What Is the Social Security Administration (SSA)? Programs and History

By Markets & Investing DeskUpdated Nov 10, 2026

Definition

The Social Security Administration is the independent U.S. federal agency that runs Social Security, paying retirement, disability and survivors benefits and issuing Social Security numbers.

Key takeaways

Workers and employers each pay 6.2% of wages in Social Security tax, up to an annual taxable maximum.
Benefits come from a formula using a worker's highest 35 years of indexed earnings, not from taxes paid.
SSI is need-based and funded by general Treasury revenue, while Social Security depends on work history.
The 2025 Trustees Report projected combined reserves running out in 2034, leaving about 81% of benefits payable.

The Social Security Administration (SSA) is an independent agency of the U.S. federal government that runs the Social Security program. It pays retirement, disability and survivors benefits, administers Supplemental Security Income (SSI), issues Social Security numbers, handles enrollment in Medicare Parts A and B, and manages the program’s finances and trust funds. Unlike most federal agencies, the SSA is headquartered in Baltimore, Maryland, not Washington, D.C.

The SSA’s work falls into a few main areas:

Retirement benefits. Monthly payments to workers who have earned enough work credits, plus benefits for eligible spouses and children.
Survivors benefits. Payments to the widows, widowers, children and in some cases dependent parents of a deceased worker.
Disability benefits (SSDI). Payments to workers who can no longer work because of a qualifying disability, and to certain family members.
Supplemental Security Income (SSI). Cash assistance for people who are aged, blind or disabled and have limited income and resources.
Medicare enrollment. Signing people up for Part A (hospital insurance) and Part B (medical insurance).
Social Security numbers. Issuing SSNs and cards. The number is needed for employment and tax reporting and is requested by many other services, such as credit applications.

The agency serves the public through regional offices, processing centers, local field offices and online services. Tens of millions of retired workers, disabled workers and survivors receive monthly benefits.

Social Security retirement, survivors and disability benefits run largely on a pay-as-you-go basis. Today’s workers pay payroll taxes under the Federal Insurance Contributions Act (FICA), and that money mostly pays today’s beneficiaries. The Social Security portion of FICA is 6.2% of wages paid by the employee plus 6.2% paid by the employer. Self-employed people pay both halves, 12.4%, through the self-employment tax. The tax applies only up to an annual wage cap (the taxable maximum), which is adjusted each year.

The Internal Revenue Service collects these taxes. The money is credited to two trust funds:

Old-Age and Survivors Insurance (OASI) Trust Fund, which pays retirement and survivors benefits.
Disability Insurance (DI) Trust Fund, which pays disability benefits.

Together they are called OASDI. Revenue beyond what current benefits need is invested in special-issue U.S. Treasury securities, and those reserves are drawn down when costs exceed income.

Hypothetical example: payroll tax and benefits

Hypothetical: An employee earns $60,000 in a year, below the taxable maximum. The employee pays 6.2% × $60,000 = $3,720 in Social Security tax, and the employer pays another $3,720, for a total of $7,440. If that person were self-employed with $60,000 of net self-employment earnings, the self-employment tax would be calculated on a slightly reduced base, because self-employed people deduct the equivalent of the employer half before applying the tax.

The tax paid does not set the benefit directly. The SSA averages a worker’s highest 35 years of indexed earnings into Average Indexed Monthly Earnings (AIME). It then applies a progressive formula with “bend points” to get the Primary Insurance Amount (PIA), the benefit payable at full retirement age. The formula replaces a larger share of earnings for lower earners than for higher earners. Claiming before full retirement age permanently reduces the monthly amount, and delaying past it, up to age 70, increases it. Annual cost-of-living adjustments (COLAs), tied to consumer price inflation, then raise benefits over time.

	Social Security (OASDI)	Supplemental Security Income (SSI)
Basis	Work history and payroll taxes paid	Financial need
Funding	Payroll taxes via trust funds	General U.S. Treasury revenue
Who qualifies	Insured workers and eligible family members	Aged (65+), blind or disabled people with limited income and resources
Means test	No income or asset test for retirement benefits	Strict income and resource limits

A person can receive both if they qualify for each. A small Social Security benefit can be topped up by SSI, though the Social Security payment counts as income for the SSI calculation.

1935: President Franklin D. Roosevelt signed the Social Security Act. It created the Social Security Board, which oversaw old-age insurance, unemployment compensation and public assistance.
1939: Amendments added benefits for dependents and survivors.
1946: The Social Security Board was abolished, and its functions moved to the newly created Social Security Administration.
1956: Disability insurance was added.
1965: President Lyndon B. Johnson signed the law creating Medicare.
1972: Amendments created SSI, which began paying in 1974, and introduced automatic annual COLAs for Social Security benefits.
1994: The SSA left the Department of Health and Human Services and again became an independent agency, led by a commissioner nominated by the President and confirmed by the Senate.

The Trustees Report and the trust fund outlook

The Boards of Trustees of the Social Security and Medicare trust funds publish an annual report on the programs’ current and projected finances. The 2025 report projected:

OASI: reserves depleted in 2033, the same as the 2024 report. Ongoing tax income would then cover about 77% of scheduled benefits.
DI: able to pay 100% of scheduled benefits through 2098.
OASDI combined (hypothetically merged): reserves depleted in 2034, after which income would cover about 81% of benefits. The 2024 report had projected 2035 and 83%.

Depletion does not mean benefits stop. Payroll taxes keep coming in, so benefits would be cut to what income can support unless Congress changes taxes, benefits or both. These are projections, and they shift from one report to the next as economic and demographic assumptions change.

What the SSA is not

Not the agency that runs Medicare. The SSA takes Medicare enrollments and can deduct Part B premiums from benefits. The Centers for Medicare & Medicaid Services administers the program.
Not the tax collector. The IRS collects FICA and self-employment taxes.
Not a retirement account. Benefits come from a statutory formula, not an individual balance. Plans such as the federal Thrift Savings Plan or a 401(k) are separate savings on top of Social Security.

Dealing with the SSA

People usually contact the SSA about an SSN or card, a benefit application, an earnings statement or an existing claim. Many tasks can be handled through an online “my Social Security” account, including replacing a lost card when nothing else on it changes. Other card changes, such as name or citizenship updates, use Form SS-5, submitted by mail or in person with the required identity documents.

Limitations

Social Security replaces part of pre-retirement earnings, not all of it. Higher earners get a smaller replacement share, and earnings above the taxable maximum raise neither taxes nor benefits. The trust fund projections add uncertainty about future benefit levels, which matters for anyone planning an early exit from work, as in the FIRE movement.

The Bottom Line

The SSA matters to nearly every American worker, retiree, disabled person and survivor, since it sets and pays benefits under a statutory formula. Social Security replaces only part of pre-retirement earnings, and trust fund projections add uncertainty about future benefit levels. Workers, especially higher earners and anyone planning to stop working early, should treat it as one income source alongside separate savings such as a 401(k) or the Thrift Savings Plan.