What Is The Social Security Trust Fund?

This is the excess or the surplus in money received from the workers’ contributions to the social security fund that do not fund the current retirees, disabled members of the society, running expenses of the social security fund or other beneficiaries of the social security fund. The national government of the United States has come up with ways to manage these funds so that the current contributors to the social security fund can benefit too when they retire.

History Behind The Social Security Trust Fund

In the year 1977 the social security trust was not actuarially sound and the president of the United States saw the dire need to have a commission to look into this matter. The beneficiaries of the social security fund were a greater number than the expected and consequently there was need to look into this because the social security system was projected to run for 75 years but at the rate at which the funds were being used it could not achieve its primary goal.

Measures Taken To Salvage The Situation

The commission therefore came up with measures to correct the situation and they recommended increase in self employment tax, increase in the retirement age from 65 to 67, an increase in the payroll tax from 9.9% to 10.8%,include members working for NGO’s and retirees who earn huge benefits into the taxation system. The commission later in the year 1997 agreed that it was necessary to invest some money of the social security trust fund so that they could generate some more money that could be used to keep the social security fund running

Investing In The Private Sector

The money under the social security trust fund is invested in securities and bonds that in turn earn income to the trust in form of interest. Today the social security fund consumes a whopping 22% of the United States government budget. The money that the beneficiaries of the social security fund get is directly proportional to their contributions.

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