Just saw this on Facebook:
Is the freehand-circled claim true? Does the United States Social Security have a surplus of $2.5 trillion?
Also, if the above is true, how did SS accrue this much extra?
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2Terminology. Social security, like many pension plans, has saved up money in a "trust fund" for future use. This is mostly money collected through SS and Medicare taxes. Wikipedia puts the amount at around $2.8 trillion. This is common knowledge and not really the sort of thing that should arouse skepticism.– Daniel R HicksOct 18, 2018 at 1:48
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3@DanielRHicks: Sounds like an answer, especially if you can explain the difference between that fund and a surplus.– Oddthinking ♦Oct 18, 2018 at 2:06
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7Use of the word "surplus" in this context implies "operating surplus", which means "left over, year after year". That's not the case. It's more like a reserve.– user11643Oct 18, 2018 at 2:18
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4The liquidity of that reserve seems to be the question here. Is it in cash or some receivable?– user11643Oct 18, 2018 at 2:37
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3You might also consider asking about that "Social Security adds nothing to the national debt" claim. Its pants are smouldering nicely.– DJClayworthOct 18, 2018 at 2:51
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2 Answers
For accurate information see The 2018 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds:
"Asset reserves" were $2,891.8 billion at the end of 2017.
The "net increase in asset reserves in 2017" was $44.1 billion.
The asset reserves of the combined trust funds were $2.9 trillion at the end of 2017. The trust fund reserves decline on a present value basis after 2017, but remain positive through 2033. However, after 2033 this cumulative amount becomes negative, which means that the combined OASI and DI Trust Funds have a net unfunded obligation through each year after 2033. Through the end of 2092, the combined funds have a present-value unfunded obligation of $13.2 trillion.
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4Pretty much this. The amount of money in Social Security is still increasing, but with an aging population and a willingness by lawmakers to use Social Security to pay for things not related to Social Security, the fund is going to reverse course soon and start to have to disperse more money than it receives. How to fix that problem is another issue entirely.– DenisSOct 18, 2018 at 13:42
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@DenisS it did still increase in 2017 (but only if you include interest on the trust funds). For 2018 and all future years decreases are projected. The other parts of the government pay interest (3.0% currently) to use borrow the funds. The trust funds would need to invest in risk assets if they didn't invest in US treasuries.– DavePhDOct 18, 2018 at 13:50
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4@DenisS - true, but the context of that fund in current political conversation is the stated desire by the controlling political party to make entitlement cuts as a remedy for the current fiscal deficits and debt. Oct 18, 2018 at 15:07
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11The crucial distinction is between "reserves" (i.e. total current assets) and "surplus" (i.e. assets minus liabilities). SS has lots of assets, but their future liabilities are even bigger. The opposite of "surplus" is "unfunded obligation". Oct 18, 2018 at 15:10
Starting in 1983, Social Security increased revenues (i.e. taxes), raised the retirement age for future beneficiaries, and adjusted spending. It is now over thirty years later and that surplus has been accruing interest over time. Less than $100 billion a year is not so much in the context of Social Security, which currently spends $988 billion per year (2018). Currently the trust fund has more than the $2.5 trillion claimed. Social Security statistics.
Throwing those numbers into a spreadsheet, I found that Social Security has collected more than $2 trillion as interest since 1983.
The idea was to prepare for the retirement of the baby boomers, who were born in 1946-1964. They started retiring on Social Security in 2008 (at age 62). The last will start in 2035 (at age 70.5). Perhaps not coincidentally, the Social Security trust fund is projected to run out of money in the early to mid 2030s. At that time, the trust fund would be covering about 25% of benefits.
Almost forty years of Social Security saving spent in less than twenty years.
Source: 2018 OASDI Trustees Report.
