How is the Trust Fund Really Doing?

  • In the near term, Social Security is taking in more through Social Security taxes than it spends. Social Security spends its funds on benefits and about 1% on administration.
  • The access funds paid in every year are invested in U.S. Treasury securities and earn interest. This interest is put back into the fund.
  • It is always hard to predict for certain if and when Social Security will stop taking in more than it spends.
  • In 2011, 70% of the money taken in by Social Security comes from worker and employer contributions through the payroll tax.  13% came in through reimbursement funds for the payroll tax holiday.   Another 14% came in through interest earned on the securities. The final 3% came in from income taxes that some beneficiaries pay on their benefits.
  • Under the “best estimate” set of assumptions in the 2012 Social Security Trustee Report, in 2023, revenue plus interest will be less than what is paid out in benefits. In 2033, the reserves would be depleted and income could only cover 75% of benefits.
  • Under a “high cost” estimate by the Social Security Trustees, reserves would be depleted in 2027 instead of 2033.
  • Under a “low cost” estimate by the Social Security Trustees, Social Security would be solvent for 75 years and beyond.
  • These estimates don’t mean that Social Security is hopeless and cannot be fixed. There are several reasonable policy options for keeping Social Security strong.
  • This summary is based on a more detailed brief authored by the National Academy of Social Sciences and located at:  http://www.nasi.org/research/2012/social-security-finances-findings-2012-trustees-report.