The dollars go into the general fund. They don't go into a lock box ....One the output outgrows the input .....game over .
Hi
Bluedragon
Uh, no they don't!!! SS funds are separate funds.
Social Security taxes that workers and employers pay are credited to the Social Security trust funds. From nasi.org
Social security taxes have always been kept separate from the general funds that keep our nation running. They have their own accounting. The only times that SS funds would go into the general fund is when SS buys U.S. bonds as a place to hold any excess collections. Those funds are invested back into the government to hold until needed. When they buy those bonds, then that purchase money goes into the general fund. But it's only there as an investment. SS can still come back and ask for their money back, which they have been doing now for the last couple of years.
No, it is not true that once the output outgrows the input....game over. SS has outgrown it's expected output several times throughout the programs history. Congress then goes in and changes some of the parameters and everything is fine for a time.
They might up the SS tax rate. In the beginning the SS tax rate was 1%. Now it's 6.5% of worker wages.
They might raise the taxable income ceiling. In the beginning the SS tax only applied to the first $3,000 in wages.
Today it's applied to incomes up to $160k.
They might raise the age at which one might draw their SS. In the beginning it was 65. Now it's creeping upwards to 67.
So, just as Congress has done before, when it looks like output will be greater than input, adjustments are made and the world continues to spin here in the U.S.
The scenario that the detractors are trying to push, that there is a point out there where SS will go broke and some retired group is going to be left with nothing, is not a possible scenario. So long as SS taxes are collected there will always be money in the SS trust fund. It may not be enough to cover current payments, but it will still be there and it will still be doling out monies every month. Right now! Yes, right this very minute. The prognostication for SS is that sometime around 2034 the fund will not be able to pay out full benefits without some adjusting. It is believed that at that time, the SS administration will only be able to pay out 80% of stated benefits.
Now, please understand, that isn't broke. It just means that some changes will happen. Either the SS administration will cut what they are paying individuals, or, I believe the better option, changes made to the other two variables.
As far as I know and understand, that is exactly 'how' SS works. It is a pay as you go program and so long as there is a SS tax, then SS will never be broke.
God bless,
Ted