Historically, older individuals who had reached a point where they were physically or mentally incapable of working any longer were cared for by family members. In many cases, families stayed within the same home or on the same land for many generations, and because mass transit and personal automobiles didn’t exist or were uncommon, communities tended to be smaller and most closely connected.
As advancements in technology brought about easier access to larger cities and more job opportunities in more places, people began to spread out and live farther away from the family home. This left some seniors who were unable to work to face financial instability and the health problems that can come from lack of access to funds. To make matters more complicated, advancements in medical technology and research improved life expectancy figures, allowing people to live longer. Despite these advancements, however, plenty of people were living longer without the ability to work.
Why Does Social Security Exist?
To remedy the growing problem of seniors in need and an aging population, President Franklin Roosevelt signed the Social Security Act in 1935. This Act established the Social Security Administration and the Social Security program, as well as unemployment benefits for those out of work. The purpose of the Social Security Act was to provide financial assistance to struggling individuals in the midst of the Great Depression as well as to provide financial security to people who were unable to work due to age, disability or unemployment.
There have been a number of amendments to the Social Security Act since it was signed into law, including provisions for cost-of-living adjustments, changes to requirements for Social Security eligibility and changes to qualifying disabling conditions. Today, the Social Security program provides benefits for over 60 million Americans, and as the Baby Boomer generation enters into retirement, that number is expected to rise throughout the 2020s.
Can You Live Off of Social Security?
Whether or not you can meet your financial needs through Social Security alone depends on your lifestyle. For some individuals, Social Security is enough to pay for food and monthly bills, but the current benefit may not be enough to cover a mortgage or rent as well as day-to-day expenses. As a result, many people consider Social Security to be supplemental income and use it in addition to other retirement funds, including 401(k) investments, pensions, individual retirement accounts and other savings vehicles.
Planning is the Key to Maximizing Social Security
Social Security also has tax implications depending on your financial situation, so it’s a good idea to work with a financial planner prior to applying for the program if possible. Your age at the time of accepting Social Security benefits can make a difference in your monthly payment, and the age of your spouse can affect any survivor benefits. Because each situation is unique, working with a financial planning professional is often the key to maximizing your benefits and ensuring that your financial needs and those of your loved ones are met for many years to come. You should also contact the Social Security Administration if you have questions about your account, eligibility or benefits.