From the website of the Social Security Administration
On June 8, 1934, President Franklin D. Roosevelt, in a message to the Congress, announced his intention to provide a program for Social Security. Subsequently, the President created by Executive Order the Committee on Economic Security, which was composed of Frances Perkins, Secretary of Labor, Chairwoman; Henry Morgenthau, Jr., Secretary of the Treasury; Henry A. Wallace, Secretary of Agriculture; Homer S. Cummings, Attorney General; and Harry L. Hopkins, Federal Emergency Relief Administrator. The committee was instructed to study the entire problem of economic insecurity and to make recommendations that would serve as the basis for legislative consideration by the Congress.
In early January 1935, the Committee made its report to the President, and on January 17 the President introduced the report to both Houses of Congress for simultaneous consideration. Each House passed its own version, but eventually the differences were resolved and the Social Security Act was signed into law on August 14, 1935. In addition to several provisions for general welfare, the new Act created a social insurance program designed to pay retired workers age 65 or older a continuing income after retirement.
Originally, beginning in 1937, Social Security paid a single, lump sum payment to the retiring worker. Monthly payments weren't scheduled to begin until 1942. The earliest known payment was to Cleveland motorman, Ernest Ackerman. He received $0.17, not exactly a princely sum, even in that day.
The original act only issued payments to the workers themselves. In 1939, it was amended to include the spouse and minor children in the event the worker died. This same amendment moved the start of monthly payments up to 1940. The act was altered again in 1950 to incorporate cost of living adjustments, aka COLAs. This adjusted the payments according to inflation so that the purchasing power of the benefits would not be eroded by inflation.
Later amendments would add disabled workers to the roster of beneficiaries, and make numerous other modifications to the program.
Although Social Security is a well meaning program, I feel that it has outlived its usefulness. It really amounts to little more than a Ponzi scheme due to its structure. Though it is true that investments are not guaranteed, they do tend to pay considerably more than SS. If the funds now used for social security, which amounts to 15% of an employee's income (7.5% by the employee, and 7.5% by the employer on behalf of the employee) were to be invested in T-bills and savings accounts, (which are guaranteed), the result would be better for workers than the current situation. They would be able to leave that to heirs, and could use it for early retirement, or just let it grow if they never wanted to retire. Or they could just improve their standard of living by spending the money and working at the same time. I think it is time to phase out social security. We can bite the bullet and pay the people currently in the system or close to retirement by cutting costs elsewhere, and free our children from the burden of taking care of the aged at gunpoint.
One of the true tragedies of social security is how it affects the accumulation of wealth among black males. 1/3 of black males die by age 65. Those who work pay into the system, but they, nor their families, unless they married and had children, will receive any benefits. Of the remaining 2/3, many don't live very long after 65, since, as a group, black males are a short lived lot. This amounts to a transfer of wealth from black males to others, mostly white females, since white females live longer than other demographic groups. If black men could instead save the money for themselves, they could pass it along to whomever they saw fit, and potentially accumulate wealth over the course of generations. Social Security effectively hits the "reset button" on wealth, preventing any such accumulation. Even if the person decided to spend the money instead of saving it for retirement, there is the guaranteed benefit of spending the money on something desirable, rather than the mere possible benefit of retirement funds -- if you live.