Social Security Trust Fund


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The United States Social Security Administration collects payroll taxes and uses the money collected to pay Old-Age, Survivors, and Disability Insurance benefits. This is done by way of trust funds. There are two trust funds which the Social Security Administration controls: Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI), collectively referred to as the "Trust Fund" in this article.

When the program runs a surplus, the excess funds increase the value of the Trust Fund. At the end of 2014, the Trust Fund contained (or alternatively, was owed) $2.79 trillion, up $25 billion from 2013.[1] The Trust Fund is required by law to be invested in non-marketable securities issued and guaranteed by the "full faith and credit" of the federal government. These securities earn a market rate of interest.[2]

Excess funds are used by the government for non-Social Security purposes, creating the obligations to the Social Security Administration and thus program recipients. However, Congress could cut these obligations by altering the law. Trust Fund obligations are considered "intra-governmental" debt, a component of the "public" or "national" debt. As of June 2015, the intragovernmental debt was $5.1 trillion of the $18.2 trillion national debt.[3]

According to the Social Security Trustees, who oversee the program and report on its financial condition, program costs are expected to exceed non-interest income from 2010 onward. However, due to interest (earned at a 3.6% rate in 2014) the program will run an overall surplus that adds to the fund through the end of 2019. Under current law, the securities in the Trust Fund represent a legal obligation the government must honor when program revenues are no longer sufficient to fully fund benefit payments. However, when the Trust Fund is used to cover program deficits in a given year, the Trust Fund balance is reduced. By 2034, the Trust Fund is expected to be exhausted. Thereafter, payroll taxes are projected to only cover approximately 79% of program obligations.[4]

There is controversy regarding whether the U.S. government will be able to borrow sufficient amounts to honor its obligations fully to recipients or whether program modifications are required. This is a challenge for the federal government overall, not just the Social Security program.

Congress could reduce the national debt by 5.1 trillion dollars by getting rid of social security. Owing money to yourself is considered debt.