Social Security Administration (SSA): What It Is and How It Works

What Is the Social Security Administration (SSA)?

The Social Security Administration (SSA) is a U.S. government agency that administers social programs covering disability, retirement, and survivors' benefits, among other services. It's also responsible for issuing Social Security numbers and managing the program’s finances and trust fund.

How the Social Security Administration Works

The SSA administers the Social Security program. Social Security is a vital part of the retirement income planning strategy of many Americans, particularly as savings rates remain low: 4.6% as of February 2023.

Almost 67 million Americans, including retired workers, disabled workers, and survivors, received Social Security benefits at the end of 2023, according to the SSA. Social Security is one of the largest government programs in the world.

The benefits are funded with payroll taxes paid by employers, employees, and the self-employed. The tax revenue goes into two Social Security trust funds: the Old-Age and Survivors Insurance (OASI) Trust Fund for retirees and the Disability Insurance Trust Fund (DI) for disability beneficiaries, which also make the benefit payments.

Supplemental Security Income (SSI) is distinct from Social Security. It isn't funded by payroll taxes. It aids the disabled, blind, and elderly who have limited income and resources.

Unlike most U.S. government agencies, the SSA is headquartered in Baltimore, Maryland rather than Washington, D.C. The SSA has 10 regional offices, six processing centers, and approximately 1,230 field offices in cities across the country. It employs almost 60,000 workers.

Social Security Administration Services

The SSA provides a wide range of services in addition to overseeing retirement and disability benefits programs and administering SSI, including enrollment in Parts A and B of the Medicare program.

It also issues the Social Security numbers (SSNs) required to access numerous government and private sector services, from credit financing and insurance coverage to hunting licenses.

History of the Social Security Administration

The Social Security Board was created in 1935 when President Franklin D. Roosevelt signed the Social Security Act into law. The SSA has since gone through numerous name changes and operational revisions under other presidential administrations. It was part of the Department of Health and Human Services until 1994 when it regained its original status as an independent agency.

President Biden fired SSA commissioner Andrew Saul in July 2021 and appointed Kilolo Kijakazi as acting commissioner. Kijakazi was deputy commissioner for retirement and disability policy at the SSA before her appointment. Saul was criticized for efforts to reduce access to disability benefits, delays in providing the information necessary to issue stimulus payments, and clashing with employee unions over COVID-19 safety protocols, including remote work.

The SSA is an independent agency and Saul's term was not due to expire until January 2025, but two Supreme Court rulings have given presidents greater authority to remove appointees. One determined that President Trump was free to fire the head of the Consumer Financial Protection Bureau (CFPB) in June 2020 and a second authorized President Biden to remove the chief of the Federal Housing Administration (FHA) in June 2021.

Social Security Administration: Annual Report

The Boards of Trustees of Social Security issue a report each year on the current and projected financial status of the SSA's programs. The Social Security Board of Trustees projected in its 2023 report that the reserves of the Old-Age and Survivors Insurance Trust Fund (OASI) will be depleted in 2033 rather than 2034 as was indicated in the 2022 report.

This occurred amid the swing to annual funding shortfalls as a result of Baby Boomer retirements. Payroll tax receipts will be sufficient to pay just 77% of scheduled benefits in 2033.

The combined OASI Trust Fund and the DI Trust Fund, together termed OASDI, would be projected to pay 100% of benefits until 2034 when the reserves will be depleted. At that point, continuing fund income would cover 80% of benefits after that point. This combined fund projection is used to gauge the overall health of the Social Security program.

The Bottom Line

The Social Security Administration manages, administers, and disperses benefits to millions of Americans each year. Understanding the SSA and how it works can help ensure that you receive the benefits you're entitled to.