KnowHow Archive

Plan Sponsor Guide Participant Guide

Security Blanket?

It is difficult these days to write about Social Security and not offer an opinion on whether or not you think the current system is broken, or just showing signs of age, as well as a laundry list of potential remedies. It used to be the "third rail" of American politics but, these days, it (like so many other things) has simply become a dividing line.

The program has served us well—perhaps too well. An enormous percentage of today's retirees depend on those Social Security checks for more than half their income and, given how modest those payouts are, that is an alarming statistic (particularly when one considers that that generation had much greater access to employer-provided pensions and retiree health care). If nothing else, it should remind plan sponsors of how much work remains in terms of shoring up the financial security of our employer-sponsored retirement system.
Without delving into the politics or judgments associated with an evaluation of the current Social Security program, the issue is top of mind for employers and participants alike. This month, we try to provide answers to some of the questions we hear most often from participants who write to us (believe it or not, they do). If you have additional items you would like us to address in this space, please write to us at As always, we trust this will assist you in your continued efforts to educate your participants—and look forward to your comments.
Social Security Factoids
» The first three digits are assigned by the geographical region in which the person was residing at the time he/she obtained a number. Generally, people on the East Coast have the lowest numbers, and those on the West Coast have the highest numbers. The remaining digits are more or less randomly assigned. You can find a table of the geographic assignments at
» The Federal Insurance Contributions Act (FICA) is the legal basis on which Social Security payroll taxes are collected. Many refer to the Social Security payroll tax as "FICA" taxes.
» The first American to receive a Social Security benefit was a guy named Ernest Ackerman, who got a payment for 17 cents in January 1937 (this was a one-time, lump-sum payout—which was the only form of benefit paid during the start-up period January 1937 through December 1939). The first person to receive ongoing monthly benefits was Ida May Fuller, from Ludlow, Vermont.