Social Insurance Programs for Older Adults

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  • 0:02 Hard Times
  • 1:58 Background to the SSA
  • 3:28 The Social Security Act
  • 6:01 Lesson Summary
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Lesson Transcript
Instructor: Christine Serva

Christine has an M.A. in American Studies, the study of American history/society/culture. She is an instructional designer, educator, and writer.

This lesson discusses the Social Security Act of 1935 and why a social insurance program for older adults was established. We explore this topic from the perspective of a family affected by the Great Depression.

Hard Times

It's 1935, and Brian's extended family has gathered together for a modest meal at his home. A few family members have brought over vegetables from their garden, and Brian's Aunt Carol has slaughtered a chicken for the event. Less than a decade earlier, the meal might have been twice as large as it is now.

Everyone has had to cut back on expenses. Even these simple contributions to the meal are generous, considering the circumstances of the Great Depression. Most of Brian's family is still out of work. His older neighbor had been out of work so long that he has lost all of his possessions and, at age 85, is living on charity from the local church.

Brian has particular concern for two older members of his family. His Aunt Carol recently lost her husband, and it's hard to imagine how she'll continue to survive without the income his uncle was bringing into their family. Since Aunt Carol's children had to move to the nearby city for work, she doesn't have many others to help her out as she copes with this financial change.

The other person Brian worries about the most is his grandfather. Since the stock market crash, his grandfather's life savings have been depleted. He is unlikely to find work due to lack of jobs as well as his own declining health. The state offers him a small pension, but this is only enough to help him pay for his monthly electricity bill and not much else.

As the family meal gets underway, the conversation turns to President Roosevelt and what the government's responsibility should be to the public's economic welfare. Other programs, such as the Townsend Plan, had been proposed to provide a pension to older adults, and so the family debates this as well. While not everyone agrees on what exactly should be done, all of his family members agree on one thing: something has to change.

Background to the SSA

The economic devastation of the Great Depression had a lasting effect. As the world slowly recovered, the public and the government asked the question of how to create reforms for long-term stability. The Great Depression made it clear that economic conditions could change dramatically and quickly. For instance, Brian's Aunt Carol, his grandfather, his neighbor, and many others were in need of financial help as a result of forces completely beyond their own control.

Due to urbanization, many older adults also found themselves living in separate places from their family members. For instance, when Aunt Carol's children moved to the city for work, she was without support as she aged in a rural area. This made her more vulnerable as an older adult, and many of her generation were finding themselves in similar circumstances.

Recognizing these challenges, some states had established programs to help out older adults. Yet, these smaller programs were often unable to meet the demands of their citizens, such as Brian's grandfather, who could barely cover just his electricity bill with the amount he received. Funding payments to so many older adults would take more than the limited money available under current legislation. In order to develop a comprehensive and lasting program, every working person and employer would soon find a percentage of their paycheck contributing to a new solution.

The Social Security Act

This type of government-funded program designed to protect individuals from the economic risks of life is known as a social insurance program. This means that when a person loses their job, acquires a disability, or retires, society as a whole takes on some responsibility to ensure that the person is protected from economic devastation.

The Social Security Act of 1935 established a program of federal social insurance benefits to older adults, those with disabilities, the unemployed, and their dependents. The program is funded by mandatory contributions from working adults and employers. If you have a paycheck coming in, you can look at the line items under taxes and deductions and will see an amount designated for Social Security, or the term FICA used as a label.

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