How is Social Security Funded?
How is Social Security Funded?
In 2022, 12.4 percent of income up to $147,000 goes into the Social Security pot. Job holders and their employers split the contribution at 6.2 percent each; self-employed people pay both shares. That money goes into two Social Security trust funds, called Old-Age and Survivors Insurance and Disability Insurance. The first pays out retirement, spousal and survivor benefits while the second covers disability benefits. About 80 cents of each dollar you pay in Social Security taxes goes to the old-age insurance fund, the rest to disability. In 2021, those taxes — called for people with wage-earning jobs and for the self-employed — brought in $981 billion, accounting for 90 percent of Social Security's revenue, according to the from Social Security's board of trustees. The rest of the revenue comes from these sources: $70.1 billion from interest on money that the trust funds invested in federally backed guaranteed securities $37.6 billion from income taxes people paid on their Social Security benefits Less than $50 million from reimbursements to the trust funds from the U.S. Treasury Throughout its history, Social Security generally has taken in more money than it paid out, generating a reserve that totaled $2.85 trillion at the end of 2021. That trend of annual net gains is reversing as aging baby boomers swell the ranks of retirees. The latest trustees’ report projects that the reserve will be depleted by 2035. That does not mean as the situation sometimes is described. If reserves are exhausted, the Social Security programs will continue to pay benefits out of their annual tax revenue. However, those payments will be lower, amounting to about 80 percent of what beneficiaries normally would be entitled to collect in 2035 and continuing to decline slightly in ensuing decades, according to current projections. Averting those cuts will require .
How is Social Security funded
Payroll taxes from U.S. workers and their employers provide most of the money for Social Security benefit programs.In 2022, 12.4 percent of income up to $147,000 goes into the Social Security pot. Job holders and their employers split the contribution at 6.2 percent each; self-employed people pay both shares. That money goes into two Social Security trust funds, called Old-Age and Survivors Insurance and Disability Insurance. The first pays out retirement, spousal and survivor benefits while the second covers disability benefits. About 80 cents of each dollar you pay in Social Security taxes goes to the old-age insurance fund, the rest to disability. In 2021, those taxes — called for people with wage-earning jobs and for the self-employed — brought in $981 billion, accounting for 90 percent of Social Security's revenue, according to the from Social Security's board of trustees. The rest of the revenue comes from these sources: $70.1 billion from interest on money that the trust funds invested in federally backed guaranteed securities $37.6 billion from income taxes people paid on their Social Security benefits Less than $50 million from reimbursements to the trust funds from the U.S. Treasury Throughout its history, Social Security generally has taken in more money than it paid out, generating a reserve that totaled $2.85 trillion at the end of 2021. That trend of annual net gains is reversing as aging baby boomers swell the ranks of retirees. The latest trustees’ report projects that the reserve will be depleted by 2035. That does not mean as the situation sometimes is described. If reserves are exhausted, the Social Security programs will continue to pay benefits out of their annual tax revenue. However, those payments will be lower, amounting to about 80 percent of what beneficiaries normally would be entitled to collect in 2035 and continuing to decline slightly in ensuing decades, according to current projections. Averting those cuts will require .