Bits and Pieces 2 : Social Security Isn't Going Broke
Is Social Security Going Broke? No. According to the actuaries at the Social Security Administration, Social Security (SS) is financially as sound as the U.S. government. The surplus in the SS trust fund today stands at $2.4 trillion and is entirely invested in U.S. Treasury Bonds, which earn interest. The Treasury bonds are backed by the full faith of the US government and SS would only go broke if the U.S. government went bankrupt.
There was a hike in the Social Security payroll tax (FICA)in the 1980s so that baby boomers would pay a bigger share of their own retirement. That hike created a surplus which went into the SS trust fund. The trust fund is projected to grow and reach its peak in 2027 at nearly $6 trillion. From that and collections, there will be sufficient money in SS to pay 100 percent of benefits until 2041.
A few small changes now could extend the trust fund far into the future. A poll conducted for USA Today by Gallup shows that 67% of Americans would support lifting the cap on FICA contributions. That change alone would extend the SS trust fund until 2083. More, and references Here.
Tags: earnings cap, FICA, payroll tax, pension plans, retirement funds, Social Security, treasury bonds, trust fund
Leave a Comment