The Social Security number (SSN) is a vital numerical identifier assigned to U.S. citizens and other residents to track income and determine benefits. Established in 1936 during the New Deal era, the SSN’s primary function was to monitor earnings and facilitate the provision of retirement and disability benefits. Over time, its use has expanded, becoming essential for tax purposes, credit tracking, and more.
Individuals in the U.S. must provide their SSNs to obtain credit, open bank accounts, apply for government benefits, complete major purchases, and much more.
Key Takeaways
- The SSN is a numerical identifier for U.S. citizens and residents to track income and allocate benefits.
- It was established in 1936 as part of the New Deal.
- SSNs are issued by the Social Security Administration (SSA).
- To obtain an SSN, you must file Form SS-5 with the SSA.
- SSNs can be susceptible to illegal use by identity thieves and fraudsters.
How Social Security Numbers Work
Virtually all U.S. citizens, permanent residents, and temporary or working residents possess an SSN. Even non-working residents can obtain an SSN due to its widespread use by businesses and government agencies. The SSA, governed under 42 U.S. Code, Chapter 7, Subsection 405 of the Social Security Act, issues these numbers.
Before 2011, the first three digits of an SSN indicated the state where the number was issued. Now, numbers are assigned randomly to prevent fraudulent activities. Still, safeguarding your SSN remains crucial given the prevalence of identity theft and scams. For assistance, refer to the Federal Trade Commission’s website to report fraud directly.
The History and Significance of SSNs
The SSN was initiated under President Franklin D. Roosevelt’s New Deal program to support U.S. citizens financially in the wake of the Great Depression. Signed in 1935, the Social Security Act created a system for tracking work history and awarding financial benefits based on one’s pre-retirement income.
The Social Security Board, now known as the SSA, assigns a unique nine-digit number to each individual. Since then, the use of SSNs has evolved, reflecting their deepened integration into various administrative and financial systems.
Understanding SSN Components
Area Number
The first three SSN digits originally indicated the issuing state or administrative area. Over time, the issuing basis evolved to reflect applicants’ mailing addresses beginning in 1972.
Group Number
The next two digits, ranging from 01 to 99, historically represented group numbers, associating blocks of 10,000 numbers issued to regional offices.
Serial Number
The last four digits, 0001 through 9999, are unique serial and order-specific identifiers within their respective group and area numbers. Since 2011, SSNs have been randomly assigned.
The Importance of an SSN
Your SSN plays a crucial role in securing U.S. government-provided benefits, tracking employment income and years of service, and calculating potential benefits like retirement and disability income. Employers need it for tax reporting and wage withholding purposes, and state governments use it for income tax recording where applicable.
Additional Uses of an SSN
- Opening financial accounts
- Applying for federal loans
- Filing for unemployment
- Identifying oneself on tax returns
- Obtaining a driver’s license
- Applying for a passport
- Enrolling in Medicare
How to Obtain Your SSN
To acquire an SSN and card, complete Form SS-5 from the SSA. The form guides applicants in obtaining, replacing, or correcting an SSN. Essential documents for proof of age, identity, citizenship, or immigration status are required. Recently, it was reported that about 420 million SSNs are available for issuance.
SSNs and Safeguarding Against Identity Theft
While SSNs function as key personal identifiers enabling various financial transactions, they also lack biometric safeguards, thus remaining vulnerable to identity theft and fraud. High-profile incidents highlight the importance of protecting SSNs.
Steps to Take if Your SSN Is Stolen
In case of suspected SSN theft, immediate action is crucial:
- Notify credit reporting agencies (Experian, TransUnion, Equifax) to flag your credit report.
- Inform the SSA of any fraudulent activity or lost cards.
- File a police report and monitor credit reports for unauthorized activity.
How to Monitor Potential SSN Misuse
Keeping vigilant about SSN activity includes regularly reviewing credit reports, verifying income with the SSA, and obtaining IRS tax transcripts to detect anomalies.
Consequences of SSN Misuse
An exposed SSN can be misappropriated for impersonation, credit fraud, account creation, unlawful job applications, tax refund theft, medical fraud, and benefit theft. Keeping your SSN confidential is essential for protecting your financial security and identity.
The Bottom Line
A Social Security number, integral since 1936, serves not only for retirement and disability benefits but plays a critical role in everyday financial activities in the U.S. Be vigilant about its protection and use it only when officially required, ensuring it secures your rightful benefits and financial future.
Related Terms: Social Security Administration, Identity Theft, Tax Reporting, Financial Accounts, Benefits.
References
- Social Security Administration. “Historical Background And Development Of Social Security”.
- Social Security Administration. “The Story of the Social Security Number”.
- Social Security Administration. “Compilation Of The Social Security Laws”.
- Social Security Administration. “Types of Social Security Cards”.
- Federal Reserve Bank of St. Louis. “Your Social Security Number: The 9-Digit Evolution”.
- Social Security Administration. “Social Security Number Randomization”.
- Social Security Administration. “FAQs”.
- Social Security Administration. “The First Social Security Number and the Lowest Number”.
- Social Security Administration. “Form SS-5 Application for a Social Security Card”.
