Social Security Trust Fund


The Federal Old-Age and Survivors Insurance Trust Fund and Federal Disability Insurance Trust Fund are trust funds that provide for payment of Social Security benefits administered by the United States Social Security Administration.
The Social Security Administration collects payroll taxes and uses the money collected to pay Old-Age, Survivors, and Disability Insurance benefits by way of trust funds. When the program runs a surplus, the excess funds increase the value of the Trust Fund. As of 2021, the Trust Fund contained $2.908 trillion. The Trust Fund is required by law to be invested in non-marketable securities issued and guaranteed by the "full faith and credit" of the federal government. These securities earn a market rate of interest.
Excess funds are used by the government for non-Social Security purposes, creating the obligations to the Social Security Administration and thus program recipients. However, Congress could cut these obligations by altering the law. Trust Fund obligations are considered "intra-governmental" debt, a component of the "public" or "national" debt. As of December 2022, the intragovernmental debt was $6.18 trillion of the $31.4 trillion national debt. Of this $6.18 trillion, $2.7 trillion is an obligation to the Social Security Administration.
According to the Social Security Trustees, who oversee the program and report on its financial condition, program costs are expected to exceed non-interest income from 2010 onward. However, due to interest the program will run an overall surplus that adds to the fund through the end of 2019. Under current law, the securities in the Trust Fund represent a legal obligation the government must honor when program revenues are no longer sufficient to fully fund benefit payments. However, when the Trust Fund is used to cover program deficits in a given year, the Trust Fund balance is reduced. One projection scenario estimates that, by 2035, the Trust Fund could be exhausted. Thereafter, payroll taxes are projected to only cover approximately 83% of program obligations.
There have been various proposals to address this shortfall, including: reducing government expenditures, such as by raising the retirement age; tax increases; investment diversification and borrowing.

Structure

The "Social Security Trust Fund" comprises two separate funds that hold federal government debt obligations related to what are traditionally thought of as Social Security benefits. The larger of these funds is the Old-Age and Survivors Insurance Trust Fund, which holds in trust special interest-bearing federal government securities bought with surplus OASI payroll tax revenues. The second, smaller fund is the Disability Insurance Trust Fund, which holds in trust more of the special interest-bearing federal government securities, bought with surplus DI payroll tax revenues.
The trust funds are "off-budget" and treated separately in certain ways from other federal spending, and other trust funds of the federal government. From the U.S. Code:
EXCLUSION OF SOCIAL SECURITY FROM ALL BUDGETS
, title XIII, Sec. 13301, Nov. 5, 1990,, provided that:
Notwithstanding any other provision of law, the receipts and disbursements of the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund shall not be counted as new budget authority, outlays, receipts, or deficit or surplus for purposes of -
the budget of the United States Government as submitted by the President,
the congressional budget, or
the Balanced Budget and Emergency Deficit Control Act of 1985.

The trust funds run surpluses in that the amount paid in by current workers is more than the amount paid out to current beneficiaries. These surpluses are invested in special U.S. government securities, which are deposited into the trust funds. If the trust funds begin running deficits, meaning more in benefits are paid out than contributions paid in, the Social Security Administration is empowered to redeem the securities and use those funds to cover the deficit.

Governance

The Board of Trustees of the Trust Funds is composed of six members:
The current board members as of March 22nd, 2025:
PositionNamePartySworn inTerm expiresAppointed by
Managing Trustee of the Trust Funds
Secretary of the Treasury		Scott BessentRepublican—Donald Trump
Trustee
Secretary of Labor

History

The Social Security system is primarily a pay-as-you-go system, meaning that payments to current retirees come from current payments into the system. The program was initially established in 1935 in response to the Great Depression. The first to file for Social Security was Ida Mae Fuller in 1940. Fuller paid $24.75 in taxes during her three years working under the social security program, and drew an aggregate of $22,889 in benefits before passing at age 100. This represents a ratio of $925 in benefits for every dollar she paid into the program.
In 1977, President Jimmy Carter and the 95th Congress increased the FICA tax to fund Social Security, phased in gradually into the 1980s. In the early 1980s, financial projections of the Social Security Administration indicated near-term revenue from payroll taxes would not be sufficient to fully fund near-term benefits. The federal government appointed the National Commission on Social Security Reform, headed by Alan Greenspan, to investigate what additional changes to federal law were necessary to shore up the fiscal health of the Social Security program. The Greenspan Commission projected that the system would be solvent for the entirety of its 75-year forecast period with certain recommendations. The changes to federal law enacted in 1983 and signed by President Reagan and pursuant to the recommendations of the Greenspan Commission advanced the time frame for previously scheduled payroll tax increases, changed certain benefit calculations, and raised the retirement age to 67 by the year 2027. As of the end of calendar year 2010, the accumulated surplus in the Social Security Trust Fund stood at just over $2.6 trillion.
Social Security benefits are paid from a combination of social security payroll taxes paid by current workers and interest income earned by the Social Security Trust Fund. According to the projections of the Social Security Administration, the Trust Fund will continue to show net growth until 2022 because the interest generated by its bonds and the revenue from payroll taxes exceeds the amount needed to pay benefits. After 2022, without increases in Social Security taxes or cuts in benefits, the Fund is projected to decrease each year until being fully exhausted in 2034. At this point, if legislative action is not taken, the benefits would be reduced.

Recent activity and financial status

The 2015 Trustees Report Press Release stated:
  • "Income including interest to the combined OASDI Trust Funds amounted to $884 billion in 2014.
  • Total expenditures from the combined OASDI Trust Funds amounted to $859 billion in 2014.
  • Non-interest income fell below program costs in 2010 for the first time since 1983. Program costs are projected to exceed non-interest income throughout the remainder of the 75-year period.
  • The asset reserves of the combined OASDI Trust Funds increased by $25 billion in 2014 to a total of $2.79 trillion.
  • During 2014, an estimated 166 million people had earnings covered by Social Security and paid payroll taxes.
  • Social Security paid benefits of $848 billion in calendar year 2014. There were about 59 million beneficiaries at the end of the calendar year.
  • The cost of $6.1 billion to administer the program in 2014 was 0.7 percent of total expenditures.
  • The combined Trust Fund asset reserves earned interest at an effective annual rate of 3.6 percent in 2014."
Some basic equations for understanding the fund balance include:
  • Fund ending balance for a given year = Fund starting balance + program revenues + interest - program payouts
  • Program annual surplus = program revenues + interest - program expenses
  • Program annual cash surplus = program revenues - program expenses
"Program revenues" has several components, including payroll tax contributions, taxation of benefits, and an accounting entry to reflect recent payroll tax cuts during 2011 and 2012, to make the fund "whole" as if these tax cuts had not occurred. These all add to the program revenues.
During 2016, the initial balance as of January 1 was $2,780 billion. An additional $710 billion in payroll tax revenue and $87 billion in interest added to the Fund during 2016, while expenses of $776 billion were removed from the Fund, for a December 31, 2016 balance of $2,801 billion.
In an annually issued report released in August 2021, the U.S. Treasury Department announced that the Old-Age and Survivors Trust Fund was projected to be able to pay scheduled benefits until 2033 while the Disability Insurance Trust Fund was projected to be able to pay its benefits through 2057, 1 year and 8 years earlier respectively than the previous report found. In June 2022, the Treasury Department issued an updated report for the Old-Age and Survivors Insurance and Disability Insurance Trust Funds with revised projections for their ability to pay scheduled benefits to 2034 and 2057 respectively and by 2035 when hypothetically combined due to accelerated recovery from the COVID-19 recession. In March 2023, the Treasury Department issued the annual trustees report for the Old-Age and Survivors Insurance and Disability Insurance Trust Funds with depletion date projections for the funds estimated at 2033 and 2097 respectively and by 2034 when combined.
In May 2024, the annual trustees report was released with depletion date projections for the funds estimated at 2033 and 2098 respectively and by 2035 when combined. The 1990 board of trustees annual report estimated the depletion date of the combined funds would be in 2043, the 2000 and 2010 annual reports estimated the depletion date of the combined funds would be in 2037, and the 2020 annual report estimated the depletion date of the combined funds would be in 2035. In a survey of 210 members of the American Economics Association published in November 2006, 85 percent agreed with the statement: "The gap between Social Security funds and expenditures will become unsustainably large within the next fifty years if current policies remain unchanged."