Social Security Basics

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A major source of information for this research is the 2010 Social Security Trustees Report.[1] This report was published in 2010 and contains data from 2009. Unless otherwise stated, all future dollar figures are indexed for inflation to produce numbers that are consistent in terms of the years 2009/2010.

Whenever the word "projections" is used, this refers to projections made by the United States Social Security Administration, which produces high, low, and intermediate projections. Unless otherwise stated, the intermediate figures are cited because these reflect the "best estimates of future experience."[2]

* In 1935, Congress passed and Democratic President Franklin D. Roosevelt signed into law the "Social Security Act." This law created "a system of Federal old-age benefits" for workers and their families. In 1956, the law was amended to also provide disability benefits.[3] [4]

* As of June 30, 2009, 51.9 million people or 16.9% of the U.S. population were receiving monthly Social Security benefits.[5]

* Certain groups of workers were originally exempt from Social Security including government employees, railroad workers, the self-employed, farm workers, domestic help, and employees of nonprofit organizations. In 1950 and 1983, the law was changed to require most of these individuals to participate in the program, although about 25% of state and local government workers are still exempted.[6] [7]

* Social Security taxes are subject to a wage threshold. Any income earned above the threshold is not taxed. In 2010, the threshold was $106,800.[10]

* The Social Security Act of 1935 set the wage threshold at $3,000. Income earned above this amount was not subject to Social Security taxes. This threshold was a fixed amount that was not indexed for inflation or wage levels.[11]

* Between 1950 and 1971, various Congresses and Presidents passed laws increasing the threshold to $9,000.[12]

* In 1972, the Congress and Republican President Richard Nixon passed a law to automatically index the threshold based upon changes in average wage levels.[13]

* Adjusting for inflation, the threshold has been increased by a factor of 3.9 times since 1950.[14]

* The Social Security Act of 1935 set the initial tax rate at 2% (employee and employer combined).

	Social Security Tax Rate
Year	Employee and Employer Combined	Self-Employed
1940	2%	Not applicable
1950	3%	Not applicable
1960	6%	4.5%
1970	8.4%	6.3%
1980	10.16%	7.05%
1990	12.4%	12.4%
2000	12.4%	12.4%
2010	12.4%	12.4%

* At the outset of the Social Security program, the federal government published an informational pamphlet that stated the following with regard to Social Security taxes:

And finally, beginning in 1949, 12 years from now, you and your employer will each pay 3 cents on each dollar you earn, up to $3,000 a year. That is the most you will ever pay.[16]

* Accounting for inflation, this promise equates to a maximum tax collection of $1,655 per person.[17]

* In 2010, the maximum payroll tax collection per person was $13,243 or eight times the promised maximum.[18]

NOTE: The following projections are based upon what the current law specifies. This does not imply that the Social Security program will have enough money to pay for these benefits. Information concerning the financial stability of the Social Security program is contained in the next section.

* In general, to qualify for old-age benefits, a person must work for ten years while earning at least $4,480 a year.[19]

* Old-age benefit amounts are generally related to the amount of Social Security taxes paid by workers.[20]

* People with lower incomes receive higher ratios of benefits to taxes.[21] If a 21-year-old earned $30,000/year for the next 46 years, he would receive a yearly old-age benefit that is about four times the amount of the yearly taxes that he paid. If another individual earned $85,000 per year, his yearly benefit would be 2.6 times the yearly taxes that he paid.[22]

* For workers who earned average wages and retired at the age of 65 in 1980, it took 2.8 years of receiving old-age benefits to recover the value of their payroll taxes. For workers who retired in 2003, it will take 17.4 years. For workers who will retire in 2020, it will take 21.6 years.[23] This assumes Social Security will have enough money to pay scheduled benefits for this entire period, which it is not projected to have.[24]

* Old-age benefits are generally increased once per year based upon the rate of inflation in the previous year.[25]

* The age at which a worker receives full Social Security old-age benefits is referred to as the "full retirement age." A person's full retirement age can be between 65 and 67 years old, depending upon his or her year of birth. For those born after 1959, the full retirement age is 67 (more details in footnote).[26]

* Family members of workers who are receiving old-age benefits may also be eligible for benefits, even if they have not worked (more details in footnote).[27]

* The statement issued by the Social Security Administration to all participants states the following:

Social Security is the largest source of income for most elderly Americans today, but Social Security was never intended to be your only source of income when you retire. You also will need other savings, investments, pensions or retirement accounts to make sure you have enough money to live comfortably when you retire.[28]

* As of 2010, Social Security pays an average of $13,968/year to retired individuals.[29] The poverty threshold for individuals over 65 years of age is $10,289.[30]

* As of 2010, Social Security pays an average of $22,704/year to retired couples.[31] The poverty threshold for couples over 65 years of age is $12,982.[32]

* Social Security pays benefits to the families of workers who die and leave behind spouses, children under the age of 20, and sometimes other relations such as parents and ex-spouses (more details in footnote).[33]

* Each dependent receives about 75% to 100% of the deceased worker's basic Social Security benefit. "However, there is a limit to the amount of money that can be paid each month to a family. The limit varies, but is generally equal to about 150 to 180 percent of your benefit rate."[34]

* In general, to qualify for disability benefits, workers must meet certain criteria regarding how recently and how long they have worked (more details in footnote).[35]

* In general, recipients begin to receive disability benefits after they have been disabled for five full months.[36]

* Disability benefits are calculated based upon a formula that takes into account the Social Security taxes paid over the course of workers' lifetimes.[37]

* Disability benefits are generally increased once a year based upon the rate of inflation.[38]

Category	Amount (billions)	Percent of Total Social Security Benefits
Retired workers and their families	$452	67%
Survivors of deceased workers	$105	16%
Disabled workers and their families	$118	17%

* The Social Security program has an independent budget that is separate from the rest of the federal government.[40]

* Between 1982 and 2009, Social Security had surpluses every year.[41] By law, these surpluses must be loaned to the federal government, which is obligated to pay the money back with interest.[42] [43] [44]

* In 2010 and 2011, Social Security is projected to spend a total of $48 billion more than it collects in taxes.[45] [46]

* Beginning in 2015, Social Security is projected to spend more than it collects in taxes every year into the foreseeable future.[47] [48]

* When Social Security spends more than it collects in taxes, it makes up the difference by collecting on the money it has loaned to the federal government.[49]

NOTE: The above fact does not mean that the federal government will have enough money to pay back the Social Security program. Information concerning the ability of the federal government to do so is contained in the section: Impact on National Debt

* By 2037, it is projected that all of the money Social Security has loaned to the federal government will be paid back, at which time, the Social Security Trust Fund will have a balance of zero.[50]

* After 2037, Social Security is projected to run deficits every year into the foreseeable future.[51]

* To cover these deficits, it is projected that payroll taxes would need to be increased by 28% starting in 2037, rising to a 33% increase by 2084.[52] This shortfall could also be covered by reducing benefits by 22% starting in 2037, rising to a 25% reduction by 2084.[53]

Time Period	Financial Status
2010–2037	Social Security spends more than it collects in taxes during 25 of these 28 years. The federal government pays back the money that the Social Security program has loaned to it with interest, and the trust fund ends this period with a balance of zero.
2037-2084	The Social Security program runs annual deficits every year that could be covered by (a) increasing payroll taxes by 28% starting in 2037, rising to a 33% increase by 2084, or (b) reducing benefits by 22% starting in 2037, rising to a 25% reduction by 2084.
2085 and beyond	The Social Security Program runs deficits every year into the foreseeable future

* The Social Security Trustees Report states that the future finances of the program depend upon

future birth rates, death rates, immigration, marriage and divorce rates, retirement-age patterns, disability incidence and termination rates, employment rates, productivity gains, wage increases, inflation, and many other demographic, economic, and program-specific factors.[54]

* The report also states that "significant uncertainty" surrounds the "best estimates" of future circumstances.[55]

* The 2001 Trustees Report projected that Social Security would have $1.41 in income for every dollar it spent in 2009. The actual figure turned out to be $1.18.

* A primary cause of the projected Social Security deficits is that the number of workers paying taxes compared to the number of people receiving benefits has fallen and is projected to fall further:

* Factors contributing to the falling ratio of people paying taxes compared to people receiving benefits:

1) Increase in life expectancy without a comparable increase in the retirement age:

• From the inception of the Social Security program through 2002, the full retirement age of 65 was not changed. A law passed in 1983 requires that it be increased in small steps to the age of 67 by the year 2027.[57] [58]

• Since Social Security began paying benefits in 1940, the life expectancy of the average 65-year old male has risen by 5.1 years, and the life expectancy of the average 65-year old female has risen by 6.3 years.[59] [60]

• Benefits and taxes are automatically indexed on an annual basis to compensate for inflation and wage growth. The retirement age is not automatically indexed to compensate for increased life expectancy.[61]

2) The higher birth rate of the baby boom generation compared to other generations:

• In 1957 (during the baby boom), the average birth rate per woman was 3.7. By 1976, the average birth rate had fallen to 1.7. As of 2006, it was 2.1.[62] [63]

• In 2011, the first wave of baby boomers will turn 65 years of age.[64] Between 2011 and 2030, it is projected that the number of people eligible for old-age benefits will increase by 62%, while the number of people paying Social Security taxes will increase by 17%.[65]

• Between 1965 and 2009, the U.S. population grew by 54%. During the same period, the number of people receiving disability benefits increased by 458%.[66]

* In 2009, the administrative costs of the Social Security program were $6,182,000,000. This was equal to 0.90% of all Social Security outlays for the year or enough to pay 442,583 retired workers the average annual old-age benefit of $13,968.[67] [68]

* In 2009, Social Security made roughly $2,547,000,000 in improper overpayments. This was equal to 0.37% of all Social Security payments for the year or enough to pay 182,345 retired workers the average annual old-age benefit of $13,968.[69] [70]

* Under the "2009 American Recovery and Reinvestment Act" (a.k.a., "stimulus"), the Social Security Administration was required to administer the payment of $250 checks to Social Security beneficiaries.[71]

* A 2010 report by the Inspector General of the Social Security Administration found that the Social Security Administration sent 71,688 stimulus checks (totaling $18,000,000) to people who were deceased.[72]

* A random audit of 50 such cases found that 26 of the payments had been returned. The stimulus act did not provide authority to reclaim payments issued to the deceased, and thus, the Social Security Administration or Treasury did not pursue collection of unreturned payments.[73]

* In 2010, the Government Accountability Office released the results of an investigation of federal employees and commercial drivers who were receiving disability benefits.[74] The investigators reported that:

• the Social Security Administration does not cross-check disability payments with federal payroll data or Department of Transportation records to prevent improper payments.[75]

• roughly 1,500 federal employees "may have improperly received benefits" based upon their wages exceeding maximum income thresholds.[76]

• in 12 selected states, "62,000 individuals received or renewed commercial driver's licenses after the Social Security Administration had determined that these individuals were eligible for full disability benefits."[77]

* Out of the cases identified above, the Government Accountability Office selected and investigated a nonrandom sample of 20 individuals.[78] The investigators found that:

• all of the 20 individuals were ineligible for the disability benefits they had received.[79]

• one of the 20 received improper Social Security disability benefits while simultaneously working for the Social Security Administration as a legal secretary.[81]

• one of the 20 received $108,000 in improper disability benefits while working as a security screener for the Transportation Safety Administration.[82]

* All taxes that have been paid into the Social Security system since its inception have already been (1) spent to pay for benefits, (2) spent to fund the administrative overhead of the program, or (3) loaned to the federal government.[85] [86] [87] [88]

There has been a temptation throughout the program's history for some people to suppose that their FICA payroll taxes entitle them to a benefit in a legal, contractual sense.… Congress clearly had no such limitation in mind when crafting the law. ... Benefits which are granted at one time can be withdrawn.…[89]

The only reason Social Security is in trouble is that our "leaders" have looted it for years. That is not the fault of Social Security. It would be fine if it were administered honestly.[90] [91]

* No money has been taken from the Social Security program.[92] [93] By law, Social Security surpluses must be loaned to the federal government,[94] [95] which is a requirement that was established in the original Social Security Act of 1935.[96] [97] [98] [99] The federal government is legally required to pay back this money to the Social Security program with interest,[100] and it has never failed to do so.[101] [102]

* The assets of the Social Security program include all of the money it has loaned to the federal government.[103] [104] Even if this money is repaid with interest, it is projected that the Social Security Trust Fund will become exhausted in 2037,[105] and the program will have deficits every year thereafter into the foreseeable future.[106]

* If extra money had not been added to the Social Security program by increasing tax rates above the levels specified in the original Social Security Act, the program would have been unable to pay full benefits since before 1980.[107]

* The Social Security program has an independent budget that is separate from the rest of the federal government.[108]

* When the Social Security program collects more in taxes than it spends, it generates surplus money. By law, the only thing that the Social Security program can do with surplus money is loan it to the U.S. government.[109] [110]

* When the Social Security program loans money to the U.S. government, the government is obligated by law to pay this money back to the Social Security program with interest. This money becomes a part of the national debt.[111] [112]

* As of December 31, 2010, the U.S. government owes $2.6 trillion to the Social Security Trust Fund. This equates to $8,500 for every man, woman, and child living in the United States or $22,269 per household.[113] [114] [115]

* The Social Security program is projected to start drawing money from the trust fund in 2010, 2011, and then every year from 2015 thereafter until trust fund exhaustion in 2037.[116] [117] [118]

* The Clinton administration's 2000 budget proposal states that the Social Security trust fund does

not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures.[119]

* As of September 30, 2010, the federal government has a total of $56,529,800,000,000 ($56.5 trillion) in debt, liabilities, and unfunded obligations. This equates to $182,914 for every person living in the U.S. or $480,949 per household. These figures assume that government projections about future economic circumstances are accurate.[120]

The money you pay in taxes is not held in a personal account for you to use when you get benefits. Your taxes are being used right now to pay people who now are getting benefits. Any unused money goes to the Social Security trust funds, not a personal account with your name on it.[121]

* For workers who are 40-years-old in 2010 and plan to retire at the age of 67 in 2037, their retirement benefits will be derived solely from taxpayers who contribute to Social Security at that time.[122] [123] In 2037, Social Security tax revenues are projected to be sufficient to pay 78% of Social Security benefits.[124]

* In general, for Social Security participants who are single and have no children under the age of 20, their benefits (or projected benefits) terminate when they die regardless of how much they have paid in Social Security taxes.[125] [126]

* For workers who are 40-years-old, their full retirement age is 67.[127] The following table shows their life expectancies beyond this age:

Race/Sex	Years of Expected Life Beyond the Age of 67
Hispanic females	17.3
White females	14.8
Hispanic males	13.2
Black females	11.7
White males	10.9
Black males	6.2

* Proposals have been made to give workers the option to change part of their Social Security participation from a benefit program to a savings plan. These savings would be the personal property of each person who chose to participate and would be willable to their heirs. In turn, their Social Security benefits would be reduced to correspond with the amount of taxes they paid to the program.[129] [130]

* Proposals to give Social Security an element of personal ownership are generally structured to improve the program's finances. Typically, there are transition costs to cover the lowered taxes of those who opt to have personal accounts, but these costs are more than offset by the savings of not paying these individuals full benefits. For example, a proposal made in 2008 would eliminate $4.3 trillion in deficits but add $4.1 trillion in transition costs, thus equating to about $200 billion in savings.[131] [132]

* To restrict speculation, personal ownership plans typically regulate the types of investments that can be made. Examples include restricting investments to broad-based funds or requiring that assets be moved to lower-risk investments as individuals approach retirement age.[133] [134] [135]

* During the 110th Congress (2007-2008), four bills were introduced that would have allowed workers to save and invest a portion of their Social Security payroll taxes. All of these bills were sponsored by Republicans. No Congressional action was taken on any of them.[136] [137]

* The 2008 Republican Party Platform supports giving workers "control over" their Social Security contributions.[138]

* The 2008 Democratic Party Platform and President Barack Obama oppose "privatization" of Social Security.[139] [140] [141]

* Since 1980, 28 countries have added an element of personal ownership to their social security systems.[142] The map below is reproduced with permission from José Piñera, the architect of the personal ownership system in Chile, which was the first country to introduce such a plan. Clicking on this map will bring you to an interactive map on Dr. Piñera's site that provides an overview (in Spanish) of the system in each of these 28 countries.

* Starting in 1946, Social Security cards had the following sentence imprinted on them:

* Since 1961, various Congresses and Presidential administrations have enacted more than 40 laws, regulations, and policies requiring the use of Social Security numbers for identity-related functions.[144]

* Starting in 1972, the sentence reading "For Social Security Purposes -- Not For Identification" was removed from all newly issued Social Security cards.[145]

* In 1994, Democratic Congressman Dick Gephardt sponsored a law that passed Congress with 67% of Democrats and 70% of Republicans voting for it. Democratic President Bill Clinton signed it into law. This legislation contains a section entitled:

The law requires that parents submit Social Security numbers for their children with their tax return in order to obtain a tax exemption for their children.[147]

The Social Security number was originally devised to keep an accurate record of each individual's earnings, and to subsequently monitor benefits paid under the Social Security program. However, use of the number as a general identifier has grown to the point where it is the most commonly used and convenient identifier for all types of record-keeping systems in the United States.

If a business or other enterprise asks you for your number, you can refuse to give it. However, that may mean doing without the purchase or service for which your number was requested.[148]

[1] "2010 Annual Report of the Board of Trustees of The Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds." United States Social Security Administration, August 9, 2010. http://www.ssa.gov/OACT/TR/2010/tr2010.pdf

Page 15: "Uncertainty of the Projections … Significant uncertainty surrounds the intermediate assumptions."

[2] "2010 Annual Report of the Board of Trustees of The Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds." United States Social Security Administration, August 9, 2010. http://www.ssa.gov/OACT/TR/2010/tr2010.pdf

Page 7: "The intermediate demographic and economic assumptions shown in table II.C1 reflect the Trustees' best estimates of future experience, and therefore most of the figures in this overview depict only the outcomes under the intermediate assumptions. Any projection of the future is, of course, uncertain. For this reason, alternatives I (low-cost) and III (high-cost) are included to provide a range of possible future experience."

Page 15: "Uncertainty of the Projections … Significant uncertainty surrounds the intermediate assumptions."

An act to provide for the general welfare by establishing a system of Federal old-age benefits, and by enabling the several States to make more adequate provision for aged persons, blind persons, dependent and crippled children, maternal and child welfare, public health, and the administration of their unemployment compensation laws; to establish a Social Security Board; to raise revenue; and for other purposes.

[4] Report: "Major Decisions in the House and Senate on Social Security." By Geoffrey Kollmann and Carmen Solomon-Fears. Domestic Social Policy Division, Social Security Administration, March 26, 2001. http://www.ssa.gov/history/reports/crsleghist3.html

[House Resolution] 7225, the Social Security Amendments of 1956, was signed by President Eisenhower on August 1, 1956. The amendments provided benefits, after a 6-month waiting period, for permanently and totally disabled workers aged 50 to 64 who were fully insured and had at least 5 years of coverage in the 10-year period before becoming disabled; to a dependent child 18 and older of a deceased or retired insured worker if the child became disabled before age 18; to women workers and wives at the age of 62, instead of 65, with actuarially reduced benefits; reduced from 65 to 62 the age at which benefits were payable to widows or parents, with no reduction; extended coverage to lawyers, dentists, veterinarians, optometrists, and all other self-employed professionals except doctors increased the tax rate by 0.25% on employer and employee each (0.375% for self-employed people) to finance disability benefits (thereby raising the aggregate tax rate ultimately to 4.25%); and created a separate disability insurance (DI) trust fund. The Social Security program now consisted of old-age, survivors, and disability insurance….

a) "2010 Annual Report of the Board of Trustees of The Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds." United States Social Security Administration, August 9, 2010. http://www.ssa.gov/OACT/TR/2010/tr2010.pdf

Pages 53-54: "Table IV.B2.—Covered Workers and Beneficiaries, Calendar Years 1945-2085. … 2009 beneficiaries^b = 51,860,000 … ^b Beneficiaries with monthly benefits in current-payment status as of June 30."

b) Dataset: "Annual Estimates of the Resident Population for the United States, Regions, States, and Puerto Rico: April 1, 2000 to July 1, 2009." U.S. Census Bureau, December 2009. http://www.census.gov/popest/states/NST-ann-est.html

[6] Report: "Summary of Major Changes in the Social Security Cash Benefits Program: 1935-1996." By Geoffrey Kollmann. Library of Congress, Congressional Research Service. Updated December 20, 1996. http://www.ssa.gov/history/pdf/crs9436.pdf

Pages 1-2: "THE SOCIAL SECURITY ACT OF 1935 … Nearly all workers in commerce and industry under age 65, or about 60% of the work force, were required to participate in the Old-Age Insurance program. Principal groups excluded from the program were government workers, railroad employees, the self-employed, farm and domestic workers, and employees of nonprofit organizations."

The 1950 amendments substantially expanded the scope of the Old-Age and Survivors Insurance (OASI) program by extending coverage to about 10 million additional workers. …

Covered regularly employed farm and domestic workers, self-employed workers (except farmers and professionals), federal civilian employees not under a federal civil service retirement system (e.g., temporary employees), Americans employed outside the United States by American employers, and workers in Puerto Rico and the Virgin Islands. Not-for-profit organizations could elect coverage for their employees (except ministers). State and local governments could elect coverage for their employees not under public employee retirement systems.*

• Coverage of federal civilian employees hired after December 31, 1983, and most current executive level political appointees and elected officials (including Members of Congress, the President, and the Vice President) and Federal judges, effective January 1984.

• Compulsory coverage of all employees of nonprofit organizations effective in January 1984 and a ban on the termination of coverage of nonprofit organization and state and local government employment after 1982.

- "Unlike nearly all private-sector workers and federal employees, some workers employed by state and local governments—about 25 percent—are not covered by Social Security." [Report: "Reducing the Deficit: Spending and Revenue Options." Congressional Budget Office, March 2011. http://cbo.gov/ftpdocs/120xx/doc12085/03-10-ReducingTheDeficit.pdf]

- For example, Illinois's "teachers and certain other workers do not participate in Social Security…." [Article: "The Illusion of Pension Savings." By Mary Williams Walsh. New York Times, September 17, 2010. http://www.nytimes.com/2010/09/18/business/18pension.html?hpw]

[8] "2010 Annual Report of the Board of Trustees of The Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds." United States Social Security Administration, August 9, 2010. http://www.ssa.gov/OACT/TR/2010/tr2010.pdf

Page 180: "Table VI.F1.—Contribution Rates for the OASDI [Social Security] and HI [Medicare Hospital Insurance] Programs"

[9] "2010 Annual Report of the Board of Trustees of The Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds." United States Social Security Administration, August 9, 2010. http://www.ssa.gov/OACT/TR/2010/tr2010.pdf

Page 180: "Table VI.F1.—Contribution Rates for the OASDI [Social Security] and HI [Medicare Hospital Insurance] Programs"

[10] "2010 Annual Report of the Board of Trustees of The Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds." United States Social Security Administration, August 9, 2010. http://www.ssa.gov/OACT/TR/2010/tr2010.pdf

Page 180: "^a The payroll tax on earnings for the OASDI [Social Security] program applies to annual earnings up to a contribution and benefit base indexed to the average wage level. The base is $106,800 for 2010."

SEC. 811. When used in this title- (a) The term wages means all remuneration for employment, including the cash value of all remuneration paid in any medium other than cash; except that such term shall not include that part of the remuneration which, after remuneration equal to $3,000 has been paid to an individual by an employer with respect to employment during any calendar year, is paid to such individual by such employer with respect to employment during such calendar year.

[12] Report: "Summary of Major Changes in the Social Security Cash Benefits Program: 1935-1996." By Geoffrey Kollmann. Library of Congress, Congressional Research Service. Updated December 20, 1996. http://www.ssa.gov/history/pdf/crs9436.pdf

Pages 4-5: "1950 Amendments … Set the earnings base (the minimum yearly amount of earnings on which Social Security taxes are paid and which is creditable for benefits) at $3,600 for 1951 and thereafter."

Pages 5-6: "1954 Amendments … Raised the earnings base from $3,600 to $4,200 a year, effective in 1955…."

Page 7: "1958 Amendments … Raised the earnings base from $4,200 to $4,800."

Page 9: "1965 Amendments … Increased the earnings base from $4,800 to $6,600, beginning in 1966."

Pages 10-11: "1967 Amendments … Increased the earnings base from $6,600 to $7,800, beginning in 1968.

Page 11: "The 1971 amendments increased … the earnings base to $9,000, effective January 1972."

[13] Report: "Summary of Major Changes in the Social Security Cash Benefits Program: 1935-1996." By Geoffrey Kollmann. Library of Congress, Congressional Research Service. Updated December 20, 1996. http://www.ssa.gov/history/pdf/crs9436.pdf

Page 11: "1972 Amendments … effective in 1975, the earnings base and the exempt amount under the earnings test would be adjusted automatically to keep pace with changes in wage levels. The base was increased in the meantime to $10,800 for 1973 and $12,000 for 1974."

Pages 12-13: "1973 Amendments … [T]he amendments increased the earnings base in 1974 to $13,200…."

a) Web page: "Contribution and Benefit Base." United States Social Security Administration, Office of the Chief Actuary. Last reviewed or modified October 29, 2010. http://www.ssa.gov/oact/cola/cbb.html

[In 1950, the taxable maximum was $3,000. In 2010, the taxable maximum was $106,800.]

"The CPI inflation calculator uses the average Consumer Price Index for a given calendar year. This data represents changes in prices of all goods and services purchased for consumption by urban households. This index value has been calculated every year since 1913. For the current year, the latest monthly index value is used."

Using the above-cited inflation calculator, $3,000 in 1950 is equivalent to $27,143.90 in 2010.

[15] Web page: "Social Security & Medicare Tax Rates." United States Social Security Administration, Office of the Chief Actuary. Last reviewed or modified Wednesday June 30, 2010. http://www.ssa.gov/oact/ProgData/taxRates.html

Using the above-cited inflation calculator, $180 in 1949 is equivalent to $1,655 in 2010.

a) Web page: "Social Security & Medicare Tax Rates." United States Social Security Administration, Office of the Chief Actuary. Last reviewed or modified Wednesday June 30, 2010. http://www.ssa.gov/oact/ProgData/taxRates.html

b) "2010 Annual Report of the Board of Trustees of The Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds." United States Social Security Administration, August 9, 2010. http://www.ssa.gov/OACT/TR/2010/tr2010.pdf

Page 180: "The payroll tax on earnings for the OASDI [Social Security] program applies to annual earnings up to a contribution and benefit base indexed to the average wage level. The base is $106,800 for 2010."

Page 2: "To qualify for benefits, you earn "credits" through your work — up to four each year. This year, for example, you earn one credit for each $1,120 of wages or self-employment income. When you've earned $4,480, you've earned your four credits for the year. Most people need 40 credits, earned over their working lifetime, to receive retirement benefits."

Many people wonder how their benefit is figured. Social Security benefits are based on your lifetime earnings. Your actual earnings are adjusted or "indexed" to account for changes in average wages since the year the earnings were received. Then Social Security calculates your average indexed monthly earnings during the 35 years in which you earned the most. We apply a formula to these earnings and arrive at your basic benefit, or "primary insurance amount" (PIA). This is how much you would receive at your full retirement age—65 or older, depending on your date of birth.

NOTE: The above statement is imprecise because it states that "benefits are based on your lifetime earnings," when in fact, benefits are based on lifetime taxable earnings, which may be lower than lifetime earnings due to the wage threshold.* Since lifetime taxable earnings are taxed at a flat rate,† lifetime taxable earnings are directly proportional to Social Security taxes paid.

* Web page: "Contribution and Benefit Base." United States Social Security Administration, Office of the Chief Actuary. Last reviewed or modified October 29, 2010. http://www.ssa.gov/oact/cola/cbb.html

"Social Security's Old-Age, Survivors, and Disability Insurance (OASDI) program limits the amount of earnings subject to taxation for a given year. The same annual limit also applies when those earnings are used in a benefit computation."

† Web page: "Social Security & Medicare Tax Rates." United States Social Security Administration, Office of the Chief Actuary. Last reviewed or modified Wednesday June 30, 2010. http://www.ssa.gov/oact/ProgData/taxRates.html

[21] Web page: "Automatic Increases: Primary Insurance Amount." United States Social Security Administration, Office of the Chief Actuary. Last reviewed or modified October 29, 2010. http://www.ssa.gov/OACT/COLA/piaformula.html

The "primary insurance amount" (PIA) is the benefit (before rounding down to next lower whole dollar) a person would receive if he/she elects to begin receiving retirement benefits at his/her normal retirement age. At this age, the benefit is neither reduced for early retirement nor increased for delayed retirement.

The PIA is the sum of three separate percentages of portions of average indexed monthly earnings. The portions depend on the year in which a worker attains age 62, becomes disabled before age 62, or dies before attaining age 62.

For 2011 these portions are the first $749, the amount between $749 and $4,517, and the amount over $4,517. These dollar amounts are the "bend points" of the 2011 PIA formula. A table shows bend points, for years beginning with 1979, for both the PIA and maximum family benefit formulas.

For an individual who first becomes eligible for old-age insurance benefits or disability insurance benefits in 2011, or who dies in 2011 before becoming eligible for benefits, his/her PIA will be the sum of:

(a) 90 percent of the first $749 of his/her average indexed monthly earnings, plus

(b) 32 percent of his/her average indexed monthly earnings over $749 and through $4,517, plus

NOTE: The above PIA formula weights lower earnings (and thus lower taxes paid) more than greater earnings (and thus higher taxes paid).

[The payroll tax rate for employees/employers combined or for self-employed persons is 12.4%.]

- On December 29, 2010, the following data was entered into the Online Calculator:

[23] Report: "Social Security Reform: Current Issues and Legislation." By Dawn Nuschler. Congressional Research Service, September 14, 2010. http://aging.senate.gov/crs/ss6.pdf

Until recent years, Social Security recipients received more, often far more, than the value of the Social Security taxes they paid. However, because Social Security payroll tax rates have increased over the years and the full retirement age (the age at which unreduced benefits are first payable) is being increased gradually, it is becoming more apparent that Social Security will be less of a good deal for many future retirees. For example, for workers who earned average wages and retired in 1980 at the age of 65, it took 2.8 years to recover the value of the retirement portion of the combined employee and employer shares of their Social Security taxes plus interest. For their counterparts who retired at the age of 65 in 2003, it will take 17.4 years. For those retiring in 2020, it will take 21.6 years.

[24] The Social Security Trust Fund is projected to be depleted by 2037, in which year, the program would be able to pay about 78% of scheduled benefits.* For more information, see the section on Financial Status.

* Table VI.F7: "Operations of the Combined OASI and DI Trust Funds, in Constant 2010 Dollars, Calendar Years 2010-85 [In billions]." United States Social Security Administration, Office of the Chief Actuary. Last reviewed or modified August 5, 2010. http://www.ssa.gov/OACT/TR/2010/lr6f7.html

"Estimates for later years are not shown because the combined OASI and DI Trust Funds are estimated to become exhausted in 2037 under the intermediate assumptions…." {NOTE: The "combined OASI and DI Trust Funds" comprise the "Social Security Trust Fund." See the column labeled "Assets at end of year."}

Page 9: "Tax revenues are projected to be sufficient to support expenditures at a level of 78 percent of scheduled benefits after trust fund exhaustion in 2037, declining to 75 percent of scheduled benefits in 2084."

Since 1975, Social Security general benefit increases have been cost-of-living adjustments or COLAs. The 1975-82 COLAs were effective with Social Security benefits payable for June in each of those years; thereafter COLAs have been effective with benefits payable for December. …

The first COLA, for June 1975, was based on the increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the second quarter of 1974 to the first quarter of 1975. The 1976-83 COLAs were based on increases in the CPI-W from the first quarter of the prior year to the corresponding quarter of the current year in which the COLA became effective. After 1983, COLAs have been based on increases in the CPI-W from the third quarter of the prior year to the corresponding quarter of the current year in which the COLA became effective.

[26] Publication number 05-10024: "Understanding the Benefits." United States Social Security Administration, May 2008. http://www.ssa.gov/pubs/10024.html

For those born before 1938, the full retirement age to qualify for Social Security benefits is 65 years old.

For those born between 1938 and 1959, the full retirement age to qualify for Social Security benefits is defined by the following chart:

Year of Birth	Full Retirement Age
1938	65 and 2 months
1939	65 and 4 months
1940	65 and 6 months
1941	65 and 8 months
1942	65 and 10 months
1943 – 1954	66
1955	66 and 2 months
1956	66 and 4 months
1957	66 and 6 months
1958	66 and 8 months
1959	66 and 10 months

For those born after 1959, the full retirement age to qualify for Social Security benefits is 67 years old.

[27] Publication number 05-10024: "Understanding the Benefits." United States Social Security Administration, May 2008. http://www.ssa.gov/pubs/10024.html

[Family members include a spouse, children under the age of 19, and adult children who are disabled. Each family member may be eligible for benefits equal to 50% of the worker's benefit, but there is a limit on the amount of benefits that a single family can receive.]

[29] Publication number 05-10024: "Understanding the Benefits." United States Social Security Administration, January 2010. http://www.ssa.gov/pubs/10024.pdf

Page 22: "Average 2010 monthly Social Security benefits … Retired worker: $1,164"

[31] Publication number 05-10024: "Understanding the Benefits." United States Social Security Administration, January 2010. http://www.ssa.gov/pubs/10024.pdf

Page 22: "Average 2010 monthly Social Security benefits … Retired couple: $1,892"

[33] Publication number 05-10024: "Understanding the Benefits." United States Social Security Administration, January 2010. http://www.ssa.gov/pubs/10024.html

• Any age if he or she is caring for your child who is younger than 16 or disabled and entitled to Social Security benefits on your record.

• Between 18 and 19 years old, but in an elementary or secondary school as full-time students; or

• Age 18 or older and severely disabled (the disability must have started before age 22).

Additionally, your parents can receive benefits on your earnings if they were dependent on you for at least half of their support.

If you have enough credits, a one-time payment of $255 also will be made after your death. This benefit may be paid to your spouse or minor children if they meet certain requirements.

If you are divorced, your ex-spouse may be eligible for survivors benefits based on your earnings when you die. He or she must:

• Be at least age 60 years old (or 50 if disabled) and have been married to you for at least 10 years; or

• Be any age if he or she is caring for a child who is eligible for benefits based on your earnings; and

• Not be eligible for an equal or higher benefit based on his or her own work; and

• Not be currently married, unless the remarriage occurred after age 60 or after age 50 if disabled.

Benefits paid to an ex-spouse will not affect the benefit rates for other survivors receiving benefits on your earnings record.

NOTE: If you are deceased and your ex-spouse remarries after age 60, he or she may be eligible for Social Security benefits based both on your work and the new spouse's work, whichever is higher.

[34] Publication number 05-10024: "Understanding the Benefits." United States Social Security Administration, January 2010. http://www.ssa.gov/pubs/10024.html

Your survivors receive a percentage of your basic Social Security benefit—usually in a range from 75 to 100 percent each. However, there is a limit to the amount of money that can be paid each month to a family. The limit varies, but is generally equal to about 150 to 180 percent of your benefit rate.

Rules for work needed for the "recent work" test
In or before the quarter you turn 24.	1.5 years of work during the three-year period ending with the quarter your disability began.
In the quarter after you turn age 24 but before the quarter you turn 31.	Work during half the time for the period beginning with the quarter after you turned 21 and ending with the quarter you became disabled. Example: If you become disabled in the quarter you turned age 27, then you would need 3 years of work out of the six-year period ending with the quarter you became disabled.
In the quarter you turn age 31 or later.	Work during five years out of the ten-year period ending with the quarter your disability began.

Examples of work needed for the "duration of work" test
If you become disabled…	*Then you generally need:*
Before age 28	1.5 years of work
Age 30	2 years
Age 34	3 years
Age 38	4 years
Age 42	5 years
Age 44	5.5 years
Age 46	6 years
Age 48	6.5 years
Age 50	7 years
Age 52	7.5 years
Age 54	8 years
Age 56	8.5 years
Age 58	9 years
Age 60	9.5 years

Page 12: "When do my benefits start? If your application is approved, your first Social Security disability benefits will be paid for the sixth full month after the date your disability began."

Page 12: "How much will my benefits be? The amount of your monthly disability benefit is based on your average lifetime earnings. The Social Security Statement that you receive each year displays your lifetime earnings and provides an estimate of your disability benefit."

NOTE: The above statement is imprecise because it states that benefits are based on "average lifetime earnings" when in fact benefits are based on lifetime taxable earnings, which may be lower than lifetime earnings due to the wage threshold.* Since lifetime taxable earnings are taxed at a flat rate,† lifetime taxable earnings are directly proportional to Social Security taxes paid.

[39] "2010 Annual Report of the Board of Trustees of The Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds." United States Social Security Administration, August 9, 2010. http://www.ssa.gov/OACT/TR/2010/tr2010.pdf

Page 31: "Table III.A5.—Distribution of Benefit Payments by Type of Beneficiary or Payment, Calendar Years 2008 and 2009."

NOTE: "Percent of Total" column does not necessarily add up to 100% due to the exclusion of categories representing minor amounts.

[40] "2010 Annual Report of the Board of Trustees of The Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds." United States Social Security Administration, August 9, 2010. http://www.ssa.gov/OACT/TR/2010/tr2010.pdf

Page 138: "The Federal Old-Age and Survivors Insurance (OASI) Trust Fund was established on January 1, 1940 as a separate account in the United States Treasury. The Federal Disability Insurance (DI) Trust Fund, another separate account in the United States Treasury, was established on August 1, 1956. All the financial operations of the OASI and DI programs are handled through these respective funds."

[41] Dataset: "Old-Age, Survivors, and Disability Insurance Trust Funds, 1957-2009 [In millions]." United States Social Security Administration, Office of the Chief Actuary. Last reviewed or modified Friday February 12, 2010. http://www.socialsecurity.gov/OACT/STATS/table4a3.html

"By law, income to the trust funds must be invested, on a daily basis, in securities guaranteed as to both principal and interest by the Federal government. All securities held by the trust funds are 'special issues' of the United States Treasury. Such securities are available only to the trust funds."

"Additionally, the Government Trust Funds are required by law to invest accumulated surpluses in Treasury securities. The Treasury securities issued to the public and to the Government Trust Funds (intragovernmental holdings) then become part of the total debt."

[44] United States Code Title 31, Subtitle III, Chapter 31, Subchapter II, Section 3123: “Payment of obligations and interest on the public debt.” Accessed April 7, 2011 at http://www4.law.cornell.edu/uscode/31/3123.html

Section (a): "The faith of the United States Government is pledged to pay, in legal tender, principal and interest on the obligations of the Government issued under this chapter."

[45] "2010 Annual Report of the Board of Trustees of The Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds." United States Social Security Administration, August 9, 2010. http://www.ssa.gov/OACT/TR/2010/tr2010.pdf

Page 3: "Under the long-range intermediate assumptions, annual cost for the OASDI [Social Security] program is projected to exceed tax income in 2010 and 2011…."

[46] Calculated with data from: Table VI.F7: "Operations of the Combined OASI and DI Trust Funds, in Constant 2010 Dollars, Calendar Years 2010-85 [In billions]." United States Social Security Administration, Office of the Chief Actuary. Last reviewed or modified August 5, 2010. http://www.ssa.gov/OACT/TR/2010/lr6f7.html

NOTE: The "combined OASI and DI Trust Funds" comprise the "Social Security Trust Fund." An Excel file containing the data and calculations is available upon request.

[47] "2010 Annual Report of the Board of Trustees of The Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds." United States Social Security Administration, August 9, 2010. http://www.ssa.gov/OACT/TR/2010/tr2010.pdf

Page 3: "Under the long-range intermediate assumptions, annual cost for the OASDI [Social Security] program is projected … to exceed tax income in 2015 and remain higher throughout the remainder of the long-range period."

a) Table VI.F7: "Operations of the Combined OASI and DI Trust Funds, in Constant 2010 Dollars, Calendar Years 2010-85 [In billions]." United States Social Security Administration, Office of the Chief Actuary. Last reviewed or modified August 5, 2010. http://www.ssa.gov/OACT/TR/2010/lr6f7.html

- The "combined OASI and DI Trust Funds" comprise the "Social Security Trust Fund." See the column labeled "Assets at end of year."

- This table only shows intermediate projections until 2036. The following source (b) shows projections until 2090, and the next source (c) shows that the infinite horizon projections are even worse.

b) Table 8.1 2010TR Alt2: "Trust Fund Operations in Current Dollars, Intermediate Assumptions, 2010 Trustees Report." United States Social Security Administration, Office of the Chief Actuary. Transmitted to Just Facts on December 20, 2010.

NOTE: An Excel file containing the data and calculations is available upon request.

c) "2010 Annual Report of the Board of Trustees of The Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds." United States Social Security Administration, August 9, 2010. http://www.ssa.gov/OACT/TR/2010/tr2010.pdf

Page 14: "Over the infinite horizon, the shortfall (unfunded obligation) amounts to $16.1 trillion in present value, 3.3 percent of future taxable payroll, or 1.2 percent of future GDP. These calculations of the shortfall indicate that much larger changes may be required to achieve solvency beyond the 75-year period as compared to changes needed to balance 75-year period summary measures."

[49] "2008 Annual Report of the Board of Trustees of The Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds." United States Social Security Administration, March 28, 2008. http://www.ssa.gov/OACT/TR/TR08/tr08.pdf

Page 2: "Annual cost will exceed tax income … at which time the annual gap will be covered with cash from redemptions of special obligations of the Treasury that make up the trust fund assets…."

Page 8: "Redemption of trust fund assets will allow continuation of full benefit payments on a timely basis until … when the trust funds are projected to become exhausted. This redemption process will require a flow of cash from the General Fund of the Treasury."

[50] Table VI.F7: "Operations of the Combined OASI and DI Trust Funds, in Constant 2010 Dollars, Calendar Years 2010-85 [In billions]." United States Social Security Administration, Office of the Chief Actuary. Last reviewed or modified August 5, 2010. http://www.ssa.gov/OACT/TR/2010/lr6f7.html

"Estimates for later years are not shown because the combined OASI and DI Trust Funds are estimated to become exhausted in 2037 under the intermediate assumptions…."

NOTE: The "combined OASI and DI Trust Funds" comprise the "Social Security Trust Fund." See the column labeled "Assets at end of year."

[51] "2010 Annual Report of the Board of Trustees of The Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds." United States Social Security Administration, August 9, 2010. http://www.ssa.gov/OACT/TR/2010/tr2010.pdf

Page 10: "Figure II.D2.—OASDI Income, Cost, and Expenditures as Percentages of Taxable Payroll [Under Intermediate Assumptions]" {NOTE: The "Cost" curve exceeds the "Expenditures" curve for all years starting in 2037. This graph ends in 2085. For the years beyond this, see the following excerpt from the same report.}

[52] Calculated with data from: Table 8.1 2010TR Alt2: "Trust Fund Operations in Current Dollars, Intermediate Assumptions, 2010 Trustees Report." United States Social Security Administration, Office of the Chief Actuary. Transmitted to Just Facts on December 20, 2010.

NOTE: An Excel file containing the data and calculations is available upon request.

[53] "2010 Annual Report of the Board of Trustees of The Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds." United States Social Security Administration, August 9, 2010. http://www.ssa.gov/OACT/TR/2010/tr2010.pdf

[54] "2010 Annual Report of the Board of Trustees of The Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds." Board of Trustees of the Federal OASDI Trust Funds, August 9, 2010. http://www.ssa.gov/OACT/TR/2010/tr2010.pdf

[55] "2010 Annual Report of the Board of Trustees of The Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds." United States Social Security Administration, August 9, 2010. http://www.ssa.gov/OACT/TR/2010/tr2010.pdf

Page 15: "Uncertainty of the Projections … Significant uncertainty surrounds the intermediate assumptions."

[56] Web page: "Covered Workers and Beneficiaries." United States Social Security Administration, Office of the Chief Actuary. Last reviewed or modified August 5, 2010. http://www.ssa.gov/OACT/TR/2010/lr4b2.html

[57] Summary of P.L. 98-21 (H.R. 1900): "Social Security Amendments of 1983." Social Security Administration, Office of Legislative and Congressional Affairs, November 26, 1984. http://www.ssa.gov/history/1983amend.html

"Raises the age of eligibility for unreduced retirement benefits in two stages to 67 by the year 2027. Workers born in 1938 will be the first group affected by the gradual increase."

[58] Publication number 05-10024: "Understanding the Benefits." United States Social Security Administration, May 2008. http://www.ssa.gov/pubs/10024.html

For those born before 1938, the full retirement age to qualify for Social Security benefits is 65 years old.

For those born between 1938 and 1959, the full retirement age to qualify for Social Security benefits is defined by the following chart:

Year of Birth	Full Retirement Age
1938	65 and 2 months
1939	65 and 4 months
1940	65 and 6 months
1941	65 and 8 months
1942	65 and 10 months
1943 – 1954	66
1955	66 and 2 months
1956	66 and 4 months
1957	66 and 6 months
1958	66 and 8 months
1959	66 and 10 months

For those born after 1959, the full retirement age to qualify for Social Security benefits is 67 years old.

Page 21: "[On January 31, 1940] Ida May Fuller became the first person to receive an old-age monthly benefit check."

[60] Web page: "Period Life Expectancy." United States Social Security Administration, Office of the Chief Actuary. Last reviewed or modified August 5, 2010. http://www.ssa.gov/OACT/TR/2010/lr5a3.html

"The period life expectancy at a given age for a given year represents the average number of years of life remaining if a group of persons at that age were to experience the mortality rates for that year over the course of their remaining lives."

NOTE: Data from 2006 is used because it is the latest year that is not an estimate.

[61] "2010 Annual Report of the Board of Trustees of The Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds." Board of Trustees of the Federal OASDI Trust Funds, August 9, 2010. http://www.ssa.gov/OACT/TR/2010/tr2010.pdf

NOTE: See pages 107-114, which explain "automatically adjusted program parameters" in detail.

[62] "2010 Annual Report of the Board of Trustees of The Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds." Board of Trustees of the Federal OASDI Trust Funds, August 9, 2010. http://www.ssa.gov/OACT/TR/2010/tr2010.pdf

Page 208: "Baby boom. The period from the end of World War II (1946) through 1965 marked by unusually high birth rates."

[63] Table V.A1.: "Principal Demographic Assumptions, Calendar Years 1940-2085." United States Social Security Administration, Office of the Chief Actuary. Last reviewed or modified August 5, 2010. http://www.ssa.gov/OACT/TR/2010/lr5a1.html

"The total fertility rate for any year is the average number of children who would be born to a woman in her lifetime if she were to experience the birth rates by age observed in, or assumed for, the selected year, and if she were to survive the entire childbearing period."

[64] Calculated with data from Table IV.B2. "Covered Workers and Beneficiaries, Calendar Years 1945-2085." United States Social Security Administration, Office of the Chief Actuary. Last reviewed or modified August 5, 2010. http://www.ssa.gov/OACT/TR/2010/lr4b2.html

Year	Covered Workers ^a	OASI [Old-Age and Survivors Insurance] Beneficiaries ^b
2011	157,116,000	44,606,000
2030	184,128,000	72,196,000

^a Workers who are paid at some time during the year for employment on which OASDI taxes are due.

[66] Calculated with data from the "2010 Annual Report of the Board of Trustees of The Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds." Board of Trustees of the Federal OASDI Trust Funds, August 9, 2010. http://www.ssa.gov/OACT/TR/2010/tr2010.pdf

Page 87: "Table V.A2.—Social Security Area Population as of July 1 and Dependency Ratios, Calendar Years 1950-2085."

Page 131: "Table V.C5.—DI Beneficiaries With Benefits in Current-Payment Status at the End of Calendar Years 1960-2085."

[67] "2010 Annual Report of the Board of Trustees of The Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds." Board of Trustees of the Federal OASDI Trust Funds, August 9, 2010. http://www.ssa.gov/OACT/TR/2010/tr2010.pdf

Page 29: "Table III.A3.—Operations of the Combined OASI and DI Trust Funds, Calendar Year 2009 [In millions]. … Net administrative expenses [=] $6,182 … Total disbursements [=] $685,801."

NOTE: The "combined OASI and DI Trust Funds" comprise the "Social Security Trust Fund." See the column labeled "Assets at end of year."

[68] Calculated with data from the footnote above and Publication number 05-10024: "Understanding the Benefits." United States Social Security Administration, January 2010. http://www.ssa.gov/pubs/10024.html

CALCULATION: ($6,182,000,000 administrative expenses) / [($1,164 average benefit/worker/month) × (12 months/per year)] = 442,583 workers

[69] "Fiscal Year 2010 Performance and Accountability Report." United States Social Security Administration, November 8, 2010.

Page 191: "Table 1: OASDI [Social Security] Improper Payments Experience, FY [Fiscal year] 2007 – FY 2009 (dollars in millions) … FY 2009 … Total payments [=] $659,565 … Underpayments [=] $619 (0.09%) … Overpayments [=] $2,547 (0.37%)"

NOTE: Pages 206-207 detail the results of some debt collection measures used by the Social Security Administration. There is no way to calculate from these data how much of the above-cited overpayments have been collected.

[70] Calculated with data from the footnote above and Publication number 05-10024: "Understanding the Benefits." United States Social Security Administration, January 2010. http://www.ssa.gov/pubs/10024.html

CALCULATION: ($2,547,000,000 improper overpayments) / [($1,164 average benefit/worker/month) × (12 months/per year)] = 182,345 workers

[71] Audit report: "Economic Recovery Payments for Social Security and Supplemental Security Income Beneficiaries." United States Social Security Administration, Office of the Inspector General, September 2010. http://www.ssa.gov/oig/ADOBEPDF/A-09-10-11017.pdf

Page 1: "ARRA [the American Recovery and Reinvestment Act] provided for a one-time ERP [Economic Recovery Payment] of $250 to certain adult Social Security and Supplemental Security Income (SSI) beneficiaries."

Page 2: "SSA [The Social Security Administration] was required to identify and certify the Social Security and SSI beneficiaries eligible for an ERP and provide the Department of the Treasury (Treasury) with the information to disburse the payments. … In April 2009, SSA identified all beneficiaries who met the eligibility criteria from its payment records. In May 2009, about 52 million beneficiaries received their $250 payments, totaling about $13 billion."

[72] Audit report: "Economic Recovery Payments for Social Security and Supplemental Security Income Beneficiaries." United States Social Security Administration, Office of the Inspector General, September 2010. http://www.ssa.gov/oig/ADOBEPDF/A-09-10-11017.pdf

Our review disclosed that 71,688 beneficiaries who were deceased before the payment certification date received an ERP [Economic Recovery Payment]. This included 63,481 beneficiaries whose deaths had been reported to SSA [the Social Security Administration]….

ARRA [the American Recovery and Reinvestment Act] states that an ERP shall not be issued to any individual whose date of death occurs before the date on which the individual is certified to receive a payment. SSA policy states that if a beneficiary is eligible to receive an ERP, but dies before payment, no ERP will be issued.

[73] Audit report: "Economic Recovery Payments for Social Security and Supplemental Security Income Beneficiaries." United States Social Security Administration, Office of the Inspector General, September 2010. http://www.ssa.gov/oig/ADOBEPDF/A-09-10-11017.pdf

Page 2: "Finally, ARRA [the American Recovery and Reinvestment Act] did not provide the authority for SSA [the Social Security Administration] or Treasury to reclaim erroneous ERPs [Economic Recovery Payments] issued to deceased beneficiaries.."

Page 4: "[S]ince SSA could not initiate reclamation for the ERPs, it only received returned checks or credits for 26 (52 percent) of the 50 beneficiaries in our sample."

[74] Report: "Social Security Administration: Cases of Federal Employees and Transportation Drivers and Owners Who Fraudulently and/or Improperly Received SSA Disability Payments." United States Government Accountability Office, June 25, 2010. http://www.gao.gov/new.items/d10444.pdf

GAO [The Government Accountability Office] was asked to (1) determine whether federal employees and commercial drivers and company owners may be improperly receiving disability benefits and (2) develop case study examples of individuals who fraudulently and/or improperly receive these benefits. To do this, GAO compared DI [Disability Insurance] and SSI [Supplemental Security Income*] benefit data to civilian payroll records of certain federal agencies and carrier/driver records from the Department of Transportation (DOT) and 12 selected states.

* Page 6: "Created in 1972, the SSI program is a nationwide federal cash benefit program administered by SSA [the Social Security Administration] that provides a minimum level of income to financially needy individuals who are aged, blind, or considered eligible for benefits because of physical or mental impairments. Payments under the SSI program … and are funded from the government's General Fund, which is financed through tax payments from the American public."

[75] Report: "Social Security Administration: Cases of Federal Employees and Transportation Drivers and Owners Who Fraudulently and/or Improperly Received SSA Disability Payments." United States Government Accountability Office, June 25, 2010. http://www.gao.gov/new.items/d10444.pdf

Preface: "SSA currently does not perform a federal payroll or DOT records match to identify individuals improperly receiving benefits."

Page 34 (Appendix IV, Comments from the Social Security Administration): "While SSA conducts a match of its beneficiary file to IRS data for all wage earners, it does not match its records to Federal payroll or DOT data to potentially identify persons who may be improperly receiving benefits."

Page 44 (General Accounting Office comments on the Social Security Administration's letter dated May 28, 2010): "IRS provides summary earnings data for a calendar year. We have previously reported that the IRS earnings data used by SSA in its enforcement operations are typically 12 to 18 months old when SSA first receives them, thus making some overpayments inevitable."

[76] Report: "Social Security Administration: Cases of Federal Employees and Transportation Drivers and Owners Who Fraudulently and/or Improperly Received SSA Disability Payments." United States Government Accountability Office, June 25, 2010. http://www.gao.gov/new.items/d10444.pdf

It is impossible to determine from data mining alone the extent to which beneficiaries improperly or fraudulently received disability payments. To adequately assess an individual's work status, a detailed evaluation of all the facts and circumstances should be conducted. This evaluation would include contacting the beneficiary and the beneficiary's employer, obtaining corroborating evidence such as payroll data and other financial records, and evaluating the beneficiary's daily activities. …

Our analysis of federal civilian salary data and SSA disability data found that about 7,000 individuals at selected agencies had been wage-earning employees for the federal government while receiving SSA disability benefits during fiscal year 2008. The exact number of individuals who may be improperly or fraudulently receiving SSA disability payments cannot be determined without detailed case investigations. Our analysis of federal salary data from October 2006 through December 2008 found that about 1,500 federal employees' records indicate that they may be improperly receiving payments. [Footnote 11] The individuals were identified using the following criteria: (1) DI beneficiaries who received more than 12 months of federal salary payments above the maximum SSA earnings threshold for the DI program (e.g., $940 per month for nonblind DI beneficiaries during calendar year 2008) after the start date of their disabilities[Footnote 12] or (2) SSI recipients who received more than 2 months[Footnote 13] of federal salary above the maximum SSA earnings threshold for the SSI program after the start date of their disabilities.[Footnote 14] Based on their SSA benefit amounts, we estimate that these approximately 1,500 federal employees received about $1.7 million of payments monthly. …

[Footnote 11] The actual estimate of federal employees who may be improperly receiving benefits was 1,487. …

[Footnote 16] Our estimate of federal employees with potential improper payment indicators is likely underestimated. It does not include salary payments that these individuals may have received outside of the federal government. Also, we had only the net pay amounts for federal employees disbursed by Department of the Treasury, not gross pay. For these employees the salary we used was reduced for deductions such as health insurance, income taxes, and other withholdings.

[77] Report: "Social Security Administration: Cases of Federal Employees and Transportation Drivers and Owners Who Fraudulently and/or Improperly Received SSA Disability Payments." United States Government Accountability Office, June 25, 2010. http://www.gao.gov/new.items/d10444.pdf

Page 3: "[Footnote 9] The 12 selected states were California, Florida, Illinois, Kentucky, Maryland, Michigan, Minnesota, Montana, Tennessee, Texas, Virginia, and Wisconsin. The 12 states were selected primarily based on the size of the licensed commercial driver population. These 12 selected states represented about 42 percent of all commercial driver's licenses contained in CDLIS."

Our analysis of data from DOT on commercial drivers and from SSA on disability beneficiaries found that about 600,000 individuals had been issued CDLs and were receiving full Social Security disability benefits. The actual number of SSA disability beneficiaries with active CDLs cannot be determined for two reasons. First, states maintain the current status of CDLs, not DOT.[Footnote 17] Second, possession of a CDL does not necessarily indicate that the individual returned to work. Because federal regulations require interstate commercial drivers to be examined and certified by a licensed medical examiner to be able to physically drive a commercial vehicle once every 2 years, we selected a nonrepresentative selection of 12 states [Footnote 18] to determine how many SSA disability beneficiaries had CDLs issued after their disabilities were determined by SSA. Of the 600,000 CDL holders receiving Social Security disability benefits, about 144,000 of these individuals were from our 12 selected states. As figure 2 shows, about 62,000 of these 144,000 individuals, or about 43 percent, had CDLs that were issued after SSA determined that the individuals met the federal requirements for full disability benefits.

[78] Report: "Social Security Administration: Cases of Federal Employees and Transportation Drivers and Owners Who Fraudulently and/or Improperly Received SSA Disability Payments." United States Government Accountability Office, June 25, 2010. http://www.gao.gov/new.items/d10444.pdf

To illustrate actual cases of fraudulent payments and/or improper payments from our overall analysis, we nonrepresentatively selected 20 cases that illustrate the types of fraudulent and improper activity we found in SSA disability programs. The 20 cases were primarily selected based on our analysis of SSA electronic and paper files for the higher overpayment amounts, the types of employment, and the locations of employment. Because this is a nonrepresentative selection, the results of these 20 case investigations cannot be projected to other federal employees, commercial drivers, or commercial vehicle owners who received SSA disability payments.

[79] Report: "Social Security Administration: Cases of Federal Employees and Transportation Drivers and Owners Who Fraudulently and/or Improperly Received SSA Disability Payments." United States Government Accountability Office, June 25, 2010. http://www.gao.gov/new.items/d10444.pdf

Page 11: "[W]e nonrepresentatively selected 20 examples of federal employees, commercial drivers, and registrants of commercial vehicle companies who received disability payments fraudulently and/or improperly. … In each case, SSA's internal controls did not prevent improper and fraudulent payments…."

[80] Report: "Social Security Administration: Cases of Federal Employees and Transportation Drivers and Owners Who Fraudulently and/or Improperly Received SSA Disability Payments." United States Government Accountability Office, June 25, 2010. http://www.gao.gov/new.items/d10444.pdf

Page 28: "For 18 cases, SSA sent the SSA beneficiaries and recipients the $250 economic stimulus check."

[81] Report: "Social Security Administration: Cases of Federal Employees and Transportation Drivers and Owners Who Fraudulently and/or Improperly Received SSA Disability Payments." United States Government Accountability Office, June 25, 2010. http://www.gao.gov/new.items/d10444.pdf

• The beneficiary was a legal assistant for SSA who worked in Arizona. The estimated overpayment was about $11,000;

• SSA approved DI payments starting in 2003 for affective/mood disorders and osteoarthrosis;

• In November 2008, SSA notified the beneficiary that based on wages earned in 2007 her benefits would be increased;

• The SSA Office of Inspector General opened an investigation of the employee after we informed the agency of her employment status;

• According to SSA officials, SSA disability programs do not have access to SSA's payroll records to determine whether their employees are receiving disability payments and thus should be evaluated for eligibility;

[82] Report: "Social Security Administration: Cases of Federal Employees and Transportation Drivers and Owners Who Fraudulently and/or Improperly Received SSA Disability Payments." United States Government Accountability Office, June 25, 2010. http://www.gao.gov/new.items/d10444.pdf

• The beneficiary was a Transportation Safety Administration screener who worked in California. The estimated overpayment was about $108,000;

• In November 2005, SSA notified the beneficiary that based on wages earned in 2004 her benefits would be increased …

• In November 2007, SSA notified the beneficiary that based on wages earned in 2006 her benefits would be increased….

• The beneficiary resides in a house that is currently listed for sale at about $1,800,000.

BRIAN WILLIAMS reporting: Inside this small private elementary school in Manhattan, Mimi Baso came to work this morning thinking about retirement. She has no plans to retire but these days worries about getting back all the Social Security money she paid in.

NOTE: Just Facts has found numerous comments of this type scattered throughout the Internet. The following footnote provides an example of imprecise rhetoric from a politician that could establish and/or reinforce such beliefs.

"Social Security Amendments of 1977 Written Statement on Signing S.305 Into Law. December 20, 1977 … Most importantly, it [the bill] … further assures today's workers that the hard-earned taxes they are paying into the system today will be available upon their retirement."

[85] "2010 Annual Report of the Board of Trustees of The Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds." Board of Trustees of the Federal OASDI Trust Funds, August 9, 2010. http://www.ssa.gov/OACT/TR/2010/tr2010.pdf

Page 221: "Funds not withdrawn for current monthly or service benefits, the financial interchange, and administrative expenses are invested in interest-bearing Federal securities, as required by law; the interest earned is also deposited in the trust funds."

[86] Research Note #20: "The Social Security Trust Funds and the Federal Budget." By Larry DeWitt. United States Social Security Administration, Historian's Office, March 4, 2005, Updated 6/18/07. http://www.ssa.gov/history/BudgetTreatment.html

Since the assets in the Social Security trust funds consists of Treasury securities, this means that the taxes collected under the Social Security payroll tax are in effect being lent to the federal government to be expended for whatever present purposes the government requires. In this indirect sense, one could say that the Social Security trust funds are being spent for non-Social Security purposes. However, all this really means is that the trust funds hold their assets in the form of Treasury securities. …

NOTE: More facts about how Social Security surpluses become part of the national debt are contained in the section: Impact on National Debt.

[88] An accounting of all Social Security tax receipts and expenditures since the program's inception is provided here.

[89] Web page: "Supreme Court Case: Flemming vs. Nestor." United States Social Security Administration. Accessed January 5, 2011 at http://www.ssa.gov/history/nestor.html

There has been a temptation throughout the program's history for some people to suppose that their FICA payroll taxes entitle them to a benefit in a legal, contractual sense. That is to say, if a person makes FICA contributions over a number of years, Congress cannot, according to this reasoning, change the rules in such a way that deprives a contributor of a promised future benefit. Under this reasoning, benefits under Social Security could probably only be increased, never decreased, if the Act could be amended at all. Congress clearly had no such limitation in mind when crafting the law. Section 1104 of the 1935 Act, entitled "RESERVATION OF POWER," specifically said: "The right to alter, amend, or repeal any provision of this Act is hereby reserved to the Congress." Even so, some have thought that this reservation was in some way unconstitutional. This is the issue finally settled by Flemming v. Nestor.

"I have introduced legislation to keep politicians in Washington from ever raiding the Social Security trust fund again. HR 219 The Social Security Preservation Act would assure that all monies collected by the Social Security Trust Fund would only be used in payments to beneficiaries, or be placed in interest bearing certificates of deposit."

[92] "2010 Annual Report of the Board of Trustees of The Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds." Board of Trustees of the Federal OASDI Trust Funds, August 9, 2010. http://www.ssa.gov/OACT/TR/2010/tr2010.pdf

Page 142: "The Social Security Act does not permit expenditures from the OASI [Old-Age & Survivors Insurance] and DI [Disability Insurance] Trust Funds for any purpose not related to the payment of benefits or administrative costs for the OASDI [Social Security] program."

[93] The Social Security Administration's Office of the Chief Actuary publishes annual receipts, expenditures, and assets for both of the Social Security trust funds, which are the "Old-Age and Survivors Insurance Trust Fund"* and the "Disability Insurance Trust Fund."† Just Facts has examined and recalculated this data, and in each year, trust fund assets increase or decrease by the differential between receipts and expenditures for the year.‡ Also, correspondingly, the U.S. Treasury Department publishes a "Monthly Statement of the Public Debt"§ that details the components of the national debt, which includes amounts owed to the trust funds equaling Social Security's finances.# More details as to how the trust funds affect the national debt are contained in the section: Impact on National Debt.

* Dataset: "Old-Age and Survivors Insurance Trust Fund, 1937-2009 [In millions]." United States Social Security Administration, Office of the Chief Actuary. Last reviewed or modified Friday February 12, 2010. http://www.socialsecurity.gov/OACT/STATS/table4a

† Dataset: "Disability Insurance Trust Fund, 1957-2009 [In millions]." United States Social Security Administration, Office of the Chief Actuary. Last reviewed or modified Friday February 12, 2010. http://www.socialsecurity.gov/OACT/STATS/table4a2.html

NOTE: Because the disability component of Social Security was not established until 1957, no data on the Disability Trust Fund is available prior to this year.

‡ An Excel file containing the data and calculations is available upon request. Note that in 1982, the Old-Age and Survivors Insurance Trust Fund borrowed money from the Disability Insurance Trust Fund, and repaid the borrowed amounts in 1985 and 1986.

# For example, the Monthly Statement of the Public Debt for December 31, 2008 (http://www.treasurydirect.gov/govt/reports/pd/mspd/2008/opdm122008.pdf) shows that the federal government owes $215,810 million to the "Federal Disability Insurance Trust Fund" and $2,203,404 million to the "Federal Old-Age and Survivors Insurance Trust Fund" (see page 9). These figures are within one quarter of 1% of the 2008 trust fund end-of-year assets in the Social Security datasets cited above ($215,773 million for the Disability Insurance Trust Fund and $2,202,886 million for the Old-Age and Survivors Insurance Trust Fund). Such minor disparities are typically the result of slightly different accounting methodologies.

[94] "2010 Annual Report of the Board of Trustees of The Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds." Board of Trustees of the Federal OASDI Trust Funds, August 9, 2010. http://www.ssa.gov/OACT/TR/2010/tr2010.pdf

Section 201(b): "It shall be the duty of the Secretary of the Treasury to invest such portion of the amounts credited to the Account as is not, in his judgment, required to meet current withdrawals. Such investment may be made only in interest-bearing obligations of the United States or in obligations guaranteed as to both principal and interest by the United States."

NOTE: Also, as shown in the next two footnotes, an official Social Security Trust Fund was established in 1939.

The Advisory Council on Social Security was appointed by the Senate Special Committee on Social Security and the Social Security Board in May, 1937. …[T]he recommendations of the [Social Security Advisory] Council were largely enacted into law in the 1939 Amendments. …

At the time the Social Security Act was drafted it was deemed necessary for constitutional reasons to separate legally the taxation and benefit features of the program. It is believed that in the light of subsequent court decisions such legal separation is no longer necessary. Since the taxes levied are essentially contributions intended to finance the benefit program, it is not only logical but expedient to provide for automatic crediting of tax proceeds to the old age insurance fund. It is believed by the Council that such a procedure would enhance public understanding of the contributory insurance system. Since the tax proceeds thus credited are intended for payment of benefits, it is recommended that they be deposited in a trust fund under the control of designated trustees in accordance with appropriate legal provisions. The trust fund should be dedicated to the payment of benefits and, to a restricted amount, to the costs necessary to the administration of the program. It is recommended that these funds should continue to be invested in securities of the Federal government as at present. …

[98] Public Law 379: "Social Security Act Amendments of 1939." 76th U.S. Congress. Signed into law by Franklin Delano Roosevelt on August 10, 1939. http://www.ssa.gov/history/pdf/1939Act.pdf

Sec. 201. (a) There is hereby created on the books of the Treasury of the United States a trust fund to be known as the 'Federal Old-Age and Survivors Insurance Trust Fund' (hereinafter in this title called the 'Trust Fund'). … There is hereby appropriated to the Trust Fund for the fiscal year ending June 30, 1941, and for each fiscal year thereafter, out of any moneys in the Treasury not otherwise appropriated, amounts equivalent to 100 per centum of the taxes (including interest, penalties, and additions to the taxes) received under the Federal Insurance Contributions Act and covered into the Treasury.

[99] Research Note #20: "The Social Security Trust Funds and the Federal Budget." By Larry DeWitt. United States Social Security Administration, Historian's Office, March 4, 2005, Updated 6/18/07. http://www.ssa.gov/history/BudgetTreatment.html

Finally, just note once again that the financing procedures involving the Social Security program have not changed in any fundamental way since they were established in the original Social Security Act of 1935 and amended in 1939. These changes in federal budgeting rules govern how the Social Security program is accounted for in the federal budget, not how it is financed.

[100] "2010 Annual Report of the Board of Trustees of The Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds." Board of Trustees of the Federal OASDI Trust Funds, August 9, 2010. http://www.ssa.gov/OACT/TR/2010/tr2010.pdf

Page 24: "All securities held by the trust funds are backed by the full faith and credit of the United States Government, as required by law."

Page 5: "In 2009, the combined trust fund assets earned interest at an effective annual rate of 4.9 percent."

[101] The Social Security Administration's Office of the Chief Actuary publishes annual receipts, expenditures, and assets for both of the Social Security trust funds.* † These data show that in years in which the trust funds run a deficit, they receive back monies that the trust funds have loaned to federal government.

NOTE: Because the disability component of Social Security was not established until 1957, no data on the Disability Trust Fund is available prior to this year.

[102] Web page: "Social Security Trust Funds: Frequently Asked Questions." United States Social Security Administration, Office of the Chief Actuary. Last reviewed or modified August 5, 2010. http://www.ssa.gov/OACT/ProgData/fundFAQ.html

[104] Web page: "FAQ's: Debunking some Internet Myths. Myths and Misinformation about Social Security." United States Social Security Administration. Last reviewed or modified February 1, 2010. http://www.socialsecurity.gov/history/InternetMyths.html

Starting in 1969 (due to action by the Johnson Administration in 1968) the transactions to the Trust Fund were included in what is known as the "unified budget." This means that every function of the federal government is included in a single budget. This is sometimes described by saying that the Social Security Trust Funds are "on-budget." This budget treatment of the Social Security Trust Fund continued until 1990 when the Trust Funds were again taken "off-budget." This means only that they are shown as a separate account in the federal budget. But whether the Trust Funds are "on-budget" or "off-budget" is primarily a question of accounting practices--it has no affect on the actual operations of the Trust Fund itself.

[105] Table VI.F7: "Operations of the Combined OASI and DI Trust Funds, in Constant 2010 Dollars, Calendar Years 2010-85 [In billions]." United States Social Security Administration, Office of the Chief Actuary. Last reviewed or modified August 5, 2010. http://www.ssa.gov/OACT/TR/2010/lr6f7.html

"Estimates for later years are not shown because the combined OASI and DI Trust Funds are estimated to become exhausted in 2037 under the intermediate assumptions…."

NOTE: The "combined OASI and DI Trust Funds" comprise the "Social Security Trust Fund." See the column labeled "Assets at end of year."

[106] "2010 Annual Report of the Board of Trustees of The Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds." United States Social Security Administration, August 9, 2010. http://www.ssa.gov/OACT/TR/2010/tr2010.pdf

[107] Result of an independent study performed by Just Facts. All data used in the study was obtained from the United States Social Security Administration. Our actual calculations show that the program would have become insolvent in 1977, but because approximations were used in the study, we added an extra 3 years as a margin of safety. The original Social Security Act of 1935 specified different tax rates that were supposed to become effective at certain points in time. Over the course of time, the law was changed. Between 1940 and 1962, the tax rates were lower than the Social Security Act of 1935 originally specified. Since 1963, the tax rates have been higher than originally specified. This study accounts for both of these situations. If the study reflected only the extra taxes paid by the younger generations, the insolvency date would have occurred years earlier. This study did not account for the extra taxes and expenses that have resulted from the government adding disability benefits to the Social Security program. If these numbers were added into the calculation, the insolvency date would have occurred years earlier. This study did not account for extra taxes that have resulted from the government increasing the wage threshold. If these numbers were added into the calculation, the insolvency date would have occurred years earlier.

[108] "2010 Annual Report of the Board of Trustees of The Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds." United States Social Security Administration, August 9, 2010. http://www.ssa.gov/OACT/TR/2010/tr2010.pdf

[109] "2010 Annual Report of the Board of Trustees of The Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds." Board of Trustees of the Federal OASDI Trust Funds, August 9, 2010. http://www.ssa.gov/OACT/TR/2010/tr2010.pdf

[111] "2010 Annual Report of the Board of Trustees of The Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds." Board of Trustees of the Federal OASDI Trust Funds, August 9, 2010. http://www.ssa.gov/OACT/TR/2010/tr2010.pdf

[113] Report: "Monthly Statement of the Public Debt of the United States, December 31, 2010." United States Department of the Treasury, Bureau of the Public Debt.

Page 9: "Table III - Detail of Treasury Securities Outstanding … Amount in Millions of Dollars … Federal Disability Insurance Trust Fund [=] $180,023 … Federal Old-Age and Survivors Insurance Trust Fund [=] $2,429,514."

[114] Dataset: "Annual Estimates of the Resident Population for the United States, Regions, States, and Puerto Rico: April 1, 2000 to July 1, 2009." U.S. Census Bureau, December 2009. http://www.census.gov/popest/states/NST-ann-est.html

CALCULATION: $2,609,537,000,000 debt / 117,181,000 households = $22,269.28 debt/household

[116] "2010 Annual Report of the Board of Trustees of The Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds." United States Social Security Administration, August 9, 2010. http://www.ssa.gov/OACT/TR/2010/tr2010.pdf

Page 3: "Under the long-range intermediate assumptions, annual cost for the OASDI [Social Security] program is projected to exceed tax income in 2010 and 2011 … be less than tax income in 2012 through 2014 … exceed tax income in 2015 and remain higher throughout the remainder of the long-range period."

[117] "2008 Annual Report of the Board of Trustees of The Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds." United States Social Security Administration, March 28, 2008. http://www.ssa.gov/OACT/TR/TR08/tr08.pdf

Page 2: "Annual cost will exceed tax income … at which time the annual gap will be covered with cash from redemptions of special obligations of the Treasury that make up the trust fund assets…."

[118] Table VI.F7: "Operations of the Combined OASI and DI Trust Funds, in Constant 2010 Dollars, Calendar Years 2010-85 [In billions]." United States Social Security Administration, Office of the Chief Actuary. Last reviewed or modified August 5, 2010. http://www.ssa.gov/OACT/TR/2010/lr6f7.html

"Estimates for later years are not shown because the combined OASI [Old-Age and Survivors Insurance] and DI [Disability Insurance] Trust Funds are estimated to become exhausted in 2037 under the intermediate assumptions…."

NOTE: The "combined OASI and DI Trust Funds" comprise the "Social Security Trust Fund." See the column labeled "Assets at end of year."

These balances are available to finance future benefit payments and other trust fund expenditures—but only in a bookkeeping sense. These funds are not set up to be pension funds, like the funds of private pension plans. They do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures. The existence of large trust fund balances, therefore, does not, by itself, have any impact on the Government's ability to pay benefits.

[121] Publication number 05-10024: "Understanding the Benefits." United States Social Security Administration, January 2010. http://www.ssa.gov/pubs/10024.html

The current Social Security system works like this: when you work, you pay taxes into Social Security. The tax money is used to pay benefits to:

Page 4: "The Social Security and Medicare taxes you pay are not put in a special account for you. They are used to pay benefits for people getting benefits today, just as your future benefits will be paid for by future workers."

[123] Table VI.F7: "Operations of the Combined OASI and DI Trust Funds, in Constant 2010 Dollars, Calendar Years 2010-85 [In billions]." United States Social Security Administration, Office of the Chief Actuary. Last reviewed or modified August 5, 2010. http://www.ssa.gov/OACT/TR/2010/lr6f7.html

"Estimates for later years are not shown because the combined OASI and DI Trust Funds are estimated to become exhausted in 2037 under the intermediate assumptions…."

NOTE: The "combined OASI and DI Trust Funds" comprise the "Social Security Trust Fund." See the column labeled "Assets at end of year."

[124] "2010 Annual Report of the Board of Trustees of The Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds." United States Social Security Administration, August 9, 2010. http://www.ssa.gov/OACT/TR/2010/tr2010.pdf

[125] Publication number 05-10024: "Understanding the Benefits." United States Social Security Administration, January 2010. http://www.ssa.gov/pubs/10024.html