This is the first of a series on Social Security – primarily focusing on the retirement benefits. The goal for this series is to address the key questions asked by our clients. Questions like:

  • When should I begin taking Social Security?
  • What options are available to me?
  • Which options are better for my circumstances?
  • Will my benefits be taxable?

I am going to heed Sgt. Joe Friday’s words and provide “Just the facts, ma’am.” Therefore, I will not be making any left-wing, right-wing, or off-the-chart-wing comments. Nor will I be looking into a crystal ball to predict Social Security’s future.

This first article will lay the foundation for future articles. Its main focus will be on terms, definitions, and history, with a bit of trivia in the mix. Future articles will dig deeper into the options, nuances, and oddities of Social Security retirement benefits.


The date is August 14, 1935. The U.S. is in the middle of the Great Depression. At 3:30 in the afternoon, President Roosevelt (that’s Franklin D., not Teddy) signed the Social Security Act, giving birth to The Social Security Administration (“SSA”). The following quote is part of President’s Roosevelt’s statement at this historic event:

Source of Photo: SSA

“We can never insure one hundred percent of the population against one hundred percent of the hazards and vicissitudes of life, but we have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age.”

Since its inception, Social Security was intended to be a safety net, not a panacea. If you would like to read the President’s whole statement, visit

A Bit of Trivia

Taxes to fund Social Security were first collected in January 1937. The tax rate in the original 1935 law was 1% each for both the employer and the employee, on the first $3,000 of earnings. This rate was increased on a regular schedule, so that by 1949 the rate would be 3% each on the first $3,000. The current tax rate for Social Security is 6.2% for each, on the first $117,000 of earnings.

Source of Photo – SSA

The first monthly retirement check, in the amount of $22.54, was issued to Ida May Fuller of Ludlow, Vermont. Miss Fuller was a legal secretary who retired in November of 1939. Therefore, only during the last three years of her employment (January 1937 – November 1939) did she pay Social Security taxes. The total amount she contributed was $24.75. Miss Fuller began collecting benefits in January 1940 at the age of 65. She died in 1975 at the age of 100. During her lifetime she collected $22,889 in Social Security benefits.

Key Terms & Definitions

The terms below are ones that will be used during this series.

COLA Cost of Living Adjustment Social Security benefits may be automatically increased each year to keep pace with increases in the cost-of-living (inflation). History since 2000 (rounded to the nearest 10th of a percent):
2000 = 3.5%     2001 = 2.6%     2002 = 1.4%
2003 = 2.1%     2004 = 2.7%     2005 = 4.1%
2006 = 3.3%     2007 = 2.3%     2008 = 5.8%
2009 = 0.0%     2010 = 0.0%     2011 = 3.6%
2012 = 1.7%     2013 = 1.5%
Annual average since 2000 = 2.5%
FRA Full Retirement Age The age at which a person may first become entitled to full or unreduced benefits based on age. For those born:
Before 1937 = Age 65
From 1938 to 1959 = Age 66+ (2 to 10 months)
After 1960 = Age 67
PIA Primary Insurance Amount The monthly amount payable to a retired worker who begins receiving benefits at full retirement age.

Future Installments

In our next issue, we will compare the three common ages for taking retirement benefits: age 62, FRA (see definition above), and age 70. In future installments, we’ll introduce you to Val and Pat, a married couple with gender-neutral names, and some complex planning options available to them. Lastly, for you Dave Barry fans, we will wrap up the series with “I’m not making this up!” and other Social Security tidbits.