The 3-Legged Stool Metaphor
Social Security benefits are considered to be only one part of a complete approach to retirement planning. In contemporary parlance, Social Security benefits are described as the "foundation" upon which individuals can build additional retirement security through company or personal pensions and through savings and investment.
For many years, an older metaphor was used to make this point. Social Security benefits were said to be one leg of a three-legged stool consisting of Social Security, private pensions and savings and investment. The metaphor was intended to convey the idea that all three approaches were needed to provide stable income security in retirement.
The question has been raised as to the origins of the three-legged stool model and whether President Roosevelt used this metaphor in his conception of Social Security.
The Origin of the Metaphor
President Franklin Roosevelt is not the source of this metaphor, nor was anyone else associated with the creation of the Social Security program in the 1934-35 period. The earliest use of this metaphor which we have been able to document was by Reinhard A. Hohaus, who was an actuary for the Metropolitan Life Insurance Company. Mr. Hohaus, who was an important private-sector authority on Social Security, used the image in a speech in 1949 at a forum on Social Security sponsored by the Ohio Chamber of Commerce. Hohaus, however, had a slightly different "stool" in mind than came to be understood in later years. His three-legged stool consisted of: private insurance; group insurance; and Social Security. In his 1949 speech Hohaus stated:
"The first in order of time is individual insurance . . . the second, a variety of employee benefit plans of which Group insurance is an outstanding American contribution; and the third, social security--designed by the government for the well-being of our fellow citizens . . . Each has its own function to perform and need not, and should not, be competitive with the others. When soundly conceived, each class of insurance can perform its role better because of the other two classes. Properly integrated, they may be looked upon as a three-legged stool affording solid and well-rounded protection for the citizen."
A Familiar Concept
Although Hohaus appears to be the creator of the three-legged stool metaphor, the basic concept which the metaphor expresses was clearly understood and widely shared by the creators of the Social Security program. In fact, in a 1942 speech before the 37th annual meeting of the American Life Convention in Chicago, Hohaus approvingly quoted Social Security Board Chairman Arthur Altmeyer as expressing the core idea: "A social insurance system does not and need not undertake to furnish complete protection to all whom it covers under all circ*mstances. The social insurance approach is to assure that the benefits would provide a minimum protection, leaving to the individuals the responsibility of buying additional protection from private sources through their private means."
Although President Roosevelt apparently never used the "three-legged stool" metaphor, he clearly had this concept in mind when he created the Social Security program, and he expressed the idea, in other words, several times over the years.
"These three great objectives the security of the home, the security of livelihood, and the security of social insurance--are, it seems to me, a minimum of the promise that we can offer to the American people. They constitute a right which belongs to every individual and every family willing to work...This seeking for a greater measure of welfare and happiness does not indicate a change in values. It is rather a return to values lost in the course of our economic development and expansion. Ample scope is left for the exercise of private initiative."
MESSAGE TO CONGRESS REVIEWING THE BROAD OBJECTIVES AND ACCOMPLISHMENTS OF THE ADMINISTRATION-June 8,1934 (This message announced the President's intention to offer a Social Security proposal to Congress.)
"In the important field of security for our old people, it seems necessary to adopt three principles: First, non-contributory old-age pensions for those who are now too old to build up their own insurance. It is, of course, clear that for perhaps thirty years to come funds will have to be provided by the States and the Federal Government to meet these pensions. Second, compulsory contributory annuities which in time will establish a self-supporting system for those now young and for future generations. Third, voluntary contributory annuities by which individual initiative can increase the annual amounts received in old age. It is proposed that the Federal Government assume one-half of the cost of the old-age pension plan, which ought ultimately to be supplanted by self-supporting annuity plans."
MESSAGE TO CONGRESS ON SOCIAL SECURITY- January 17,1935
(This message transmitted the Administration's legislative proposal to Congress. Note that the original proposal included a third system of voluntary annuities [like IRAs] as a supplement to Social Security. This aspect of the Administration's proposal was not adopted by Congress. It is also interesting to note that the President clearly intended that the Social Security program, supplemented by voluntary annuities, would eventually eliminate the need for welfare programs for the elderly.)
"We can never insure one hundred percent of the population against one hundred percent of the hazards and vicissitudes of life, but we have tried to frame a law which gives some measure of protection to the average citizen and his family against the loss of a job and against poverty-ridden old age."
STATEMENT BY PRESIDENT FRANKLIN ROOSEVELT ON SIGNING THE SOCIAL SECURITY ACT -- August 14,1935 (This is FDR's most famous one-line summary of the intent of Social Security.)
"Because it has become increasingly difficult for individuals to build their own security single-handed, Government must now step in and help them lay the foundation stones .
The Act does not offer anyone, either individually or collectively, an easy life--nor was it ever intended so to do. None of the sums of money paid out to individuals in assistance or in insurance will spell anything approaching abundance. But they will furnish that minimum necessity to keep a foothold; and that is the kind of protection Americans want. . ."
PRESIDENT ROOSEVELT'S RADIO ADDRESS ON THE THIRD ANNIVERSARY OF THE SOCIAL SECURITY ACT -August 14,1938 (In this radio address President Roosevelt reflected on the accomplishments and purpose of Social Security.)
"I cannot too strongly urge the wisdom of building upon the principles contained in the present Social Security Act in affording greater protection to our people, rather than turning to untried and demonstrably unsound panaceas. As I stated in my message four years ago: "It is overwhelmingly important to avoid any danger of permanently discrediting the sound and necessary policy of Federal legislation for economic security by attempting to apply it on too ambitious a scale before actual experience has provided guidance for the permanently safe direction of such efforts. The place of such a fundamental in our future civilization is too precious to be jeopardized now by the extravagant action."
We shall make the most orderly progress if we look upon social security as a development toward a goal rather than a finished product. We shall make the most lasting progress if we recognize that social security can furnish only a base upon which each one of our citizens may build his individual security through his own individual efforts."
A MESSAGE TRANSMITTING TO THE CONGRESS A REPORT OF THE SOCIAL SECURITY BOARD RECOMMENDING CERTAIN IMPROVEMENTS IN THE LAW.January 16, 1939. (This message transmitted the Administration's legislative proposal which became the pivotal 1939 Amendments. It is also FDR's clearest expression of the idea of Social Security as a foundation upon which the individual can build their own retirement security.)
Prepared By:
Larry DeWitt
SSA Historian's Office
May 1996
