Social Security Administration

Fact Box

Social Security Administration

Formed on August 14, 1935
Headquarters- Woodlawn, Maryland
Commissioner- Michael J. Astrue
Employees- 62,000
Annual budget (2008) $657.3 billion

The Social Security Administration (SSA) is an independent federal agency that pays monthly sums to those who are retired or have disabilities. Social Security currently provides financial protection to more than 158 million workers and their families, and it pays approximately $805 billion annually in benefits to more than 64.3 million Americans who receive monthly Social Security retirement, disability, or survivors’ benefits. Created during the Great Depression of the 1930s, Social Security was the first “entitlement” program created by the federal government, designed to help Americans during the latter years of life or those with disabilities. In recent years, concerns have been growing over how the federal government will maintain the program as retirees will soon outnumber workers whose payroll taxes fund the system. In 2005, Social Security reform was arguably the hottest political topic in Washington D.C., as President George W. Bush tried to push through a radical change involving personal retirement accounts, a plan that failed dramatically. The solvency and potential vulnerability of Social Security continues to be the subject of much heated political debate, particularly during times of economic distress and election-year fever.


Because it was created during the New Deal, many have credited President Franklin Roosevelt for establishing Social Security. However, the idea was really that of maverick Democratic Senator Huey Long of Louisiana, who proposed the “Every Man a King” program in 1930. Long proposed that every person receive an old-age pension when they reached the age of 60. On June 8, 1934, the Committee on Economic Security sponsored the first-ever national town-hall forum on Social Security and drafted a detailed legislative proposal for a social security program. The Social Security Act was passed in August 1935.

The Act established an independent Social Security Board (SSB). The very first social security number was issued to John D. Sweeney, Jr. of New Rochelle, New York. The lowest number ever issued was 001-01-0001, to Grace Dorothy Owen of Concord, New Hampshire. Monthly benefits did not start until 1942. Prior to that, recipients received lump-sum payments upon retiring. The first person to receive such a payment was Ernest Ackerman of Cleveland, Ohio, who retired one day before the Social Security System went into effect. For his one day in the program, Ackerman had a nickel withheld from his paycheck. He then received a lump-sum payment of 17 cents. The average lump sum was $58.06.

In 1939, Congress adopted two important changes to Social Security. One made spouses and children of retired workers eligible for Social Security income in the event the worker died. The other change moved the SSB into the newly created Federal Security Agency. 

Seven years later, SSB was renamed the Social Security Administration. In 1953 the Federal Security Agency was abolished and the Social Security Administration became part of the Department of Health, Education and Welfare. The 1950s also saw important changes to the program. Benefit levels were increased for the first time (by 77%) to provide greater assistance to retired Americans. In 1956, lawmakers passed an amendment that granted benefits to adult workers age 50-65 who became disabled and to disabled adult children. In succeeding years, Congress opened the disability portion of Social Security to adults of all ages.

In 1961, the retirement age was lowered to 62 for men to qualify for Social Security (women received this benefit in 1956). A few years later, President Lyndon Johnson and Congress approved one of the largest expansions ever in Social Security history by creating the Medicare program. Under Medicare, Social Security beneficiaries 65 and older qualified for the new government health insurance program. Nearly 20 million people enrolled in Medicare during its first three years.

During the 1970s, cost-of-living adjustments and wage indexing were implemented for Social Security to help retirees better cope with inflation. The Social Security Income (SSI) program was established to oversee the distribution of benefits to the disabled. Another important change removed Medicare from the Social Security program and entrusted its administration to the newly created Health Care Financing Administration. 

The SSA moved again with the creation of the Department of Health and Human Services in 1980. The decade also represented the first time that lawmakers had to grapple with a financing problem for Social Security. President Ronald Reagan formed a blue ribbon panel led by Alan Greenspan to come up with solutions. Congress adopted amendments in 1983 at the suggestion of the Greenspan Commission, which included partial taxation of Social Security benefits, the first coverage of federal employees, raising the retirement age beginning in 2000, and increasing the reserves of the Social Security trust fund. Another change came about in 1989 with the requirement that the SSA send out annual statements to all persons working under Social Security. (As a cost-saving move, the SSA stopped such mailings in 2011, except for people age 60 and over.) 

It was not until 1994 that the Social Security Administration regained its status as an independent agency. SSA now reported directly to the President, and a seven-member bipartisan Social Security Advisory Board was formed to provide advice and counsel on the program. In the late 1990s, SSI benefits for non-citizens were scaled back, and the Ticket to Work and Work Incentives Improvement Act of 1999 was adopted. The latter provided vouchers to SSI recipients to help or encourage them to find employment (and thus reduce their reliance on Social Security).

In 2000, President Bill Clinton signed the Senior Citizens’ Freedom to Work Act, which eliminated rules that penalized seniors who choose to work after retiring. The remainder of this decade has been preoccupied by debate over Social Security reform. In 2001, President George W. Bush commissioned a special report on how to avoid Social Security from running out of money (scheduled to happen in the decade of 2030). Following his reelection in 2004, Bush made Social Security reform a major goal of his second term. Included in his proposed changes were plans to partially privatize Social Security—a controversial idea that Republicans and Democrats in Congress refused to embrace.

The SSA put several changes into effect in 2011. They included a lowering of the Social Security tax rate, introduction of a new “randomized” method of issuing Social Security numbers, and the elimination of paper checks, retroactive benefit suspensions, and interest-free loans to retirees. Also, for the second time since it was instigated in 1975, no cost of living adjustment (COLA) is being applied to benefit payments. Additionally, the agency announced a plan to ban people from visiting its offices, starting in November 2011, if they had ever made a threat against the SSA. In 2010, such threats increased by 43%—to a total of 2,800—over the previous year, including 352 people charged with killing, assaulting, or threatening SSA employees. SSA field offices were visited by 45 million people in 2010.

What it Does

The SSA is responsible for distributing retirement benefits and disability payments to Americans. The administration implements two main programs. The largest is the Old-Age, Survivors Disability and Insurance, which is commonly referred to as Social Security. This program provides funding to more than 54 million Americans who are age 65 and older. The other program, Supplemental Security Income (SSI), provides financial support to more than 8.1 million Americans who are aged, blind, or disabled adults and to children with limited income and resources.

Key SSA Offices

Retirement/Disability Policy (RDP) is the principal adviser to the Commissioner of Social Security on major policy issues and is responsible for all major activities in the areas of strategic and program policy planning, policy research and evaluation, statistical programs, and overall policy development, analysis, and implementation. The RDP serves as the lead spokesperson in presenting policy proposals and analysis within and outside the Executive Branch. The office directs and manages the planning, development, issuance, and evaluation of operational policies, standards, and instructions for the Retirement and Survivors Insurance, Disability Insurance, Supplemental Security Income (SSI) program and other SSA programs. The office assists in achievement of consistency in program policy across programs administered by SSA. The Office is involved in analyses of legislative and regulatory specifications and budgetary impacts of legislation on programs administered by SSA. The office produces, presents, supports, and publishes program data, statistics, research, analyses, and reports that detail trends and effects of the programs on recipients and potential recipients. It explains impacts of reform proposal options to enhance program provisions or solvency. The office develops and evaluates demonstrations and studies that support the policy development of SSA. The office works with the Department of Treasury on issues of policy relating to the Federal Insurance Contributions Act and the Self-Employment Contributions Act, including such matters as definition of wages and implementation of laws. It manages a nationwide network of medical, psychological and vocational experts who assist Administrative Law Judges (ALJs), the Decision Review Board (DRB), State Disability Determination Services (DDS) and the Office of Quality Performance (OQP) in making disability determinations and decisions.

Disability Adjudication/Review administers the nationwide Disability Adjudication and Review program for SSA. It provides the means through which individuals and organizations dissatisfied with determinations affecting their rights to and amounts of benefits or their participation in programs under the Social Security Act may appeal these determinations in accordance with the requirements of the Administrative Procedure and Social Security Acts. The office includes a nationwide field organization staffed with Administrative Law Judges (ALJs) who conduct hearings and make decisions on appeals filed by claimants, their representatives, providers‑of‑service institutions, and others under the Social Security Act. 

Operations directs and manages central office functions and those spread across the country. It oversees regional operating program, technical, assessment, and program management activities. It directs studies and actions to improve the operational effectiveness and efficiency of its components. It promotes systems and operational integration and defines user needs in the strategic planning process. It determines automation support needs for office components. It oversees the coordination and implementation of SSA’s policies for the electronic delivery of agency services to the public.

Quality Performance is responsible for rendering formal advice and recommendations to SSA executives on a range of issues relating specifically to quality performance management in each of the agency’s core business areas. It works with deputy commissioner-level components to direct the SSA quality performance management program, its policies, and initiatives involving one or more components of the agency. It also provides oversight for SSA computer matching operations.

Systems directs systems and operational integration and strategic planning processes and the implementation of a comprehensive systems configuration management, data base management, and data administration program. It initiates software and hardware acquisition for SSA and oversees software and hardware acquisition procedures, policies, and activities. It directs the development of operational and programmatic specifications for new and modified systems and oversees development, validation, and implementation phases. 

Actuary plans and directs a program of actuarial estimates and analyses pertaining to the SSA-administered retirement, survivors and disability insurance programs, and the SSI program, and to projected changes in these programs. It evaluates operations of the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund; estimates future operations of the trust funds; conducts studies of program financing; performs actuarial and demographic research on social insurance and related program issues; and estimates future workloads. It also provides technical and consultative services to the commissioner, the Board of Trustees of those two trust funds, and, as requested, congressional committees. It appears before congressional committees to provide expert testimony on the actuarial aspects of Social Security issues.

Budget, Finance, Management directs SSA management programs, including budget, acquisition and grants, facilities management and publications, and logistics. The office directs the development of SSA policies and procedures as well as the management of financial systems. 

Legislative Affairs develops and conducts the legislative program of SSA, serves as the focal point for all legislative activity in SSA, analyzes legislative and regulatory initiatives and develops specific positions and amendments.  The office evaluates the effectiveness of programs administered by SSA in terms of legislative needs and analyzes and develops recommendations on related income maintenance, social service and rehabilitation program proposals, particularly those which may involve coordination with SSA-administered programs and on other methods of providing economic security. 

General Counsel advises the commissioner on legal matters, is responsible for providing all legal advice to the commissioner, deputy commissioner and all subordinate officers (except the inspector general) of SSA in connection with the operation and administration of SSA. The general counsel is responsible for the policy formulation and decision making related to the collection, access and disclosure of information in the records of the Social Security Administration and processing of Freedom of Information requests and appeals.  

Communications is responsible for SSA’s national public information/public affairs (PI/PA) programs. It performs SSA Press Office functions and provides guidance and direction from a PI/PA standpoint to the development of agency policies and decisions and assesses their potential impact on the public and SSA employees. It also creates and develops all SSA communications and PI/PA activities, both internal and external.

Inspector General is responsible for promoting economy, efficiency and effectiveness in the administration of SSA programs and operations, and to prevent and detect fraud, waste, abuse, and mismanagement. The office directs, conducts, and supervises a program of audits, evaluations, and investigations, and also searches for and reports systemic weaknesses, and follows up with recommendations for needed improvements and corrective actions. 

In 2011, the SSA announced forthcoming changes to the agency’s organizational structure, including the following: SSA’s Innovation and Investment Management offices, which have been part of the Office of the Chief Information Officer, would move to the Office of Systems, taking on responsibility for health IT initiatives. The SSA’s Office of Vision and Strategy would be split in two, with the Division of Strategic Services going to the Office of Quality Performance and the IT strategy unit moving to the Office of Systems. Security functions, which had been handled by facilities management, would become the responsibility of a newly created Office of Security and Emergency Preparedness. Logistics functions would be consolidated in a new Office of Facilities and Supply Management.

Where Does the Money Go?

The SSA provides benefits to nine out of ten individuals age 65 and older. As of July 2011, 64.3% of benefits paid go to retired workers and their dependents, 19% goes to disabled workers and their dependents, and 11.5% are paid to survivors of deceased workers. Social Security is primarily financed through taxes paid by employers and employees. Employers pay 6.2% and employees pay 4.2% of their wages up to a maximum of $106,800, while the self-employed pay 13.3% of their wages. In 2010 these taxes accounted for approximately 82% of the funding for Social Security and Disability. The remaining 18% is composed of interest earnings from the federal government, Treasury fund reimbursements, and taxation of Social Security benefits.

SSA also spends on private contractors to help it administer its programs and carry out its mission. According to, the agency spent more than $8.9 billion this decade on 81,500 contractor transactions. The largest expenditures were for telecommunications services (nearly $2 billion), ADP software ($964,183,782), ADP input/output and storage devices ($462,727,353 ), ADP storage equipment ($409,191,467), and ADPE system configuration ($353,212,931).

The top five contractors between 2002 and 2011 were:

1. Lockheed Martin Corporation                                                         $1,026,538,857

2. IBM Corporation                                                                                $620,174,337

3. Dell Inc.                                                                                             $301,482,783

4. CA Inc.                                                                                              $237,466,689

5. Hewlett-Packard Company                                                               $224,398,362

Data on Social Security Administration