Proponents of expanding Social Security benefits frequently throw around the word “surplus.” Some even claim there is plenty of money in the Trust to expand benefits now. This creates a false impression regarding Social Security finances.
Let’s be sure we understand “surplus.”
A surplus is simply more than you need to meet your obligations. In the case of Social Security, government has taken Working Americans taxes and “promised” a future benefit. It doesn’t matter if you are 90 or 19, you have earned or are earning a benefit. At some point the government must pay you.
Remember, incoming taxes are no longer sufficient to make even current SS benefit payments. Incoming taxes plus interest from the trust are no longer sufficient so, taxes, interest and each month some of the trust assets are used to pay current beneficiaries.
Although there are major differences between pensions and SS, the concept of a fund surplus is similar. You must have more money than needed to meet all the obligations created. In other words, if from today forward no money was added to the fund, every participant would eventually collect what they are entitled to from what is in the fund with money left over.
An overfunded pension plan is a company retirement plan that has more assets than liabilities. In other words, there is a surplus amount of money needed to cover current and future retirements. Although the surplus can legally be recorded as company income, it cannot be paid out to corporation shareholders like other income as it is reserved for current and future retirees. Source: Investopedia
If all payroll taxes and other revenue into the Social Security Trust were stopped today, benefits in pay status could be paid for about 36 months. There is nothing close to a surplus.