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Social Security History Quiz

Posted on Tue, Sep 04, 2012

Q. In 1937, a streetcar motorman in Cleveland named Ernest Ackerman received the very first Social Security retirement benefit payment. It was a one-time, lump-sum payout. How much was it for?

a. $177
b. $1,777
c. $7
d. 17 cents

The answer is d

The first Social Security checks (from 1937 to 1940) weren't monthly, but rather one-time lump sums. The purpose of these checks was to provide some "payback" to the people who contributed to the program, but did not participate long enough to be vested for monthly benefits.

Ernest Ackerman, who retired one day after the Social Security program began, is the earliest reported applicant for a lump-sum benefit. During his one day of participation in the program, a nickel was withheld from his pay for Social Security. Upon retiring, Mr. Ackerman received a lump-sum payment of 17 cents.

Under the 1935 law, monthly benefits began in 1942. The period of 1937 to 1942 was used to build up the Trust Funds and to provide a minimum period for participation in order to qualify for monthly benefits. The average lump-sum payment during this period was just over $58. The smallest payment ever made was for 5 cents.

Tags: Accounting, Social Security, History, Investment