5 Fascinating Things You Probably Didn't Know About Social Security

Most people are at least loosely familiar with Social Security, but here are some eye-opening facts about the program.

Maurie Backman
Maurie Backman
Jun 13, 2017 at 8:03AM
Investment Planning

Social Security provides critical benefits to millions of retired workers and disabled Americans. But how much do you really know about one the most crucial social programs our country has ever established? Here, we'll review some captivating facts about Social Security that will probably surprise you.

1. Civil War pensions served as our country's first Social Security program of sorts. 

Though Social Security wasn't formally introduced until 1935, many historians regard Civil War pensions as a precursor to the program as we know it today. After the war, there were countless disabled veterans, widows, and orphans in need of financial assistance. This led to the development of a substantial pension program that in many ways paved the road to Social Security down the line.

Social Security card


2. Social Security has evolved since its inception.

In its earliest stages, Social Security was established to provide retired workers with a continuing source of income. But the program has since been expanded to address a wider range of needs. In 1939, survivor benefits were tacked on to the program to cover spouses and children of retired individuals. Then, in 1956, disability benefits were added on as well.

3. Early Social Security recipients were paid differently than today's beneficiaries.

These days, Social Security enrollees receive benefits each month. But the program didn't always work that way. In fact, between 1937 and 1940, enrollees got paid in the form of a single, lump-sum benefit. Monthly payments weren't actually introduced until 1942, the reason being that the program needed time to build up some reserves and establish a minimum participation period for workers to qualify for monthly benefits. Beneficiaries under the lump-sum system received an average payout of $58.06 -- roughly $1,014 in today's dollars.

4. Current Social Security recipients get about $1,360 per month in benefits.

Many seniors bemoan the fact that their Social Security benefits don't give them enough buying power in the face of ever-climbing expenses. A big reason has to do with the fact that cost-of-living adjustments, or COLAs, have been fairly stingy in recent years. Last year, beneficiaries received just a 0.3% bump going into 2017, which translates to a mere $4 to $5 a month. Worse yet, recipients who are also enrolled in Medicare never even see that money -- it's automatically swallowed up by their Part B premiums.

Still, beneficiaries today have it good compared to what the program's earliest recipients were entitled to. Back in 1942, the typical monthly benefit equaled $17.50 a month. That's just $263 in today's dollars. And if that sounds bad, consider this: The lowest Social Security payment on record throughout the program's history is a mere five cents. Let's hope whoever got it didn't spend it all at once.

5. There are over 2,700 rules in Social Security's handbook. 

There's a reason people tend to be confused about Social Security. With more than 2,700 distinct rules surrounding the program, that's a lot of information to absorb. But while you can't be expected to learn every single rule by heart, you can review the basics of how Social Security works.

For starters, your Social Security benefits are based on your top 35 years of earnings. Once your base benefit amount is established, you'll be eligible to collect it in full upon reaching full retirement age (which, for today's workers, is 66, 67, or somewhere in between). If you file for benefits earlier (which you're allowed to do, beginning at age 62), you'll lower them permanently. On the other hand, if you delay your benefits past full retirement age, you'll get an 8% boost in payments for each year you hold off, up until age 70, at which point the incentive to wait runs out.

Even if you don't have enough of a work history to collect benefits yourself, you may still be entitled to receive spousal benefits based on your spouse's previous earnings. Furthermore, you may be able to get at those benefits even if you're divorced. The more you read up on Social Security, the better positioned you'll be to capitalize on whatever benefits you're entitled to.

Now that you know a bit more about Social Security, you can work on developing a strategy that will help you make the most of the program. It's never too early to start thinking about Social Security, and the deeper you dig in, the more interesting tidbits you're likely to come away with.