How much money is owed to Social Security?
The Trust Fund represents a legal obligation of the federal government to program beneficiaries. The government has borrowed nearly $2.8 trillion as of 2014 from the Trust Fund and used the money for other purposes.
Lyndon Johnson was the first president to borrow from the Social Security Trust Fund. He needed to pay for the Vietnam War. Next was Ronald Reagan and the military buildup of the 1980s. GW Bush did in the 2000's.
- Overview. The Trust Fund represents a legal obligation of the federal government to program beneficiaries. The government has borrowed nearly $2.8 trillion as of 2014 from the Trust Fund and used the money for other purposes.
- Which political party started taxing Social Security annuities? A3. The taxation of Social Security began in 1984 following passage of a set of Amendments in 1983, which were signed into law by President Reagan in April 1983. These amendments passed the Congress in 1983 on an overwhelmingly bi-partisan vote.
- To date, 450+ million SSNs have been issued, but with just under 1 billion possible number combinations, there has never been a need to recycle numbers, and the SSA notes that it does "not reassign a Social Security number (SSN) after the number holder's death."
Social Security is funded with income from four sources. Social Security is primarily funded by payroll taxes assessed on wages in the United States. The employer pays 6.2% of income, and the employee chips in another 6.2%. The self-employed, being both employer and employee, pay 12.4% of income into the program.
- Then in 1982, President Ronald Reagan enacted a payroll tax hike to prepare for the impending surge of retiring baby boomers, and a surplus began to build. By law, the U.S. Treasury is required to take the surplus and, in exchange, issue interest-accruing bonds to the Social Security trust funds.
- Workers and employers pay for Social Security. Workers pay 6.2 percent of their earnings up to a cap, which is $127,200 a year in 2017. (The cap on taxable earnings usually rises each year with average wages.) Employers pay a matching amount for a combined contribution of 12.4 percent of earnings.
- Most people can't avoid paying Social Security taxes on their employment and self-employment income. There are, however, exemptions available to specific groups of taxpayers. However, if you do take advantage of the exemption, you will be ineligible to receive any of the benefits offered by Social Security.
The Social Security trust funds are invested entirely in U.S. Treasury securities. Like the Treasury bills, notes, and bonds purchased by private investors around the world, the Treasury securities that the trust funds hold are backed by the full faith and credit of the U.S. government.
- For people with lower than average earnings, the ratio of the lifetime benefits they receive from Social Security to the lifetime payroll taxes they pay for the program is higher than it is for people with higher average earnings. In that sense, the Social Security system is progressive.
- These taxes are for Medicare coverage. In 2018, when you work, 81 cents of every Social Security tax dollar you pay goes to a trust fund that pays monthly benefits to current retirees and their families and to surviving spouses and children of workers who have died.
- Assuming no future change in the law, this question can be answered directly by focusing on the "solvency" of the Social Security trust funds. Solvency for the Social Security program is defined as the ability of the trust funds at any point in time to pay the full scheduled benefits in the law on a timely basis.
Updated: 26th November 2019