General Question

Hawaii_Jake's avatar

Is there any money in the US Social Security fund?

Asked by Hawaii_Jake (33046points) March 5th, 2012

I have an acquaintance who says that there is no money in the Social Security fund in the US. I’ve also seen reports that state there is $2.6 trillion dollars in the fund, which is enough to pay benefits for 25 years even if no more money were ever put back in.

Is there any money there?

What are some talking points I can use with this person when discussing Social Security?

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34 Answers

tedd's avatar

I’m too lazy to look it up, but…. The US government owns something to the tune of almost 50% of its own national debt.. They do this through intra-agency holdings. IE: Agencies in the government that are tasked with raising money to help stay afloat, will invest their money by purchasing treasury bonds (much like a bank or a mutual fund will purchase treasury bonds for the same reason). Social Security is no different, and actually owns a pretty sizeable chunk of the US national debt. I do not remember the exact number, but I know it is at least near the trillion dollar mark.

You could also point out the falsehood in the typical complaint/claim about SS. Most people against it point out that in X years it will become insolvent. Well they fail to point out two things… 1) Social Security has always been about X years (10–15) away from insolvency. That’s why it has been reworked something like 12 times since it’s inception. The model originally conceived back in the 30’s or whenever, figured that most people won’t live past age 55 or 60… that has changed.. and the model has needed adjusting as we go. So long as you continue to change it with the changing trends, there is no reason SS will become insolvent. For example, I could claim that my car is going to become insolvent in the next 5 years because the tires are going to go bad. That’s great, they are in fact going to go bad… but that doesn’t mean the car is a loss, it just means I need new tires.

2) Insolvency does not mean that suddenly SS will not be able to pay any checks out. People against SS cry that the youth of today are wasting their money, because when the insolvency clock strikes midnight in X years, they suddenly won’t be getting any money back. Not true. Insolvency means that instead of getting $1 back for every $1 you put in, you get back 99 cents for every $1 you put in. Insolvency could get worse than that… maybe it’s 10 years from now that it’s 99 cents, and in 15 it’s 97 cents for every dollar… and it may even some day reach a point of 0 cents per dollar (although theoretically I think that’s impossible unless the whole program is just scrapped). But this is again assuming no one makes the proper adjustments to the program to keep it functioning.

Another big point I like to refute is the whole “private investments rather than SS” thing. Many conservatives rail against SS and say that the people would be better if they just were allowed to invest their money on their own, either by not being taxed the money… or by offering them basically a 401k through the government (outsourcing/privatizing SS). I think both ideas are stupid. Private industry cares about one thing… profit. They will do a job or task, or make a product… as well as they need to, to still legitimately turn a profit… and not one ounce of effort better than that in most cases (especially when you’re talking multi-national-multi-billion-dollar financial firms). What’s to stop them from abusing the power we bestow upon them for their own personal gain, at our expense (as they have done in so many other fields)? Government bureaucracy may be inefficient at times and slow, but at least it’s primary goal is caring for the people.

Hawaii_Jake's avatar

@tedd : I was able to find one figure online: Social Security owns 14% of the US national debt. Thank you for the other points as well.

marinelife's avatar

“The $49 billion deficit last year [2010] (excluding interest income) and $46 billion projected deficit in 2011 are in large part due to the weakened economy and to downward income adjustments that correct for excess payroll tax revenue credited to the trust funds in earlier years. This deficit is expected to shrink to about $20 billion for years 2012–2014 as the economy strengthens. After 2014, cash deficits are expected to grow rapidly as the number of beneficiaries continues to grow at a substantially faster rate than the number of covered workers. Through 2022, the annual cash deficits will be made up by redeeming trust fund assets from the General Fund of the Treasury. Because these redemptions will be less than interest earnings, trust fund balances will continue to grow. After 2022, trust fund assets will be redeemed in amounts that exceed interest earnings until trust fund reserves are exhausted in 2036, one year earlier than was projected last year. Thereafter, tax income would be sufficient to pay only about three-quarters of scheduled benefits through 2085.” Social Security Online

plethora's avatar

Nice fancy arguments^^. Just remember, for every dollar paid out of SS, a dollar is taken from you in the form of taxes. You, in fact, are footing the bill (last month) for the SS check that I get this month. And I do appreciate it. It’s a pay as you go system.

dappled_leaves's avatar

@plethora That’s pretty much the point of Social Security, no?

tedd's avatar

@dappled_leaves @plethora Yah I thought that was the idea behind it. I pay for you now, and in 50 or however many years, the kids my age today pay for me then. Did I miss a memo on how it works?

WestRiverrat's avatar

@tedd and @plethora that only works when the workforce keeps growing as or faster than the number of people joining the retirement crowd minus the deaths. When the SSI system was set up the life expectancy in the US was 62 years, I believe it is now nearly 80.

Ponzi schemes never work forever, even government sponsored ponzi schemes. Eventually you run out of people with money to take it from.

CaptainHarley's avatar

Although in my opinion there SHOULD be, there is no “lock box” into which SS money goes. It’s just put into and definitely drawn out of General revenue. : ((

dabbler's avatar

It’s an insurance program, not a scheme. And it has a huge reserve as noted above, set up explicitly to cover the huge pulse of baby boomers coming through now. If someone, a Republican, hadn’t taken spent the reserve and put some IOUs in the box, the actual US Treasury notes would still be owned by the SS reserve, instead it owns IOUs, which coming from the US government should be just as worthy of your respect as the Treasury notes.

Response moderated (Off-Topic)
plethora's avatar

@dabbler. It is not an insurance program. It is subject to no actuarial assumptions on which success could be based. It is called an “entitlement” program. You (and I) get whatever the govt wants to give us….period. All these old people you see on TV talking about “their” SS are actors who are spouting foolishness.

dappled_leaves's avatar

Sorry, @plethora – American Social Security is considered a form of Social Insurance.

Jaxk's avatar

There is no money in the Social Security fund. Only IOUs. When Social security runs short as it did in 2011, the money has to be borrowed from China or some other such entity. The idea that there is $2+ Trillion some where in social security funds just isn’t true. The recent tax reduction Obama pushed through insures that there will be little money coming in to pay the existing beneficiaries so even more will need to be borrowed.

In 1968 the Johnson administration adopted a unified budget. That meant that Social Security was counted in the overall budget and congress could use the excess Social Security funds to spend on pet projects. Thus the deficit. The changes also made it so that Social Security is not a Social Security benefit because elderly and disabled are entitled to it regardless of work history. Also it is not an entitlement because no one has a right to it. It can be changed or eliminated as congress sees fit. It is a welfare system.

For those that think we can just roll along with Social Security as it is are sadly mistaken. Once the Democrats got thier hands on the Social Security money they spent it. And they’ve been spending it for decades. A sad state of affairs.

plethora's avatar

@dappled_leaves American Social Security is considered a form of Social Insurance

Please pay close attention the adjective “social” that precedes the word “Insurance”.
Let me make this real simple for you. All true insurance programs are based on actuarial tables, which form the basis for success for failure in the insurance venture.

Social Insurance is simply a whitewashed name to make you feel better about the eventual success of the SSA. SS is an entitlement program. In the federal budget is called an entitlement. Believe that.

Believe EVERY comment @Jaxk has made.

There IS NO FUND guaranteeing your payments. It does not exist. You will get what the govt decides to give you and that;s it.

And dont make me explain this again.

vitro's avatar

There is 2.5 trillion in the trust fund, but this isn’t an asset, it’s a liability of the treasury, along with the rest of the government debts. It’s a stupid accounting trick which works in the short term, but will only rapidly increase the federal debt. The fact is with the current tax code, the government is giving more then it’s collecting.

The government is going to “fix” this by increasing taxes or start cutting benefits (like raising the minimum age). It will be a great deal of help if workers die before the age of 65 since the government gets to keep the collection. In other words, the government uses the taxes it collected to cover up the general deficits, and to sustain the system, it will give a negative rate of return to those who paid in.

dabbler's avatar

“old people you see on TV talking about “their” SS are actors” I know you have no proof of this because there isn’t any. Unless you count something you heard on talk radio.

“no actuarial assumptions”
The GAO (General Accounting Office of the executive branch) among others do extensive analyses on SSI costs and cashflow regularly which is how they knew to bump the premiums up years ago to establish a reserve big enough to accommodate the baby-boomer pulse.

“on which success could be based”
Success by what standards? It works just like any other insurance pool, except with hugely more efficient overhead (unless you are lucky enough to buy your insurance from commie-pinko-socialist co-op institutions like Agway and AAA auto club). It’s also very successful at its stated purpose to keep seniors and disabled out of poverty.

It’s true that SSI can’t roll along forever as it is. As it is it can roll along for a few decades, which is probably more than you can say for most business plans or most other government programs. Programs need adjustment and modification from time to time to work with changes in their costs and constituents.
It’s very easy to ‘fix’ SSI to last ‘forever’, especially by raising the income ceiling on which the premiums are based.

It’s an insurance program with unusual intentions to Cover Everyone, not to make a profit. Shocking as that is to some, it’s why it appears to not be an insurance program. It behaves differently because it won’t dump you when you become a liability and it will include you even if you have only been able to pay in a little, or not at all. That is its intention to Cover Everyone, especially those who need it most. SSI works well for those people. Sorry if that doesn’t fit your profit-or-to-hell-with-you sensibilities.

If you’d rather see seniors who couldn’t save enough for retirement, and people with disabilities starve on the street, there are plenty of countries on the planet where you can enjoy that sort of thing. The US for the time being isn’t one of them.

Calling SSI a Ponzi Scheme is fun, because it sounds funny, like “Fonzi” and who’d buy anything but hair-gel from the Fonz. But that’s also willfully ignorant of the contrary facts that it collects revenue and pays out all the money transparently as claimed, no tricks, no MBA at the top siphoning off billions until it collapses.

“recent tax reduction Obama pushed through insures that there will be little money” @Jaxk is right about that, it was a big mistake in the wrong direction and contrary to previous decades of sensible administration of SSI toward its stated purposes.

“And don’t make me explain this again.” Being adamant doesn’t make you correct. What are you going to do next, hold your breath til you reach a blue state?

tedd's avatar


Didn’t take long for the conservative psychos to get in on this one huh?

wundayatta's avatar

Social insurance? Ponzi scheme? Investment?

I think people are forgetting the purpose of the program. The idea is to keep the elderly out of poverty. Social Security provides the elderly with a minimum level of income that allows them to keep their heads above water… almost.

If we agree this is what we want to do in society, then all that is left to talk about is how to fund it. We happen to have a dedicated tax that is not all that dedicated, since our government keeps messing with it. We also happen to have a dedicated benefit that is not all that dedicated, since the rules of eligibility are subject to change, which makes sense, since if people are capable of working to an older age, they shouldn’t have to need SSI in order to survive.

The problem is that people see it as an entitlement or as insurance, and I don’t think it really is any of those things. People use those terms in order to protect or attack the program, given prevailing political ideologies and slogans. But the point is to keep the elderly out of poverty. The program could only be sold as something that benefited everyone. It could not be sold as a poverty program.

Thus we are in this ideological debate that pretty much takes us into all kinds of places that shouldn’t be relevant. Typical.

Jaxk's avatar

One of the arguments I hear a lot is that we are living longer so the retirement age should be raised. We are in fact living much longer than we did when SS was enacted. The problem is we’re not young longer, we’re old longer. Anyone that thinks “we’ll just make everyone keep working until they’re 70”, isn’t being realistic. Depending on your career, you may be able to do it but the ravages of time will take a toll. Especially if your in a manual labor job.

sinscriven's avatar

There’s money, the question is whether we are refueling it at a rate that is sustainable as more of the boomers are now collecting and living longer lives and still have enough funds for the people born post baby-boom.

The system operated on a system that expects lots of younger people paying into it, but relatively few being able to actually collect it for long periods of time so it always stays afloat. Politics and scientific advances has flipped the model on it’s head.

wundayatta's avatar

@Jaxk People don’t stay the same all their lives. People in physical jobs often lose their ability to do those jobs way before age 65. People turn to other jobs. People learn new things, even in their late 60s. It is possible, and not unreasonable to expect. People’s talents change as they grow older.

And what is the alternative, if there is not enough money to pay people what the system says they are entitled to? How will you pay for it? Borrow from China?

Jaxk's avatar


Try finding a new job in your 60s. Even better try finding a job in a new field in your 60s. All this looks good on paper but doesn’t work in the real world. I have consistently supported eliminating the cap on social security wages. I believe that would be a great start even though it is a tax hike. It is one I believe we could live with. The other piece that needs to be addressed is the disability piece. Way too many people get on disability that don’t deserve it. It is one of the primary deficiencies of government. Policing the welfare programs.

wundayatta's avatar

@Jaxk I would agree with you about lifting the cap on social security wages. I am, of course, against fraud, as well. I am skeptical about that, though. Every politician I ever heard promised to go after fraud, and either they are all incompetent or not serious, or it is a much more difficult task than anyone admits to.

Jaxk's avatar


With IRS data and SS data, much of the fraud seems fairly easy to find. According to the GAO 1500 federal employees are fraudulently collecting SS. Note the response to this study from the SS commissioner Michael Astrue. Denial and no recommendation for change. There is simply no incentive to fix the problems. In an entitlement society, all the incentives are to pay out rather than to conserve. Ergo, no one is watching the store.

wundayatta's avatar

@Jaxk That doesn’t make sense. There must be more to the story.

Jaxk's avatar


That is but one of the many stories out there. The government is more concerned with making it easy to get money than than insuring it is done productively. Welfare, unemployment and other assistance is auto-deposited or provided with credit cards. Once the paperwork is approved, every thing beyond that is on auto-pilot.

GracieT's avatar

About disability, I don’t think that it is that easy to get. I am on disability, but even with myTraumatic Brain Injury (It was serious and I came back more than I should have with the severity.) It was hard to get. I applied three times and was rejected, and when I was awarded it I only won because my doctor showed how I qualified under federal law. I have several friends with TBIs that haven’t been able to get help and they all are very poor, they cannot live comfortably. When I was awarded SSD I was given under $700.00 a month, and I can’t control it. What I mean is that my husband was made guardian of my checks, he is the only one with any rights to that account. If I want to use that money, I have to show that it is for something I need, not something I want, he needs to write the check, and we can be audited at any time to make sure that we are using the money properly. Based on my experience I don’t think that SSD is used incorrectly, but other people may know differently, and I appreciate reading their stories and explanations.

Jaxk's avatar


Sorry to hear about your problems. It seems that with most government programs, it’s all about knowing the system. That means that if your familiar with the system and know what to do and say, benefits come fairly easy. If your not familiar with the system any misstep will be a denial. The result is that those that know how can beat the system but those that don’t can’t get needed help even though they deserve it.

Your experience would seem to be a case in point. It took you 3 tries with the same disability to get it right and even then it was a struggle. If you or your doctor were more familiar with the system, it would have happened on the first try (I’m assuming here).

GracieT's avatar

Actually, @Jaxk, I agree with your answer up to a point. I was assured by several people that determined SSD cases that a job like mine was ok, because it basically was structured FOR ME, and even then I had problems due to the location of and severity of my injury. But what we didn’t count on ways that they would look at my job and decide that I was obviously capable of working and also obtaining insurance, even though my injury would be termed a pre-existing condition, if I would even qualify for insurance at all. My case, unfortunately, is NOT unusual, they look for whatever small thing they can use to disqualify you, and even now I have to prove that I “deserve” the paltry amount I get every few months. SSD is not the “free ticket” people like Limbaugh and Hannity look to portray it as.

Jaxk's avatar


Unfortunately we have a tendency to look at these things from different sides and tend to be blinded to the other side. If I want to show that disability is abused, there are plenty of examples to prove my case. But if I want to show that it is indiscriminately withheld, I can find plenty of examples to prove that case. I had a family move in next door to me a couple of years ago. They rented the house on government assistance. The house is on the water so they had a boat at the dock and two brand new SUVs in the driveway. Neither of them worked and lived off government assistance. If you ask how they did that, I have no idea, but they did. This is the type of thing you may hear from Rush or Hannity, but it not an isolated case. On the other hand you may hear of cases such as yours from some of the liberal pundits. Again yours is not an isolated case. Neither the conservatives nor the liberals condone the case I presented nor do they wish to eliminate the subsidy for a case such as yours. To fix one, you need to address both.

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