Social security's golden anniversary. Program has bridged gap between poverty and well-being for millions

A new era for older Americans began 50 years ago today when the Social Security Act was signed into law. Although it faces continuing criticism, social security has produced a profound change in the lives of American retirees in the intervening years.

``There isn't any doubt at all that it has had a major impact on the lives of older persons,'' says Arthur Flemming, secretary of Health, Education, and Welfare under President Eisenhower. The program has ``unquestionably kept millions'' of older Americans out of poverty, he says.

Social security also has had a major impact on younger people, Mr. Flemming notes, by freeing them from total financial responsibility for their parents. That responsibility would have been met at the expense of their own children's education, he says.

Along the way, Congress has continually expanded the system's scope and cost. Social security at first provided only retirement benefits to workers in private industry. Now the plan includes 95 percent of the US work force, including the self-employed and some government workers. Benefits for survivors and dependents were added in 1939, disability benefits in 1956, and health insurance in 1965.

Retirement-age people faced a bleak situation in the days before social security was passed.

When the Social Security Act was signed, one out of five Americans was jobless. Bank failures and the stock market's collapse had wiped out the retirement savings of millions of elderly people.

And few retirement-age people could depend on corporate pensions, which were rare until World War II. In 1929, for example, there were only 397 such plans in operation. And many who had such coverage lost it when their employers went bankrupt in the depression.

From a third to a half of 7 million elderly Americans had nothing to live on but what friends and family provided, a government report at the time found.

An estimated 50 percent of the population would have fallen below the government's poverty line without social security retirement benefits, Flemming estimates.

Now only 14.1 percent of the elderly fall below the poverty line, down from 24.5 percent in 1970.

One key reason for the drop in elderly poverty is that social security benefits have soared both in dollar terms and as a share of a retiree's total income.

In 1940, when monthly benefits were first paid, the maximum monthly check at retirment was $41.20. The first check, for $22.74, was delivered to Ida Mae Fuller, of Ludlow, Vt., on Jan. 30, 1940. In 1984 the maximum check was $703.60.

The rise in social security checks far outpaced inflation. From 1940 to '84 prices rose 6.5 times, while the maximum benefit check soared 16 times.

As the checks grew larger, Americans grew more dependent on them. As recently as 1950, social security was the source of only 27 percent of the retirement benefits the average elderly American received. Today it provides more than 50 percent.

And far more Americans now live to collect these benefits. In the 1930s the average American died two years before reaching retirement age. A male born in 1983 has an average life expectancy of 71.1 years, a female born the same year, 78.3 years.

The small benefits, slim odds of collecting, and large number of workers supporting each retiree, held down social security's cost in the early days. In 1937, the first year social security taxes were collected, the levy was 1 percent of a worker's first $3,000 in earnings, or a maximum of $30 a year. This year, workers pay 7.05 percent on their first $39,600 of wages, or a maximum of $2,792. In 1984 there were 3.3 workers paying into the system for each retired worker. In 1945, 41.9 workers supported e ach retiree.