Facts about Social Security 

Now that Trump and company and Republicans are going to be in charge, the anti-change anything rhetoric will be ratcheting up (if that is possible). A primary target will be Social Security. Everyone (almost) wants Social Security to continue and recognizes that the program is vital for all Americans. That won’t stop the unrealistic position that nothing has to change, it does.

imageThose who lobby to support Social Security need to be realistic and truthful in their rhetoric. Unfortunately that is not always the case. They often use scare tactics supported by misinformation which is easily absorbed by many Americans, especially seniors. Usually that rhetoric presents a rosy, no problem picture and that is not accurate or fair.

For those who want facts, the official projections and the Trustees conclusions we need to act upon, it’s all easily available HERE

Following is quick summary of the situation from the Committee for a Responsible Federal Budget.

Beware of the propaganda you see on Facebook.  Most of it wanting to “save” Social Security is doing you a disservice by misleading you and giving you a false sense of security. The fact is we must take action to preserve the program and make it sustainable and that action must affect all generations to be fair. 

Since 2010, Social Security has been running cash deficits — meaning that the total tax revenue it brings in from the payroll tax and income taxation of benefits has fallen short of benefit payments. So far, those deficits have totaled nearly $450 billion and this year alone will exceed $70 billion.  In their latest report “the Trustees project annual deficits for every year of the projection period.”

However, the Social Security trust fund (technically, the hypothetical combined Old-Age Survivors and Disability Insurance trust fund) currently holds $2.8 trillion of government bonds which accumulate interest each year (these interest payments represents a cost to the rest of government. Including this year’s interest payment, Social Security is likely to run a small surplus this year — about $15 billion — as compared to its $70 billion cash deficit. This has led some to conclude that Social Security is in a strong fiscal position. This conclusion is wrong for several reasons.


For ongoing information and discussion about Social Security visit the SS category on this blog


  1. The max benefit requires paying in for 35 years. It actually is the lowest wage people who have gaps in their earning history who get the best “return” on their tax “investment”


  2. Sorry, Social Security IS sustainable – just not at the promised benefit levels. The Social Security trustees confirm that benefits must be reduced 25% or so in 2033 – 2035 – because the funding approved by Congress is insufficient. I say leave it alone – and I mean everything – taxes, benefits, etc.

    Then, if you want to provide added benefits, have Congress pass a taxpayer resolution which must be approved by the taxpayers who would be subject to the added taxes – where the beneficiaries of the added benefits are specifically required to fund their individual benefit gap. See who votes for that.

    Else, we will continue to get the same crap we have always gotten – don’t tax you, don;’t tax me, tax that guy behind the tree. Or, the best tax is the one I owe and you pay. Just like Medicare, they will be using the improved benefits to buy votes. As we saw with health care, so we shall see with Medicare, I want the best coverage YOUR money will buy.

    Leave it alone!!!!!!! So, if you want more, make it a SEPARATE, self-sustaining welfare/old age program.


    1. BenefitJack – Social Security has always been a welfare / old age program. I will have everything I and my employers paid in taxes, back in 48 months. My mom who is 86 has received over $120,000 more in benefit over the last 23 years, than were paid in taxes. Most people get everything back in 6 to 8 years. The SS tax rate has not been raised since 1990, but benefits have continued to go up. The SS tax rate as it is today allow employers who have lower paid workers (restaurants, service industry, retail) to pay less into the system per worker. 50% of workers make less than $30,000 and the tax on their small wages do not even come close to the benefits that they will receive. We need to raise the SS tax rate the same percentage as the COLA each year; until the tax is 10% for worker and employer, This will take 15 to 20 years, but then there will be enough to pay benefits, without any cuts. This tax rate increase will be more in line with what the workers will receive in the future.


      1. Dick, Jeffrey, note the following announcement earlier today:

        “31% Cut in Social Security Benefits Needed by 2031: CBO

        In contrast, an earlier report from the Social Security Trust Fund projected a 21% cut in benefits beginning in 2034

        Social Security may be in worse shape than many advisors (and retirees) thought. The Congressional Office Budget is now reporting that the combined Social Security retirement and disability trust funds will be depleted in fiscal year 2029—five years earlier than the trustees of the two funds had projected earlier this year in their annual report.

        As a result, the CBO is expecting that Social Security benefits will need to be cut by 31% beginning in 2031 if no changes are made to the program. The Social Security Trust Fund had previously projected a 21% reduction in benefits beginning in 2034. The CBO estimates that the disability trust fund will be “exhausted” by 2022, and that the Old Age and Survivors Insurance trust fund–commonly known as Social Security–would be exhausted by 2030.”

        So, Jeffrey, yes, SS has always been an old age program, but no, it has never been a welfare program. There is a minimum benefit, but only if you have 40 quarters of coverage. Welfare is provided regardless of taxes paid, participation, etc.

        And yes, individuals with lower incomes and taxes will often more, much more out of the program than they paid in because of the lack of a death benefit (only those who attain retirement age receive benefits – other than S or DI benefits).

        You also mention that the tax rate has not been raised since 1990. However, you also need to know that the formula for SS benefits has not changed since 1983 – other than adjusting the bend points for inflation (just like they adjust the cap on wages subject to taxes for inflation).

        So, assuming that the Trustees don’t borrow (which they are not permitted to do), the tax rate and wage base for taxation are already in line with the benefits people receive – just that once the trust fund is exhausted (as Dick has explained over, and over and over again), those benefits are scheduled to be reduced as early as 2034 (according to the trustees) or 2031 (according to the Congressional Budget Office). What Dick never does discuss, however, is the added layer of taxes from general revenues that will be required (or we will run even larger deficits) to redeem the bonds from the Social Security trust fund.

        Bottom line, raising more FICA and FICA-Med taxes to again build up the trust fund to fund benefits for baby boomers who are retiring at this time is an intergenerational penalty/abuse that is inappropriate. Let the thing be self-financing and sustainable at the projected benefit levels.

        Then, if you want to provide some group more money, call it welfare or transfer or whatever and do what you will – whatever lie legislators want to sell to taxpayers so they can continue to buy votes – just like Reagan did in 1983 (Social Security Amendments Act) and W did in 2003 (Medicare Modernization Act) so they could win re-election in 1984 and 2004, respectively.

        Look for a Republican successor to Trump (or should Trump lose reelection, a Democratic president) as a means to secure election in 2024. That is, Democrats will be running on “saving” Social Security and Medicare lo these next four – eight years … saving them from Trump.


      2. Finally, note the chart recently posted in the Wall Street Journal. While it does suggest that many, perhaps most individuals will receive more in benefits than they paid in, but note that the author at the Tax Policy Center only incorporated a 2% per year rate of earnings on those contributions.

        I am no investment guru. However, my rate of return on investments since 1982, the past 35 years, have averaged over 7%. If you more than triple the interest rate from 2% to 7%, ALL BUT A FEW WILL CONTRIBUTE MORE THAN THEY RECEIVE – all but the lowest income single individuals (those receiving the maximum benefits from the Social Security formula’s use of bend points), and single taxpayers receiving retiree and spouse benefits.

        So, yes, it is an old age program where you must contribute to qualify, but, it is “Social” Security – reflecting the progressive form of benefits (weighted to favor lower income individuals) funded by a flat rate of taxation. As I always say, the only thing more regressive than Social Security and Medicare BENEFITS are the taxes used to fund them.


      3. SS is NOT a retirement account. It is a taxation system to fund current payments to retirees, until death, let us call it what it really is. If there is any excess tax revenue it is used to purchase special government bonds, that earn on average 3%. Also there is no proof that if the worker was not required to pay the SS tax that they would take any savings and investment it. And there is no proof that if the employers did not have to pay the SS tax that they would pay the savings in increased wages to the workers. It simple math raise the tax rate so the benefits can be paid. Melton Friedman called SS the biggest wealth transfer to the rich that had ever been devised. By having an income cap on the SS tax and most rich go to college and enter the workforce later, so they pay the tax for less years. Then they receive some of the highest benefit checks.


      4. The “rich” may or may not pay for fewer years, they are just as likely to work longer. In addition, they pay more in SS taxes and receive less proportionally in a SS benefit as the formula is designed to favor the lower income worker.


      5. rdquinn – But if the “rich” live past 85 they will get much more than the poorer worker. Thousands of dollars more than the poorer worker, that is what Melton Friedman was referring to. If the SS system was created to make sure retirees did not live in poverty, then it will soon be means tested or the government will make sure that each retiree gets the same amount to keep all retirees above the poverty level. You may not like that, but unless we raise the SS tax rate, that is what is going to happen.


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