Do you consider your Social Security check to be a government benefit, or do you consider it earned income? The reason I’m asking is because this week, two different friends of mine sent me the same Facebook post that seems to be going viral. And honestly, it’s making a lot of people very upset.
So here’s what it says. I’m going to read part of it to you. The government is now referring to our Social Security checks as federal benefit payments. This isn’t a benefit. It’s our money paid out of our earned income. End quote.
The post goes on to say, quote, “Instead, the folks in Washington pulled off a bigger Ponzi scheme than Bernie Madoff ever did.” And now, to add insult to injury, they’re calling it a benefit, as if we never worked to earn every penny of it.
This is a transcript of our video. You can watch the full video on our YouTube channel: Low Income Relief.
Why This Post Makes People So Angry
Now, this post does go on to claim that if you had just invested that money yourself, you’d have over $1.3 million in the bank and be living like a king. When you read that, it feels like theft. It feels like they’re changing the rules in the middle of the game.
And I want to start this video by saying you have every right to feel that way. You worked 30, 40, maybe 50 or more years. You saw money come out of your paycheck every single week. You know you paid for this. So when someone calls it a benefit, which sounds like a gift or a handout or welfare, that feels deeply disrespectful of your sacrifices.
So today, we’re going to do a deep dive into this viral post so that you can get the truth. Is the government really renaming Social Security? Is that math about the $1.3 million actually true? And why does everyone insist on using the word benefit for Social Security when we all know that you paid for it?
Going Back to 1935
To answer all of that, we need to start by going back in time. We need to look at the receipts from 90 years ago. We’re going to travel back to August 14th of 1935. That is the day President Franklin Delano Roosevelt sat at a desk at the White House and signed the original Social Security Act into law.
I went back and pulled the original text of this document. I wanted to see what they called it back then and how they talked about it. Was it earned income like this viral post claims? Was it identified as a worker investment?
Actually, no. The original 1935 act explicitly called this program federal old-age benefits. In fact, the word benefit appears 31 times in that original document.
So here’s the hard truth. The government is not embarking on some new renaming scheme. The government hasn’t changed the name recently to trick you. They’ve been calling it a benefit for 90 years, starting from day one.
Why It’s Called a Benefit
But—and this is the important part—why did FDR call it that? Was he trying to say it was welfare? No.
Back in the 1930s, and still today, benefit is a legal term used by insurance companies. When you buy an insurance policy, the payout is legally called a benefit. So when FDR signed that law, he wasn’t creating a charity. He was creating a mandatory insurance program.
Just like State Farm may pay you a collision benefit if you crash your car, the government pays you an old-age benefit when you retire or a disability benefit when you become too disabled to work.
So while I know a lot of people hate that word because it sounds like a handout, I want you to know it’s not some new trick. There’s no conspiracy to rename or disrespect your Social Security. It’s just old, boring insurance language.
The “Federal Benefit Payment” Label and Why It Matters
Even more than that, if you look at your bank statements, you’ll probably see they’ve been calling it that for a long time. If you get your Social Security via direct deposit, your bank statement might say something like “US Treasury federal benefit pay.”
That label, federal benefit payment, is a code used by the U.S. Treasury and banks. And that matters because it gives your money superpowers.
If you have credit card debt or medical bills and a collector tries to freeze your bank account, they can take your birthday money. They can take your lottery winnings. They can take the money you earn from a side job. But they cannot take money that is labeled a federal benefit payment.
That label is the legal shield that stops debt collectors from being able to drain your Social Security. So ironically, we really want that label on your bank statements for your protection. That designation helps a lot of low-income seniors and people with disabilities avoid losing the money they worked so hard for.
The $1.3 Million Claim and the Real Math
Now that we’ve cleared up the name, let’s look at the other claims in this viral post. It says you paid 15% of your income your whole life, and if you had just invested that, you’d be a millionaire with $1.3 million in the bank.
I’m going to be the bearer of bad news here, because the math in this post is a bit exaggerated. First, you didn’t pay 15% your whole life. Right now, the total rate is 12.4%. But if you’re retired now, you probably worked in the 70s, 80s, 90s, and earlier.
Back in 1970, the tax rate wasn’t 15%. It was 8.4%. Back in 1950, it was only 3%. The amounts vary depending on what years you actually worked. So the claim that they took 15% of every dollar you ever earned isn’t historically accurate, even though it feels true because that money did come out of your check and it did affect you.
But is the post right that you could have made more money in the stock market? Maybe—if you timed it right. The catch is that Social Security isn’t an investment account. It’s meant to be more like insurance.
If you had put all that money into the stock market and the market crashed the year you retired, like it did in 2008, you could have lost a substantial amount of your life savings overnight. Social Security is designed to be more resilient than that. It’s not designed to make you rich. It’s designed to make sure it never hits zero.
Why We Still Use the Word “Benefits”
I want you to know that I see your comments. I see when you get mad about the phrase Social Security benefits, and I understand why. I know you earned that. I know it’s personal. And I know for many of you, Social Security is an absolute lifeline.
We still use the phrase Social Security benefits here because it’s the language the government uses, and that matters for accuracy. If you call the Social Security Administration and ask about your investment or your earned income, they’re not going to know what you’re talking about. You have to ask about your Social Security benefits to get the help you need.
So please, when you hear me say Social Security benefits, don’t hear charity or welfare. Hear insurance payout. Hear money you earned. Because that’s exactly what it is.
A Final Request
On that note, I have one last favor to ask you. The next time you see that viral post on Facebook, or your cousin sends it to you in an email, don’t get into a fight in the comments. Just drop the link to this video in the reply. Let’s fight information with facts so we can focus on the real fight—protecting this program for everyone who needs it in the future.
The one part of the post I do agree with is where it says, “Let’s take a stand. We’ve earned our right to Social Security and Medicare. Find a way to keep it going for the sake of the 92% of our population who need it.” I absolutely agree with that.
We need to work together to push the government to find real solutions. I didn’t copy and paste the post because it’s factually incorrect, which is why I’m talking to you about it today. But the sentiment behind it does matter.
You are so good at this. Thank you for your time, energy and insight.