Do You Have A Legal Right to Social Security?

In Social Security, US Supreme Court on August 17, 2011 at 9:45 pm

Do you have a legal right to Social Security?


This is not a matter of opinion.  It is not a recent change.  No nefarious politician stole your Social Security in the middle of the night.

It is old news but not widely known that in 1960, the United States Supreme Court ruled you have no legal claim to Social Security.

But doesn’t Social Security mail you an annual statement of projected Social Security benefits?

Yes, but the annual statement shows “potential benefits”.  It is not legally binding.

Under current law, any American worker who pays into the system will receive benefits upon retirement.  Nevertheless, the benefits may be changed or taken away at any time.  

The Social Security Administration itself explains:

‘The fact that workers contribute to the Social Security program’s funding through a dedicated payroll tax … can be said to establish “rights” to certain government services. This is often expressed in the idea that Social Security benefits are “an earned right.”  ….  But like all federal entitlement programs, Congress can change the rules regarding eligibility–and it has done so many times over the years.  The rules can be made more generous, or they can be made more restrictive. Benefits which are granted at one time can be withdrawn, as for example with student benefits, which were substantially scaled-back in the 1983 Amendments.” [1] [emphasis added]

There has been a temptation throughout the program’s history for some people to suppose that their FICA payroll taxes entitle them to a benefit in a legal, contractual sense. That is to say, if a person makes FICA contributions over a number of years, Congress cannot, according to this reasoning, change the rules in such a way that deprives a contributor of a promised future benefit…. Congress clearly had no such limitation in mind when crafting the law. Section 1104 of the 1935 Act, entitled “RESERVATION OF POWER,” specifically said: “The right to alter, amend, or repeal any provision of this Act is hereby reserved to the Congress.” [1] [emphasis added]

In Flemming v. Nestor (1960), the US Supreme Court considered the case of Ephram Nestor, whose Social Security payments were denied.  Nestor sued, holding that he had a Social Security contract after he had paid Social Security Withholding Taxes into the system during his career.  The Court ruled it was valid to deny Nestor because a 1954 law forbade deported Communists from receiving Social Security.  Nestor had been deported as a member of the Communist Party.   

Justice John Marshall Harlan’s ruling was explicit, saying “We must conclude that a person covered by the [Social Security] Act has not such a right in benefit payments …. It is apparent that the noncontractual interest of an employee covered by the Act cannot be soundly analogized to that of the holder of an annuity” [1] [emphasis added]

The Court similarly held there is no legal right to Social Security in Helvering v. Davis (1937).  Then, the Supreme Court ruled “The [Social Security] proceeds of both the employee and employer taxes are to be paid into the Treasury like any other internal revenue generally, and are not earmarked in any way.” [2] [emphasis added]

In other words, Social Security is not a retirement program nor is it an annuity.  You pay FICA “contributions”, which are properly called taxes.  Social Security currently pays retiree benefits in loose relation to amounts paid and in the same manner as an annuity: the benefit lasts until death, is not owned and cannot be bequeathed.


Pictures from Wikipedia Commons.

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