The First Retirement Plan Of The United States

The Social Security Act came to be because of two separate factors, the Industrial Revolution and the Great Depression. Before these two events which shaped the United States to what is known as todays’ security for the elderly came from another source. In prior times in America was almost entirely an agricultural nation. A typical life in this period would be to grow up on the farm working the land until you were too old to do so. Once this occurred your extended family would take care of you until you passed away, so there was no need for social security. The farms would stay in the family for years. It was rare for someone

The Social Security Act was enacted by President Franklin D. Roosevelt in 1935 to help seniors who were broke from the stock market crash in 1929. He wanted to build a safety net to ensure that every senior would stay above the poverty line and that there would be support for every worker’s family after his or her death. Today, Social Security does do that, but only barley, for many folks. (Epstein, 2006) Social Security was not the first retirement plan that was put into place in 1795 Thomas Paine introduce a pamphlet named Agrarian Justice where he suggested a system of inheritance taxes. His plan was for the tax of 10 percent on inherited property would be put into a special fund. It would be paid out as a one-time stipend to citizens just starting out at age 21, and as an annual benefit to everyone age 50 and older to protect against poverty in old age. Paine’s idea was never adopted even though inheritance taxes eventually were.

(FDR) stated The Social Security Act was for (workers in business and in industry.”) And the job categories that were not covered by that of (business and industry) were workers in agricultural labor, domestic service, teachers, nurses, just to name a few. Basically the employment definitions under (FDR) reflected the typical white male categories and configurations for the 1950’s era. So, consequently most women and minorities were excluded from the benefits of unemployment insurance and old age pensions that Social Security presented and they still continued to suffer and endure

Social Security, as we know it today, began as the “Economic Security Act” in 1935, and it wasn’t until later that activist Abraham Epstein coined the phrase “Social Security”. In its earliest form, the government paid benefits only to the primary worker in the household, but in 1939 the act was rewritten to include survivor’s benefits for spouses and children. The very first recipient of social security received 17 cents, paid to him in January 1937. The first person to receive monthly benefits began to do so in 1940. In the three prior years, this person had contributed a total of $24.75. By the time of her death in 1975 (at the age of 100) she had collected $22,889 (http://people.howstuffworks.com/social-security-number6.htm). By contrast, the first person to ever be issued a social security number (in 1936) died in 1974 at the age of 61 without ever receiving a single social security payment (however, his widow did). This is the “math” of social security and it doesn’t always add up in a logical way.

Retirement and Social Security issues have become local, national, and international concerns that will also affect each of us on a personal level. Social Security benefits began in 1935 when the depression hit and put many elderly people out of work (http://ssa-custhelp.ssa.gov). Social Security has been around for over 70 years providing a dependable monthly income with automatic increases as the cost of living increased. The Social Security Administration reports that workers need 70-80 percent of pre-retirement income once retired and Social Security only provides about 40 percent (www.ssa.gov). The depletion of funds is becoming a great concern and is also getting worse with each generation.

Baby Boomers have been one of the most powerful forces in shaping the economic environment and are the wealthiest generation in the United States (Kotler and Armstrong, 2015). “In their early years, “Leading Edge” Boomers enjoyed economic prosperity, and their resulting financial power in their prime years drove rising trends in everything. However, the recessionary years of the early 1970’s also added cautionary realities to their youthful consumption and employment dreams” (“America’s Oldest Boomers”, n.d.). Baby boomers control approximately 70% of the disposable income in the United States, therefore, they are known as being one of the most influential financial forces in the marketplace (“Baby Boomers Report”, 2015). As they reach their

A pension plan is set up to guarantee an individual a certain amount of money each month when they reach retirement age. In a pension plan, it is usually required to make monthly contributions of a set percentage, although most of the contribution will come from the employer. The creation of this plan takes into account the length of employment, salary, and other factors (Caldwell, p. 2). Till now legislators and businesses, have done improvements of these plans basing it with the change of economic situations, benefit formulas and coverage expansion. But how did pension start in United States? The first official implementation of pension in the United States was dated back since the signing of the U.S. constitution that was used as an

Instead, it focuses entirely on the benefit distribution of Social Security. It is evident that an overwhelming amount of African American males die before they reach the age set forth by the government to receive Social Security disbursement, yet are still required to pay in the same amount as every other hard working American. When the Social Security act of 1935 was passed, sixty to seventy percent of African Americans were excluded from receiving benefits based on occupation alone. The occupations excluded were the ones in which women and African Americans were most likely to work, such as education, government, agriculture, domestic service and charitable nonprofit institutions. It is understandable as to why the Social Security act was built this way. President Roosevelt faced a solid block of white southern congressman who refused to support any social security legislation that included blacks. What is amazing is that no subsequent amendments to these laws have done anything to change this. According to present and past census data, the African American male is actually underwriting the white American male. Just as in slavery, the African American male provides much of the base of support for white Americans during their retirement years. Low-income wage earners tend to pay a larger proportion of their income to social security and other taxes. According to 2000 census data, there is a life expectancy difference of 6.8 years between

The reason Social Security promises to pay current and future workers much more than it takes in, this is because of the system’s generosity to early birth cohorts, generations of workers now retired or deceased (U.S. Department of Treasury, 11). Social Security paid these workers, benefits that exceeded their lifetime contributions by more than 13.6 trillion, and in order to finance this gap, later birth cohorts must receive benefits whose value is lower by the same amount (U.S. Department of Treasury,

The reason for such a dramatic growth in population is still a disputed subject among experts. At first, the U.S. welcomed this phenomenon by passing GI bills to improve education, skills and income. Now, the generation of baby boomers is already retiring, or fast approaching retirement age. Currently, the cost of Social Security is rising faster than the taxed income of the working population (Lavery 56). Due to this fact, nowadays, it has become questionable whether the American economy will be able to afford the future cost of Social Security, as the baby boomer generation continues to

Retirement Retirement seems to be one of the most often overlooked areas of people's future plan. Simply because it seems so far away, it is an area that is subject to procrastination. People are expected to live longer now than ever before, this is another reason why young adults and teenagers are not worried about saving for their retirement. The baby boom generation, the seventy seven million people born between 1943 and 1960, face an entirely different retirement plan. As they began to retire, people are starting to think that there will be no money left and this will turn into a crisis. What will happen when seventy-seven million baby boomers begin to want the money they paid in

With the workforce in America decreasing due to hard economic times, there is no guarantee the money put into the reserve will sufficiently support a generation when it is time for retirement. Depending on Social Security to support a person financially when ready to retire, will leave that individual in even more of a struggle than the beneficiaries trying to survive in these earlier years of the 21 century. Social Security benefits represent about 41% of the income of the elderly; if there is not enough to support even half of the elderly’s financial needs now, there is no reason a younger person should depend on it alone for retirement (Dewitt, 2010) in the future.

It is every worker’s dream to have a secure and a comfortable retirement benefit. Achieving the dream is much easier when plans are made on time. In 1935, the social security act was passed into law by President Roosevelt to supplement the personal retirement benefits of the elderly Americans. The federal government discovered that Americans were not saving enough money for their retirement, and needed enough support to support themselves when they retired. The President ensured that no taxes were charged on the benefits to ensure that the money was available when the time came to retire. In 1983, the law changed and congress required workers to pay taxes on their retirements. Today, if one is single and earns a salary of $25, 000 dollars, or is married and the couple is earning a salary of $32,000 dollars, they will be required to pay 50% percent on their social security benefits (Royer, 2011). This is one of the problems that will be discussed on the paper, and how many Americans will not be allowed to retire.

(5) Currently SS funds are collected and distributed on a pay - as - you -go (PAYG) system in which Social Security taxes from individuals are immediately distributed by the means of the SS Administration as it sees best fit. This means that taxes collected are not reserved for the individual who has paid them: in Rose 2 the current state he or she must rely on those persons paying SS taxes during the time of their retirement (Becker). For a number of these characteristics and future issues, the Social Security System must be reformed or completely abolished to meet the needs of tomorrow. The leading concerns of Social Security that merits the immediate initiation of reform are the demographic and economic circumstances in the coming century. Even though "forecasting the economy and budget over such a long period is uncertain" there remain many "certainties" regarding problems facing Social Security in the first half of the 21st century (OMB, Budget Perspectives 23). The Federal Government's responsibilities extend well beyond "the five- or six-year window" that has restricted the focus of recent budget analysis and debate. Of these "certainties" are the mounting challenges posed from the baby-boomer generation. This generation, born in the years after World War II, is aging

In 1875, American Express offered America’s first employer-provided retirement plan. Five years later, the Baltimore and Ohio Railroad introduced the first retirement plan, financed jointly by contributions from an employer and its workers.