exceptions. Federal employees, for instance, were not covered by Social Security until 1984 as they participated in the Civil Service Retirement System instead.²
- Eligibility Doesn’t Require Decades of Work Those born in 1929 or later need to work at least 10 years (or earn 40 credits) under the Social Security system to be eligible for benefits.³
- Your Benefits Depend on Your Earnings Social Security benefits are calculated based on your average earnings over the 35 highest-earning years of your career. For those with fewer than 35 years of earnings, years with low or no income may be factored in, potentially reducing the benefit amount.⁴
- Cost-of-Living Adjustments (COLA) Weren’t Always Automatic Prior to 1975, Congress had to pass legislation to adjust Social Security benefits. Since then, annual adjustments are automatic and tied to the Consumer Price Index. For example, benefits increased by 3.2% in 2024 following a 2.5% increase in 2025.⁵
- Social Security Supports Most Retirees An impressive 91% of current retirees rely on Social Security for income, illustrating how central the program is to retirement planning.⁶
- Benefits Are Taxable Social Security benefits weren’t always taxed. This changed in 1983 when amendments to the Social Security Act imposed federal income taxes on benefits starting in the 1984 tax year.⁷
- Social Security Once Paid Lump Sums Between 1937 and 1940, Social Security recipients received one-time payments. These payouts acted as a refund for contributions, as administrators didn’t expect participants to qualify for full monthly benefits yet.⁸
- The First Payment Was Just 17 Cents Earnest Ackerman was the first person to receive a Social Security payment in January 1937—a mere 17 cents.⁸
Social Security plays an undeniable role in providing financial security for retirees. Understanding its history, rules, and nuances can help you better prepare for your own retirement.
Disclaimer: This content was developed from sources believed to be accurate, but it’s not intended as legal or tax advice. For advice tailored to your specific situation, consult with a qualified tax or legal professional. This material was developed by FMG Suite and is not affiliated with any named broker-dealer or registered investment advisory firm. It is provided for general informational purposes and should not be considered a solicitation for buying or selling securities.
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