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Social Security Act

Definition

The Social Security Act was a law signed by a U.S. president in 1935 that created social insurance programs designed to provide economic security for retired workers, unemployed individuals, and those with disabilities.

Analogy

Imagine your piggy bank that you fill up with money over time. Just like how you save money in your piggy bank as a safety net for future needs, the Social Security Act created programs to ensure people have financial support when they need it later in life.

Related terms

Medicare: Medicare is a federal health insurance program established under the Social Security Act that provides medical coverage primarily for people aged 65 and older.

Medicaid: Medicaid is another program established under the Social Security Act that provides healthcare assistance to low-income individuals and families.

Old Age, Survivors, and Disability Insurance (OASDI): OASDI refers specifically to one part of Social Security which provides benefits during retirement or disability, as well as survivor benefits.