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Citation

 

"Social Security Basics." By James D. Agresti and Stephen F. Cardone. Just Facts, January 27, 2011. Revised 10/1/14. http://justfacts.com/socialsecurity.basics.asp

 

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» This research contains basic facts about Social Security. For detailed facts, click here.

 

» Click on the footnote numbers for meticulous documentation of each fact.

 

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Introductory Notes

 

A major source of information for this research is the 2014 Social Security Trustees Report.[1] This report was published in July 2014 and uses data from 2013 as a baseline. Thus, unless otherwise stated, all future dollar figures are indexed for inflation to produce numbers that are consistent in terms of the years 2013/2014.

 

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]

 
Overview

 

* 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, 2013, 57.5 million people or 18% 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]

 
Taxes

 

* Social Security's tax rates are as follows:

 

   Social Security Tax
Employee portion  6.2%
Employer portion  6.2%
Total  12.4%

[8]

 

* The self-employed pay a Social Security tax of 12.4%.[9]

 

* Social Security taxes are subject to a wage threshold. Any income earned above the threshold is not taxed. For 2013, the threshold is $117,000.[10]

 


Threshold Increases

 

* 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 between 1950 and 2014.[14]

 


Tax Rate

 

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

 

* Tax rate history:

 

 

 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%
2014  12.4%  12.4%

[15]

 

* For 2011 and 2012, the Social Security payroll tax rate was reduced by two percentage points (from 12.4% to 10.4%). This is referred to as a "payroll tax holiday." (For more detail, click here.)

 


Government Promise

 

* At the outset of the Social Security program, the federal government published an informational pamphlet that stated the following about 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 $1,802 per person.[17]

 

* For 2014, the maximum payroll tax collection per person is $14,508 or eight times the promised maximum.[18]

 
Benefits

 

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.

 


Old-Age Benefits

 

* In general, to qualify for old-age benefits, a person must work for ten years while earning at least $4,800 per year.[19]

 

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

 

* People with lower incomes receive higher ratios of benefits to taxes.[21] If a 23-year-old earned $30,000/year for the next 44 years, he would receive a yearly old-age benefit that is 9.3 times the amount of the yearly taxes that he paid. If another individual earned $85,000 per year, his yearly benefit would be 6.1 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 each December based upon the rate of inflation in the previous year. The benefit increase for 2007 was 2.3%; for 2008, 5.8%; for 2009, 0.0%; for 2010, 0.0%; for 2011, 3.6%; for 2012, 1.7%; for 2013, 1.5%.[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 66 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]

 


Retirement Income

 

* 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 2014, Social Security pays an average of $15,528/year to retired individuals.[29] In 2013, the U.S. Census Bureau's poverty threshold for individuals over 65 years of age was $11,173.[30]

 

* As of 2014, Social Security pays an average of $25,332/year to retired couples.[31] In 2013, the U.S. Census Bureau's poverty threshold for couples over 65 years of age was $14,095.[32]

 


Survivors Benefits

 

* 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, as per the Social Security Administration, "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]

 


Disability Benefits

 

* 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 per year based upon the rate of inflation.[38]

 


Benefit Distribution

 

* Distribution of benefits in 2013:

 

Category

 Amount (billions)  Percent of Total Social

Security Benefits

Retired workers and their families  $560  70%
Survivors of deceased workers  $112  14%
Disabled workers and their families  $140  17%

[39]

 
Financial Status

 

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

 

* From 1985 through 2009, Social Security's tax income exceeded its expenses. In 2010, this situation reversed, and expenses exceeded dedicated taxes.[41]

* When Social Security's income exceeds its expenses, the resultant surpluses must be loaned to the general fund of the U.S. Treasury. By law, the Treasury must pay this money back to the Social Security program with interest.[42] [43] [44]


* The money owed by the Treasury to the Social Security program is referred to as the "Social Security Trust Fund," and at the close of 2013, it had a balance of $2.8 trillion.[45] (Facts about the ability of the Treasury to pay this debt are detailed below in the section entitled Impact on National Debt.)

* In 2010, Social Security's expenses exceeded its tax income for the first time in 25 years.[46] This state of affairs continued through 2013 and is projected to continue every year into the foreseeable future.[47]

* Despite the interest payments that Social Security receives on the Trust Fund, the trust fund began declining in value in 2011.[48]

* The Social Security Trust Fund continued declining in 2012 and 2013, and this state of affairs is projected to continue until the Trust Fund is exhausted in 2033.[49]

* After 2033, Social Security is projected to run deficits every year into the foreseeable future.[50]
 

* To cover these deficits, it is projected that payroll taxes would need to be increased by 30.5% starting in 2033, rising to a 39.6% increase by 2088.[52] These shortfalls could also be covered by reducing benefits by 22.5% starting in 2033, rising to a 27% reduction by 2088.[53]

 


Summary

 

* Projected financial status of the Social Security program:

 

Time Period  Financial Status
2014–2033 The Trust Fund declines in value every year. The federal government pays back the money that the Social Security program has loaned to it with interest, and the Trust Fund is depleted.
2033-2088 The Social Security program runs annual deficits every year that could be covered by (a) increasing payroll taxes by 30.5% starting in 2033, rising to a 39.6% increase by 2088, or (b) reducing benefits by 22.5% starting in 2033, rising to a 27% reduction by 2088.
2089 and beyond The Social Security Program runs deficits every year into the foreseeable future

 


Accuracy of Projections

 

* 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 $1.33 in income for every dollar it spent in 2013. The actual figure turned out to be $1.03. (For more detail, click here.)

 


Causes and Effects

 

* 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:

 

justFacts

[56]

 

* 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 6.1 years, and the life expectancy of the average 65-year old female has risen by 7.1 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. In 2010, it was 1.93.[62] [63]

 

• In 2011, the first wave of baby boomers turned 65 years of age.[64] Between 2013 and 2030, it is projected that the number of people eligible for old-age benefits will increase by 56.6%, while the number of people paying Social Security taxes will increase by 13.9%.[65]

 

3. The increasing number of people receiving disability benefits:

 

• Between 1965 and 2013, the U.S. population grew by 57.9%. During the same period, the number of people receiving disability benefits increased by 531.8%.[66]

 
Accountability

 

*In 2013, the administrative costs of the Social Security program were $6,166,000,000. This was equal to 0.74% of all Social Security outlays for the year or enough to pay 397,089 retired workers the average annual old-age benefit of $15,528 for 2014.[67] [68]

 

* In 2012, Social Security made roughly $1,708,000,000 in improper overpayments. This was equal to 0.22% of all Social Security payments for the year or enough to pay 115,812 retired workers the average annual old-age benefit of $14,748 for 2012.[69] [70]

 


Stimulus Checks

 

* 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]

 


Disability Payments

 

* 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]

 

• 18 of the 20 received a $250 "stimulus" check.[80]

 

• 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]

 
Popular Perceptions

 

* Perception about Social Security benefits:

 

I am entitled to the money. It's my money. I've saved it.[83] [84]

 

* 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]

 

* The website of United States Social Security Administration states:

 

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]

 


 

* Perception about Social Security's finances:

 

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 2033,[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]

 
Impact on National Debt

 


Trust Fund Assets Consist of Federal Debt

 

* 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]

 


Debt to be Paid

 

* As of December 31, 2013, the U.S. government owes $2.8 trillion to the Social Security Trust Fund. This equates to $8,715 for every man, woman, and child living in the United States or $22,285 per household.[113] [114] [115]

 

* The Social Security program started drawing money from the Trust Fund in 2010 and is projected to keep drawing this money every year until the Trust Fund is exhausted in 2033.[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]

 

* At the close of the federal government's 2013 fiscal year, the federal government had $71 trillion in debts, liabilities, and unfinanced obligations. This equates to $224,110 for every person living in the U.S. or $579,761 per household.[120]

 
Personal Ownership

 


Current System

 

* Social Security Administration publication number 05-10024 states:

 

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 those planning to collect Social Security after 2033, it is projected that the Trust Fund will be depleted and all benefits will be paid solely by workers who pay Social Security taxes at that time.[122] [123] It is also projected that Social Security taxes will be sufficient to pay 77% of scheduled benefits at that time.[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

[128]

 


Ownership Proposals

 

* Proposals have been made to give workers the option to change part of their Social Security involvement 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]

 


Politics

 

* 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, at least 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.

 

justFacts

 

Privacy

 

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

 

FOR SOCIAL SECURITY PURPOSES -- NOT FOR IDENTIFICATION.[143]

 

* 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:

 

TAXPAYER IDENTIFICATION NUMBERS REQUIRED AT BIRTH.[146]

 

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]

 

* Per the U.S. Social Security Administration:

 

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]
 
Footnotes

 

[1] "2014 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, July 28, 2014. http://www.ssa.gov/oact/tr/2014/tr2014.pdf

 

[2] "2014 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, July 28, 2014. http://www.ssa.gov/OACT/TR/2014/tr2014.pdf

 

Page 8: "Table II.C1 presents key demographic and economic assumptions for three alternative scenarios. The intermediate assumptions reflect the Trustees' best estimates of future experience. Therefore, most of the figures in this overview present only the outcomes under the immediate assumptions. Any projection of the future is, of course, uncertain. For this reason, the Trustees also present results under low-cost and high-cost alternatives to provide a range of possible future experience."

 

Page 18: "Uncertainty of the Projections … Significant uncertainty surrounds the intermediate assumptions."

 

[3] "The Social Security Act of 1935."  United States Social Security Administration. http://www.ssa.gov/history/35act.html

 

The Social Security Act (Act of August 14, 1935) [House Resolution 7260]

 

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 (OASDI).

 

[5] Calculated with data from:

 

a) "2014 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, July 28, 2014. http://www.ssa.gov/oact/tr/2014/tr2014.pdf

Pages 57-58: "Table IV.B2.—Covered Workers and Beneficiaries, Calendar Years 1945-2090 … 2013 beneficiariesb = 57,471,000 … b Beneficiaries with monthly benefits in current-payment status as of June 30."

 

b) "Monthly Population Estimates for the United States: April 1, 2010 to December 1, 2014." U.S. Census Bureau, Population Division, Monthly, January 2014 to December 2014. http://www.census.gov/popest/data/index.html
"Resident Population … July 1, 2013 [=] 316,128,839"

 

CALCULATION: 57,471,000 beneficiaries / 316,128,839 people = 18%


[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."

 

Page 4:

 

1950 Amendments

 

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.*

 

Pages 16-17:

 

1983 Amendments

 

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.

 

* NOTES:

- "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]

 

[7] Report: "Annual Statistical Supplement to the Social Security Bulletin, 2003." Social Security Administration, Office of Research, Evaluation, and Statistics, July 2004. http://www.ssa.gov/policy/docs/statcomps/ …

 

NOTE: Table 2.A1 in this report provides detailed information on "Covered employment and self-employment provisions, by year enacted." This table is available at http://www.ssa.gov/policy/docs/statcomps/ …

 

[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] Web page: "Contribution and Benefit Base." United States Social Security Administration, Office of the Chief Actuary. Accessed August 29, 2014 at 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. This limit changes each year with changes in the national average wage index. We call this annual limit the contribution and benefit base. For earnings in 2014, this base is $117,000."

 

[11] "Social Security Act of 1935." United States Social Security Administration. http://www.ssa.gov/history/35act.html

 

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."

 

CALCULATION: ($9,000 - $3,000) / $3,000 = 2.0

 

[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…."

 

CALCULATION: ($13,200 - $9,000) / $9,000 = .47

 

[14] Calculated with data from:

 

a) Web page: "Contribution and Benefit Base." United States Social Security Administration, Office of the Chief Actuary. Accessed August 22, 2014 at http://www.ssa.gov/oact/cola/cbb.html

"1950 [=] $3,000 … 2014 [=] $117,000"

 

b) Web page: "CPI Inflation Calculator." United States Department of Labor, Bureau of Labor Statistics. Accessed August 22, 2014 at http://www.bls.gov/data/inflation_calculator.htm


"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."

 

CALCULATIONS: Using the above-cited inflation calculator, $3,000 in 1950 is equivalent to $29,657.68 in 2014. Hence, $117,000 / $29,657.68 = 3.9

 

[15] Web page: "Social Security & Medicare Tax Rates." United States Social Security Administration, Office of the Chief Actuary. Accessed September 12, 2014 at http://www.ssa.gov/oact/ProgData/taxRates.html

 

[16] "The 1936 Government Pamphlet on Social Security." United States Social Security Administration. http://www.ssa.gov/history/ssn/ssb36.html

 

[17] Web page: "CPI Inflation Calculator." United States Department of Labor, Bureau of Labor Statistics. Accessed August 22, 2014 at http://www.bls.gov/data/inflation_calculator.htm

 

"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."

 

CALCULATIONS:

6% of $3,000 = $180

Using the above-cited inflation calculator, $180 in 1949 is equivalent to $1,802 in 2014, which is the latest available year.

 

[18] Calculated with data from the footnote above and:

 

a) Web page: "Social Security & Medicare Tax Rates." United States Social Security Administration, Office of the Chief Actuary. Accessed August 22, 2014 at http://www.ssa.gov/oact/ProgData/taxRates.html

"1990 and later … OASDI [Social Security] 12.4[%]"

 

b) Web page: "Contribution and Benefit Base." United States Social Security Administration, Office of the Chief Actuary. Accessed August 22, 2014 at 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. This limit changes each year with changes in the national average wage index. We call this annual limit the contribution and benefit base. For earnings in 2014, this base is $117,000."

 

CALCULATIONS:

$117,000 x 12.4% = $14,508
$14,508 / $1,802 = 8.05

 

[19] Publication No. 05-10072: "How You Earn Credits." U.S. Social Security Administration, January 2014. http://www.ssa.gov/pubs/EN-05-10072.pdf

Page 2:


The credits are based on the amount of your earnings. We use your work history to determine your eligibility for retirement or disability benefits or your family’s eligibility for survivors benefits when you die.

In 2014, you receive one credit for each $1,200 of earnings, up to the maximum of four credits per year.

Each year the amount of earnings needed for credits goes up slightly as average earnings levels increase. The credits you earn remain on your Social Security record even if you change jobs or have no earnings for a while.
 

Page 4:


How long you must work to qualify for Social Security
The number of credits you need to be eligible for benefits depends on your age and the type of benefit.

Retirement benefits
Anyone born in 1929 or later needs 10 years of work (40 credits) to be eligible for retirement benefits. People born before 1929 need fewer years of work.
 

[20] Publication number 05-10070: "Your Retirement Benefit: How it is Figured." United States Social Security Administration, January 2014. http://www.socialsecurity.gov/pubs/EN-05-10070.pdf

 

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. Accessed August 22, 2014 at 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. Accessed August 22, 2014 at 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. Accessed August 24, 2014 at http://www.ssa.gov/OACT/COLA/piaformula.html

 

PIA definition

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.

 

PIA formula bend points

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 2014 these portions are the first $816, the amount between $816 and $4,917, and the amount over $4,917. These dollar amounts are the "bend points" of the 2014 PIA formula. A table shows bend points, for years beginning with 1979, for both the PIA and maximum family benefit formulas.

 

PIA formula

For an individual who first becomes eligible for old-age insurance benefits or disability insurance benefits in 2014, or who dies in 2014 before becoming eligible for benefits, his/her PIA will be the sum of:

(a) 90 percent of the first $816 of his/her average indexed monthly earnings, plus

(b) 32 percent of his/her average indexed monthly earnings over $816 and through $4,917, plus

(c) 15 percent of his/her average indexed monthly earnings over $4,917.

 

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

 

[22] Calculated with data from:

 

a) Web page: "Social Security & Medicare Tax Rates." United States Social Security Administration, Office of the Chief Actuary. Accessed August 31, 2014 at http://www.ssa.gov/oact/ProgData/taxRates.html

NOTE: For 1990 and later, the payroll tax rate for employees/employers combined or for self-employed persons is 12.4%. This does not account for the payroll tax holidays in 2011 and 2012, which are financed by general revenues. General revenue taxes are progressive so that higher-income households pay higher tax rates: http://www.justfacts.com/healthcare.asp#general_revenues.

 

b) Web page: "Online Calculator." United States Social Security Administration, Accessed August 31, 2014 at http://www.socialsecurity.gov/retire2/AnypiaApplet.html

 

NOTES:

- On September 3, 2014, the following data was entered into the Online Calculator:

• An individual born December 29, 1991.


• First year of work is 2014 (works the full year).


• Retirement date of December 29, 2058 (67 years old).


• Projected benefits to be quoted in today's (2014) dollars.


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

 

[23] Report: "Social Security Reform: Current Issues and Legislation." By Dawn Nuschler. Congressional Research Service, November 28, 2012. http://aging.senate.gov/crs/ss6.pdf

 

Page 14:

 

Until recent years, Social Security beneficiaries 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 in 2033, after which, the program will be unable to pay full benefits. For more information, see the section on Financial Status.

 

[25] Web page: "Cost of Living Adjustments." United States Social Security Administration. Accessed August 22, 2014 at http://www.socialsecurity.gov/OACT/COLA/colaseries.html

 

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, January 2014. http://www.ssa.gov/pubs/EN-05-10024.pdf

 

If you were born from 1943 to 1960, the age at which full retirement benefits are payable increases gradually to age 67. If you were born in 1947 or earlier, you already are eligible for your full Social Security benefit.

 

The following chart will guide you in determining your full retirement age.

 

Year of Birth  Full Retirement Age
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
1960 or later  67


[27] Publication number 05-10024: "Understanding the Benefits." United States Social Security Administration, January 2014. http://www.ssa.gov/pubs/EN-05-10024.pdf

[Family members include a spouse, children under the age of 18, 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.]  


[28] Web page: "Your Social Security Statement." United States Social Security Administration, January 2, 2014. http://www.ssa.gov/myaccount/materials/pdfs/SSA-7005-OL.pdf

 

[29] Publication number 05-10024: "Understanding the Benefits." United States Social Security Administration, January 2014. http://www.ssa.gov/pubs/EN-05-10024.pdf

 

Page 22: "Average 2014 monthly Social Security benefits … Retired worker: $1,294"

CALCULATION: $1,294/month × 12 months/year = $15,528/year

 

[30] Report: "Poverty Thresholds for 2013 by Size of Family and Number of Related Children Under 18 Years." United States Census Bureau. Accessed September 29, 2014 at http://www.census.gov/hhes/www/poverty/data/threshld/index.html

 

[31] Publication number 05-10024: "Understanding the Benefits." United States Social Security Administration, January 2014. http://www.ssa.gov/pubs/EN-05-10024.pdf

 

Page 22: "Average 2014 monthly Social Security benefits … Retired couple: $2,111"

CALCULATION: $2,111/month × 12 months/year = $25,332/year
 

[32] Dataset: "Poverty Thresholds for 2013 by Size of Family and Number of Related Children Under 18 Years." United States Census Bureau. Accessed September 29, 2014 at http://www.census.gov/hhes/www/poverty/data/threshld/index.html

 

[33] Publication number 05-10024: "Understanding the Benefits." United States Social Security Administration, January 2014. http://www.ssa.gov/pubs/EN-05-10024.pdf

 

Survivors benefits

 

When you die, your family may be eligible for benefits based on your work.

Family members who can collect benefits include a widow or widower who is:

 

• 60 or older; or

• 50 or older and disabled; or

• 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.

 

Your children can receive benefits, too, if they are unmarried and:

 

• Younger than 18 years old; or

• 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.

 

Payment after death

 

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

 

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 2014. http://www.ssa.gov/pubs/EN-05-10024.pdf

 

How much will your survivors get?

 

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.

 

[35] Publication No. 05-10029: "Disability Benefits." United States Social Security Administration, May 2014. http://www.socialsecurity.gov/pubs/EN-05-10029.pdf

 

Page 5:

 

 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 three 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.

 

Page 6:

 
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

 

[36] Publication No. 05-10029: "Disability Benefits." United States Social Security Administration, May 2014. http://www.socialsecurity.gov/pubs/EN-05-10029.pdf

 

Page 12: "What happens when my claim is approved? We will send you a letter telling you that your application is approved, the amount of your monthly benefit and the effective date. Your monthly disability benefit is based on your average lifetime earnings. Your first Social Security disability benefits will be paid for the sixth full month after the date your disability began."

 

[37] Publication No. 05-10029: "Disability Benefits." United States Social Security Administration, May 2014. http://www.socialsecurity.gov/pubs/EN-05-10029.pdf

 

Page 12: "What happens when my claim is approved? Your monthly disability benefit is based on your average lifetime earnings. Your first Social Security disability benefits will be paid for the sixth full month after the date your disability began."

 

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.

 

* Web page: "Contribution and Benefit Base." United States Social Security Administration, Office of the Chief Actuary. Accessed September 13, 2014 at 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. Accessed August 22, 2014 at http://www.ssa.gov/oact/ProgData/taxRates.html

 

[38] Web page: "Cost of Living Adjustments." United States Social Security Administration. Accessed August 23, 2014 at http://www.socialsecurity.gov/OACT/COLA/colaseries.html

 

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.

 

[39] Calculated with data from the "2014 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, July 28, 2014. http://www.ssa.gov/OACT/TR/2014/tr2014.pdf

 

Page 36: "Table III.A5.—Distribution of Benefit Payments by Type of Beneficiary or Payment, Calendar Years 2012 and 2013 (Amounts in millions) … 2013 … Total OASDI benefit payments [=] 812,247 … Retired workers and auxiliaries [=] 559,942 … Survivors of deceased workers [=] 112,032 … Lump-sum death payments [=] 201 … DI benefit payments, total [=] 140,071"

NOTE: Total may not add to 100% due to rounding.

CALCULATIONS:
559,942 Retired workers and auxiliaries / 812,247 = 0.6894
(112,032 Survivors of deceased workers + 201 Lump-sum death payments) / 812,247 = 0.1382
140,071 DI benefit payments / 812,247 = 0.1725
 

[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] Calculated with the dataset: "Old-Age, Survivors, and Disability Insurance Trust Funds, 1957-2013 [In millions]." United States Social Security Administration, Office of the Chief Actuary. Accessed August 25, 2014 at http://www.socialsecurity.gov/OACT/STATS/table4a3.html

 

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

 

[42] Web page: "Trust Fund FAQs." United States Social Security Administration. Accessed August 31, 2014 at http://www.ssa.gov/OACT/ProgData/fundFAQ.html#a0=1

 

"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."

 

[43] Web page: "Debt versus Deficit: What's the Difference?" United States Department of the Treasury, Bureau of the Public Debt. Accessed August 31, 2014 at http://www.treasurydirect.gov/news/pressroom/ …

 

"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 September 30, 2014 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] "2014 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, July 28, 2014. http://www.ssa.gov/oact/tr/2014/tr2014.pdf

 

Page 6: "Table II.B1.—Summary of 2013 Trust Fund Financial Operations (In billions) … OASDI … Assets at the end of 2013 … $2,764.4"

 

[46] Calculated with the dataset: "Old-Age, Survivors, and Disability Insurance Trust Funds, 1957-2010 [In millions]." United States Social Security Administration, Office of the Chief Actuary, July 18, 2011. Accessed August 25, 2014 at http://www.socialsecurity.gov/OACT/STATS/table4a3.html

 

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

 

[47] "2014 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, July 28, 2014. http://www.ssa.gov/oact/tr/2014/tr2014.pdf

 

Page 2:


Social Security's cost exceeded its tax income in 2013, and also exceeded its non-interest income, as it has since 2010. This relationship is projected to continue throughout the short-range period (2014 through 2023) and beyond. The 2013 deficit of tax income relative to cost was $76 billion and the deficit of non-interest income relative to cost was $71 billion. In recent years, OASDI tax income and non-interest income have differed as a result of a temporary reduction in the Social Security payroll tax for 2011 and 2012, combined with reimbursements from the General Fund of the Treasury to the Social Security trust funds that amounted to $103 billion in 2011, $114 billion in 2012, and $5 billion in 2013. Assuming there is no future legislation to transfer General Funds to the trust funds, OASDI tax income should approximately equal non-interest income this year and in future years. For 2014, the deficit of tax income (and non-interest income) is projected to be approximately $80 billion.


Page 4: "Under the intermediate assumptions, the Trustees project that annual cost for the OASDI [Social Security] program will exceed non-interest income in 2014 and remain higher throughout the remainder of the long-range period."

 

[48] Calculated with data from:

a) Dataset: "Old-Age, Survivors, and Disability Insurance Trust Funds, 1957-2013 [In millions]." United States Social Security Administration, Office of the Chief Actuary. Accessed August 25, 2014 at http://www.socialsecurity.gov/OACT/STATS/table4a3.html

b) Web page: "CPI Inflation Calculator." United States Department of Labor, Bureau of Labor Statistics. Accessed October 1, 2014 at http://www.bls.gov/data/inflation_calculator.htm

NOTES:
- 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.

 

[49] Calculated with data from:

a) Table VI.G7: "Operations of the Combined OASI and DI Trust Funds, in CPI-indexed 2014 Dollars, Calendar Years 2014-90 [In billions]." United States Social Security Administration, Office of the Chief Actuary. Accessed August 24, 2014 at http://www.ssa.gov/OACT/TR/2014/lr6f7.html

"2032 bb The combined OASI and DI Trust Funds become depleted in 2033 under the intermediate assumptions and in 2028 under the high-cost assumptions, so estimates for later years are not shown."

NOTES:
- 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.

 

b) Dataset: "Old-Age, Survivors, and Disability Insurance Trust Funds, 1957-2013 [In millions]." United States Social Security Administration, Office of the Chief Actuary. Accessed August 25, 2014 at http://www.socialsecurity.gov/OACT/STATS/table4a3.html

c) Web page: "CPI Inflation Calculator." United States Department of Labor, Bureau of Labor Statistics. Accessed October 1, 2014 at http://www.bls.gov/data/inflation_calculator.htm

[50] "2014 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, July 28, 2014. http://www.ssa.gov/oact/tr/2014/tr2014.pdf

 

Page 17: "Figure II.D6.—OASDI Income, Cost, and Expenditures as Percentages of Taxable Payroll [Under Intermediate Assumptions]"

NOTE: The "Cost" curve in Figure II.D6 exceeds the "Expenditures" curve for all years starting in 2033. This graph ends in 2088. For the years beyond this, see the following excerpt from the same report.

Page 18: "Extending the horizon beyond 75 years increases the measured unfunded obligation. Through the infinite horizon, the unfunded obligation, or shortfall, is equivalent to 4.1 percent of future tax-able payroll or 1.4 percent of future GDP."  


[52] Calculated with data from Table 8 Alt2: "Trust Fund Operations in Current Dollars, 2014-2090, Intermediate Assumptions, 2014 Trustees Report." United States Social Security Administration, Office of the Chief Actuary. Transmitted to Just Facts on August 22, 2014.

 

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

 

[53] Calculated with data from Table 8 Alt2: "Trust Fund Operations in Current Dollars, 2014-2090, Intermediate Assumptions, 2014 Trustees Report." United States Social Security Administration, Office of the Chief Actuary. Transmitted to Just Facts on August 22, 2014.

 

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

 

[54] "2014 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, July 28, 2014. http://www.ssa.gov/OACT/TR/2014/tr2014.pdf

 

Page 8.

 

[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 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."

 

[56] Web page: "Covered Workers and Beneficiaries." United States Social Security Administration, Office of the Chief Actuary. Accessed August 25, 2014 at http://www.ssa.gov/OACT/TR/2014/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, January 2014. http://www.ssa.gov/pubs/EN-05-10024.pdf

 

If you were born from 1943 to 1960, the age at which full retirement benefits are payable increases gradually to age 67.

 

If you were born in 1947 or earlier, you already are eligible for your full Social Security benefit. The following chart will guide you in determining your full retirement age.

 

Year of Birth  Full Retirement Age
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
1960 or later  67

 

 

[59] Publication No. 21-059: "Social Security: A Brief History." United States Social Security Administration, October 2007. http://www.socialsecurity.gov/history/pdf/2007historybooklet.pdf

 

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

 

[60] Calculated with data from Table V.A3.: "Period Life Expectancy." United States Social Security Administration, Office of the Chief Actuary. Accessed August 31, 2014 at http://www.ssa.gov/OACT/TR/2014/lr5a3.html
 

"Period Life Expectancy … At age 65 …

Calendar year 1940 … Male [=] 11.9 Female [=] 13.4 …

Calendar year 2013 … Male [=] 18.0 Female [=] 20.5 …


The period life expectancy at a given age for a given year is the average remaining number of years expected prior to death for a person at that exact age, born on January 1, using the mortality rates for that year over the course of his or her remaining life."


CALCULATIONS:
Male: 18.0 – 11.9 = 6.1
Female: 20.5 – 13.4 = 7.1

 

[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. Accessed September 9, 2014 at http://www.ssa.gov/OACT/TR/2014/lr5a1.html

 

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

 

[64] Article: "Medicare Bound to Bust as First Boomers Hit 65." By Sharyl Attkisson. CBS, December 30, 2010. http://www.cbsnews.com/stories/2010/12/30/ …

 

"On New Year's Day, the first baby boomers will celebrate the big 6-5, and they're not just getting older."

 

[65] Calculated with data from Table IV.B2.: "Covered Workers and Beneficiaries." United States Social Security Administration, Office of the Chief Actuary. Accessed August 31, 2014 at http://www.ssa.gov/OACT/TR/2012/lr4b2.html

 
Year  Covered Workers a  OASI [Old-Age and Survivors Insurance]

Beneficiaries b

2013  163,221,000  46,517,000
2030  186,049,000  72,809,000

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

b Beneficiaries with monthly benefits in current-payment status as of June 30.

 

CALCULATIONS:
(72,809,000 - 46,517,000) / 46,517,000 = 56.5%
(186,049,000 - 163,221,000) / 163,221,000 = 13.9%

 

[66] Calculated with data from the "2014 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, July 28, 2014. http://www.ssa.gov/oact/tr/2014/tr2014.pdf

 

Page 87: "Table V.A2.—Social Security Area Population as of July 1 and Dependency Ratios, Calendar Years 1950-2090 … Population (in thousands) … Total … 1965 [=] 203,982 … 2013 [Estimated] [=] 322,113"

Page 133: "Table V.C5.—DI Beneficiaries With Benefits in Current-Payment Status at the End of Calendar Years 1960-2090 (in thousands) … Total beneficiaries … 1965 [=] 1,739 … 2013 [=] 10,987"

CALCULATIONS:

Populations: (322,113,000 - 203,982,000) / 203,948,000 = 57.9%

Disability Beneficiaries: (10,987,000 - 1,739,000) / 1,739,000 = 531.8%

 

[67] Calculated with data from the "2014 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, April 25, 2014. http://www.ssa.gov/oact/tr/2014/tr2014.pdf

 

Page 30: "Table III.A3.—Operations of the Combined OASI and DI Trust Funds, Calendar Year 2013 [In millions] … Net administrative expenses [=] $6,116 … Total disbursements [=] $822,925"

CALCULATION: $6,116 / $822,925 = 0.74%

 

NOTE: The "combined OASI and DI Trust Funds" comprise the "Social Security Trust Fund."

 

[68] Calculated with data from the footnote above and Publication number 05-10024: "Understanding the Benefits." United States Social Security Administration, January 2014. http://www.ssa.gov/pubs/EN-05-10024.pdf

 

Page 22: "Average 2014 monthly Social Security benefits … Retired worker: $1,294"

CALCULATION: ($6,166,000,000 administrative expenses) / [($1,294 average benefit/worker/month) × (12 months/per year)] = 397,089 workers
 

[69] "Social Security Administration's Fiscal Year 2013 Financial Report." United States Social Security Administration, December 9, 2013. Accessed September 1, 2014 at http://www.ssa.gov/finance/2013/Improper%20Payments.pdf

Page 143: "Table 1: OASDI [Social Security] Improper Payments Experience, FY [Fiscal year] 2010 – FY 2012 (dollars in millions) … FY 2012 … Total benefit payments [=] $700,300 … Underpayments [=] $740 (0.09%) … Overpayments [=] $1,708 (0.22%)"

NOTE: Pages 160-161 the results of overpayment collection measures used by the Social Security Administration. There is no way to calculate from this 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, March 2012. http://www.ssa.gov/pubs/EN-05-10024.pdf

 

"Average 2012 monthly Social Security benefits … Retired worker: $1,229."

 

CALCULATION: ($1,708,000,000 improper overpayments) / [($1,229 average benefit/worker/month) × (12 months/per year)] = 115,812 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://oig.ssa.gov/ …

 

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://oig.ssa.gov/ …

 

Page 3:

 

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://oig.ssa.gov/ …

 

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

 

Preface:

 

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

 

Pages 7-8:

 

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."

 

Pages 9-10:

 

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.

 

Page 7:

 

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.

 

[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

 

Pages 3-4:

 

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

 

Page 19:

 

Case no. 8 Details …

 

• 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.

 

• The beneficiary began working for SSA in the third quarter of 2007. …

 

• 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

 

Page 16:

 

Case no. 2 Details …

 

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

 

• SSA approved DI payments starting in 1995 for mood and anxiety disorders;

 

• The beneficiary began full-time federal employment in 2003. …

 

• 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.

 

[83] Transcript: "NBC Nightly News" (6:30 PM ET). NBC, February 26, 2004.

 

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.

 

Ms. MIMI BASO: I am entitled to the money. It's my money. I've saved it.

 

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.

 

[84] Web Page: Presidential Statements, Jimmy Carter." United States Social Security Administration. Accessed September 30, 2014 at http://www.ssa.gov/history/carterstmts.html

 

"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.

 

[87] Web page: "Debt versus Deficit: What's the Difference?" United States Department of the Treasury, Bureau of the Public Debt. Last updated August 5, 2004. Last Updated October 10, 2008. http://www.treasurydirect.gov/news/pressroom/ …

 

"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."

 

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 September 30, 2014 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.

 

[90] Comment by "Kilfarsnar," March 12, 2009. http://cunningrealist.blogspot.com/2009/03/ …

 

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.

 

[91] Article: "Government Statistics and Lies." By Ron Paul. LewRockwell, November 3, 2009. http://www.lewrockwell.com/ …

 

"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, 1937-2013 [In millions]." United States Social Security Administration, Office of the Chief Actuary. Accessed August 28, 2014 at http://www.ssa.gov/ …

 

† Dataset: "Disability Insurance Trust Fund, 1957-2013 [In millions]." United States Social Security Administration, Office of the Chief Actuary. Accessed August 28, 2014 at 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.

 

§ Report: "Monthly Statement of the Public Debt of the United States." United States Department of the Treasury, Bureau of the Public Debt. http://www.treasurydirect.gov/govt/reports/pd/mspd/mspd.htm

 

# For example, the Monthly Statement of the Public Debt for December 31, 2013 ( http://www.treasurydirect.gov/govt/reports/pd/mspd/2013/opdm122013.pdf) shows that the federal government owes $90,723 million to the "Federal Disability Insurance Trust Fund" and $2,674,490 million to the "Federal Old-Age and Survivors Insurance Trust Fund" (see page 9). These figures are within one third of 1% the 2013 trust fund end-of-year assets in the Social Security datasets cited above.

($90,723 million for the Disability Insurance Trust Fund and $2,674,490 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

 

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."

 

[95] Web page: "Debt versus Deficit: What's the Difference?" United States Department of the Treasury, Bureau of the Public Debt. Last updated August 5, 2004. Last Updated October 10, 2008. http://www.treasurydirect.gov/news/pressroom/ …

 

"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."

 

[96] "Social Security Act of 1935." United States Social Security Administration. http://www.ssa.gov/history/35act.html

 

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.

 

[97] Web page: "Reports & Studies, 1938 Advisory Council" United States Social Security Administration. Accessed August 28, 2014 at http://www.ssa.gov/history/reports/38advise.html

 

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. …

 

The following is the text of the Report issued by the Council. …

 

REPORT …

 

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. …

 

December 10, 1938.

 

[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 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."

 

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.

 

* Dataset: "Old-Age and Survivors Insurance Trust Fund, 1937-2009 [In millions]." United States Social Security Administration, Office of the Chief Actuary. Accessed August 31, 2014 at http://www.ssa.gov/oact/STATS/table4a1.html

 

† Dataset: "Disability Insurance Trust Fund, 1957-2013 [In millions]." United States Social Security Administration, Office of the Chief Actuary. Accessed August 28, 2014 at 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.

 

[102] Web page: "Social Security Trust Funds: Frequently Asked Questions." United States Social Security Administration, Office of the Chief Actuary. Accessed August 28, 2014 at http://www.ssa.gov/OACT/ProgData/fundFAQ.html

 

"The government has always repaid Social Security, with interest."

 

[103] See here.

 

[104] Web page: "FAQ's: Debunking some Internet Myths. Myths and Misinformation about Social Security." United States Social Security Administration. Accessed August 28, 2014 at 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.G7: "Operations of the Combined OASI and DI Trust Funds, in CPI-indexed 2014 Dollars, Calendar Years 2014-90 [In billions]." United States Social Security Administration, Office of the Chief Actuary. Accessed August 28, 2014 at http://www.ssa.gov/OACT/TR/2014/lr6f7.html

"The combined OASI and DI Trust Funds become depleted in 2033 under the intermediate assumptions…."

NOTE: The "combined OASI and DI Trust Funds" comprise the Social Security Trust Fund.

 

[106] "2012 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, April 25, 2012. http://www.ssa.gov/oact/tr/2012/tr2012.pdf

 

Page 11: "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 2033. This graph ends in 2090. For the years beyond this, see the following excerpt from the same report.

Pages 15-16: "Extending the horizon beyond 75 years increases the measured unfunded obligation. Through the infinite horizon, the unfunded obligation, or shortfall, equals $20.5 trillion in present value, which represents 3.9 percent of future taxable payroll or 1.3 percent of future GDP. The summarized shortfalls for the 75-year period and through the infinite horizon both reflect annual cash-flow shortfalls for all years after trust fund exhaustion."
 

[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

 

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."

 

[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

 

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."

 

[110] Web page: "Debt versus Deficit: What's the Difference?" United States Department of the Treasury, Bureau of the Public Debt, August 5, 2004. Last updated October 10, 2008. http://www.treasurydirect.gov/news/pressroom/pressroom_bpd08052004.htm

 

"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."

 

[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

 

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."

 

[112] Web page: "Debt versus Deficit: What's the Difference?" United States Department of the Treasury, Bureau of the Public Debt. Last updated August 5, 2004. Last Updated October 10, 2008. http://www.treasurydirect.gov/news/pressroom/pressroom_bpd08052004.htm

 

"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."

 

[113]Report: "Monthly Statement of the Public Debt of the United States, December 31, 2013." United States Department of the Treasury, Bureau of the Public Debt. http://www.treasurydirect.gov/govt/reports/pd/mspd/2013/opdm122013.pdf

Page 12: "Table III - Detail of Treasury Securities Outstanding … Amount in Millions of Dollars … Federal Disability Insurance Trust Fund [=] $92,283 … Federal Old-Age and Survivors Insurance Trust Fund [=] $2,636,662"

CALCULATION: $90,723,000,000 + $2,674,490,000,000 = $2,765,213,000,000
 

[114] Dataset: "Monthly Population Estimates for the United States: April 1, 2010 to December 1, 2014." U.S. Census Bureau, Population Division, August 2014. http://www.census.gov/popest/data/index.html

"Resident Population … January 1, 2014 … [=] 317,297,725"

CALCULATION: $2,765,213,000,000 / 317,297,725 people = $8,715 debt/person

 

[115] Dataset: "Average Number of People per Household, by Race and Hispanic Origin, Marital Status, Age, and Education of Householder: 2013." U.S. Census Bureau, November 2013. https://www.census.gov/hhes/families/data/cps2013AVG.html

Total households = 122,459,000

CALCULATION: $2,765,213,000,000 debt / 122,459,000 households = $22,285 debt/household

 

[116] "2012 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, April 25, 2012. http://www.ssa.gov/oact/tr/2012/tr2012.pdf

 

Page 10: "As it has since 2010, projected cost exceeds non-interest income throughout the short-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…."

 

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."

 

[118]Table VI.F7: "Operations of the Combined OASI and DI Trust Funds, in CPI-indexed 2014 Dollars, Calendar Years 2014-90 [In billions]." United States Social Security Administration, Office of the Chief Actuary. Accessed September 13, 2014 at http://www.ssa.gov/OACT/TR/2014/lr6f7.html

"The combined OASI and DI Trust Funds become exhausted in 2033 under the intermediate assumptions …"

NOTE: The "combined OASI and DI Trust Funds" comprise the Social Security Trust Fund.

 

[119] Report: "Analytical Perspectives: Budget of the United States Government, Fiscal Year 2000." Executive Office of the President of the United States, 1999. http://www.gpoaccess.gov/usbudget/fy00/pdf/spec.pdf

 

Page 337:

 

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.

 

[120] A detailed accounting of these debts, liabilities, and obligations is published in Just Facts' research on the national debt.

 

[121] Publication number 05-10024: "Understanding the Benefits." United States Social Security Administration, January 2014.
http://www.ssa.gov/ …

 

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:

 

• People who already have retired;

• People who are disabled;

• Survivors of workers who have died; and

• Dependents of beneficiaries.

 

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.

 

[122] Publication No. 05-10006: "A 'Snapshot'." United States Social Security Administration, May 2009. http://www.ssa.gov/pubs/EN-05-10024.pdf

 

Page 4-5: "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."

 

[123] Table VI.F7: "Operations of the Combined OASI and DI Trust Funds, in CPI-indexed 2014 Dollars, Calendar Years 2014-90 [In billions]." United States Social Security Administration, Office of the Chief Actuary. Accessed August 31, 2014 at http://www.ssa.gov/OACT/TR/2014/lr6f7.html

"The combined OASI and DI Trust Funds become depleted in 2033 under the intermediate assumptions …"

NOTE: The "combined OASI and DI Trust Funds" comprise the Social Security Trust Fund.

 

[124] Calculated with data from Table 8 Alt2: "Trust Fund Operations in Current Dollars, 2014-2090, Intermediate Assumptions, 2014 Trustees Report." United States Social Security Administration, Office of the Chief Actuary. Transmitted to Just Facts on August 22, 2014.

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

[125] Publication number 05-10024: "Understanding the Benefits." United States Social Security Administration, January 2014. http://www.ssa.gov/pubs/EN-05-10024.pdf

 

Survivors benefits

 

When you die, your family may be eligible for benefits based on your work.

 

Family members who can collect benefits include a widow or widower who is:

 

• 60 or older; or

• 50 or older and disabled; or

• 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.

 

Your children can receive benefits, too, if they are unmarried and:

 

• Younger than 18 years old; or

• 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.

 

Payment after death

 

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

 

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.

 

[126] Report: "Strengthening Social Security and Creating Personal Wealth for All Americans." The President's Commission to Strengthen Social Security, December 21, 2001. http://govinfo.library.unt.edu/csss/reports/Final_report.pdf

 

Page 7:

 

One egregious failing of the present system is its effect on minorities with shorter life spans than the white majority. For black men age 20, only some 65 percent can be expected to survive to age 65. Thus, one of every three black youths will pay for retirement benefits they will never collect. No one intends this; and with time the gap may close. But it is not closed now. And because Social Security provides no property rights to its contributors – the Supreme Court has twice so ruled – a worker could easily work forty years then die and own not a penny of the contributions he has made for retirement benefits he will never collect. There are, to be sure, survivors and dependents benefits, but many workers die before eligibility for these is established. Disability insurance was added during the Eisenhower Administration so that workers are covered during their working years. But far too many never receive any retirement benefits and leave no estate.

 

Page 32:

 

Almost one in five 20-year-olds will not live to age 65. Among African American males, this percentage is even higher. While Social Security offers survivors benefits to spouses who have reached retirement age and to children under the age of 16, Social Security – which constitutes the total saving for many lower-income workers – offers no opportunity for workers to build and pass on any substantial wealth to their heirs, even if the worker died prior to receiving any benefits at all. The only lump sum wealth Social Security provides to pass on is a one-time payment of a $255 death benefit.

 

[127] Publication number 05-10024: "Understanding the Benefits." United States Social Security Administration, January 2014. http://www.ssa.gov/pubs/EN-05-10024.pdf

 

"If you were born from 1943 to 1960, the age at which full retirement benefits are payable increases gradually to age 67."

 

NOTE: Individuals who turned 40 years old in 2010 were born in 1970. Thus, their full retirement age is 67.

 

[128] Report: "United States Life Tables by Hispanic Origin." U.S. Centers for Disease Control and Prevention, National Center for Health Statistics, October 2010. http://www.cdc.gov/nchs/data/series/sr_02/sr02_152.pdf

 

Page 10 (page 16 in pdf): "Table G. Expectation of life by age, sex, Hispanic origin, and race for the non-Hispanic white and non-Hispanic black populations: United States, 2006 … Age [=] 40 … Life Expectancy … Hispanic male [=] 40.2 … Hispanic female [=] 44.3 … Non-Hispanic white male [=] 37.9 … Non-Hispanic white female [=] 41.8 … Non-Hispanic black male [=]  33.2 … Non-Hispanic black female [=] 38.7"

 

NOTE: The life expectancy for 40-year-olds beyond their full retirement age of 67 is determined by the formula: 40 years old + life expectancy for 40-year-olds (shown above) – 67 years

 

[129] Report: "Strengthening Social Security and Creating Personal Wealth for All Americans." The President's Commission to Strengthen Social Security, December 21, 2001. http://govinfo.library.unt.edu/csss/reports/Final_report.pdf

 

Page 72: "Under a personal account program, workers would be given the option to invest a portion of their payroll taxes in accounts that they would own."

 

Page 74: "All of the plans presented by the Commission provide individuals the option to invest in personal accounts. In all cases, these accounts are at least partially financed by a redirection of payroll tax revenue from the existing system. In return for the opportunity to pursue higher expected returns through personal accounts, individuals who choose the account agree to forgo the benefit that would have been financed by these payroll taxes (plus interest)."

 

[130] Report: "Strengthening Social Security and Creating Personal Wealth for All Americans." The President's Commission to Strengthen Social Security, December 21, 2001. http://govinfo.library.unt.edu/csss/reports/Final_report.pdf

 

Page 11: "Personal accounts improve retirement security by facilitating wealth creation and providing participants with assets that they own and that can be inherited, rather than providing only claims to benefits that remain subject to political negotiation."

 

[131] Memorandum: "Estimated Financial Effects of the 'Social Security Personal Savings Guarantee and Prosperity Act of 2008.'" By Stephen C. Goss. United States Social Security Administration, Office of the Chief Actuary. May 21, 2008. http://www.ssa.gov/OACT/solvency/PRyan_20080521.pdf

 

Page 2:

 

Under the plan specifications described below the Social Security program would be expected to be solvent and to meet its benefit obligations throughout the long-range period 2008 through 2082. The long-range [Social Security] actuarial deficit of 1.70 percent of payroll and the [Social Security] long-range unfunded obligation of $4.3 trillion in present value would be eliminated. In addition, trust fund assets expressed as a percentage of annual program cost are projected to be rising at the end of the 75-year period. Thus, the proposal meets the long-range criteria for sustainable solvency and would be expected to remain solvent for the foreseeable future. General Fund transfers are, however, expected to be needed under the plan in years 2032 through 2063, totaling $4.1 trillion in present discounted value. All estimates are based on the intermediate assumptions of the 2008 Trustees Report plus additional assumptions described below.

 

NOTE: The financial details of several other personal ownership proposals are available at http://www.ssa.gov/OACT/solvency/index.htm

 

[132] Report: "Strengthening Social Security and Creating Personal Wealth for All Americans." President's Commission to Strengthen Social Security, December 2001. http://govinfo.library.unt.edu/csss/reports/Final_report.pdf

 

Page 11: "Personal accounts can also contribute towards the fiscal sustainability of the Social Security system. While there are multiple paths to fiscal sustainability that are consistent with the President's principles for Social Security reform, we have chosen to include three reform models in the report that improve the fiscal sustainability of the current system, are costed honestly, and are preferable to the current Social Security system."

 

[133] Senate Bill 1302: "Stop the Raid on Social Security Act of 2005." Introduced by Senator Jim DeMint and cosponsored by Senators Santorum, Graham, Crapo, Coburn, Sununu, Isakson, Enzi, Cornyn, Lott, Brownback, And Craig. 109th U.S. Congress, June 23, 2005. http://www.gpo.gov/fdsys/pkg/BILLS-109s1302is/pdf/BILLS-109s1302is.pdf

 

Section 255:

 

(a) Designation of Certified Account Managers- Under the Program, a certified account manager shall be designated by or on behalf of each participating individual to hold for investment under this section such individual's social security personal retirement account assets.

 

(b) Procedure for Designation- Any designation made under subsection (a) shall be made in such form and manner as shall be prescribed in regulations prescribed by the Board. Such regulations shall provide for annual selection periods during which participating individuals may make designations pursuant to subsection (a). Designations made pursuant to subsection (a) during any such period shall be irrevocable for the one-year period following such period, except that such regulations shall provide for such interim designations as may be necessitated by the decertification of a certified account manager. Such regulations shall provide for such designations made by the Board on behalf of a participating individual in any case in which a timely designation is not made by the participating individual.

 

(c) Investment- Any balance held in a participating individual's social security personal retirement account under this part which is not necessary for immediate withdrawal shall be invested on behalf of such participating individual by the certified account manager as follows:

 

(1) INVESTMENT IN MARKETABLE GOVERNMENT SECURITIES- In a representative mix of fixed marketable interest-bearing obligations of the United States then forming a part of the public debt which are not due or callable earlier than 4 years after the date of investment.

 

(2) ADDITIONAL AND ALTERNATIVE INVESTMENTS- Beginning with 2008, in such additional and alternative investment options in broad-based index funds that are similar to the index fund investment options available within the Thrift Savings Fund established under section 8437 of title 5, United States Code, as the Board determines would be prudent sources of retirement income that could yield greater amounts of income than the investment described in paragraph (1) and a participating individual may elect.

 

[134] "Biographical Directory of the United States Congress 1774-Present." United States Congress. Accessed September 30, 2014 at http://bioguide.congress.gov/

 

NOTE: This dictionary was used to determine party affiliation.

 

[135] Article: "Personal Accounts and the Stock Market Collapse." By Andrew G. Biggs. American Enterprise Institute, November 21, 2008. http://papers.ssrn.com/ …

 

The portfolio would be managed on a "life-cycle" basis, meaning that the proportion of stocks and bonds would automatically be adjusted as the individual aged. Following Shiller, accounts would hold 85 percent stocks through age twenty-nine, then gradually decline to 15 percent stocks by age sixty, with annual rebalancing of assets to maintain these proportions. In Bush's 2005 personal account proposal, individuals would automatically be switched to a life-cycle account as of age forty-seven. It is likely that future personal account proposals would make a life-cycle portfolio the default option at all ages, and it is assumed that accounts would be managed in that way throughout the individual's working career.

 

[136] Report: "Social Security Reform: Current Issues and Legislation." By Dawn Nuschler. Congressional Research Service, November 28, 2012. http://fas.org/sgp/crs/misc/RL33544.pdf

 

Page 29: "Legislation Introduced in the 110th Congress … H.R. 2002 (which is similar to H.R. 530 in the 109th Congress), H.R. 4181, S. 2765 (which is similar to S. 540 in the 109th Congress) and H.R. 6110 would have established individual accounts funded with a redirection of current payroll taxes, among other program changes … There was no congressional action on these measures during the 110th Congress."

 

Page 30: "H.R. 2002. Representative Sam Johnson introduced H.R. 2002 (Individual Social Security Investment Program Act of 2007) on April 23, 2007. The measure would have established individual accounts funded with 6.2 percentage points of the current Social Security payroll tax. Participation in the individual account system would have been voluntary for workers aged 22 to 54 (in 2007) and mandatory for younger individuals."

 

Page 31: "S. 2765. Senator Chuck Hagel introduced S. 2765 (Saving Social Security Act of 2008) on March 13, 2008. The measure would have allowed workers born in 1963 or later (workers aged 45 or younger in 2008) to redirect 4 percentage points of the current Social Security payroll tax to an individual account (a SAFE account). Eligible workers would have been enrolled automatically in the individual account system and allowed to waive their eligibility for a SAFE account."

 

Page 31: "H.R. 107. Representative Jeff Flake introduced H.R. 107 (Securing Medicare and Retirement for Tomorrow Act of 2009) on January 6, 2009.[Footnote 36] Among other provisions, the measure would establish individual accounts funded with 6.2 percentage points of the current Social Security payroll tax. Participation in the individual account system would be mandatory for workers below the Social Security full retirement age.* [Footnote 36: H.R. 107 is similar to H.R. 4181 introduced by Representative Flake in the 110th Congress.]"

 

Page 33: "H.R. 4529. Representative Paul Ryan introduced H.R. 4529 … [Footnote 41] Title IV of the bill … would have allowed workers aged 55 or younger in 2012 to redirect a portion of their payroll tax contributions to voluntary individual accounts. [Footnote 41: H.R. 4529 is similar to H.R. 6110 introduced by Representative Ryan in the 110th Congress and includes provisions similar to H.R. 1776 introduced by Representative Ryan in the 109th Congress.]"

 

NOTE: * In 2009, the year this bill was sponsored, people who were born in 1943 turned 66 years old, which is the full retirement age for people born in 1943. [Publication number 05-10024: "Understanding the Benefits." United States Social Security Administration, May 2008. http://www.ssa.gov/pubs/EN-05-10024.pdf]

 

[137] "Biographical Directory of the United States Congress 1774-Present." United States Congress. Accessed September 30, 2014 at http://bioguide.congress.gov/

 

NOTE: This dictionary was used to determine party affiliations.

 

[138] Report: "2008 Republican Platform." Republican National Committee, September 2008. http://www.gop.com/2008Platform/2008platform.pdf

 

Page 19: "We believe the solution [to Social Security's financial problems] should give workers control over, and a fair return on, their contributions. No changes in the system should adversely affect any current or near retiree."

 

[139] Report: "2008 Democratic Party Platform." Democratic National Committee, August 25, 2008. http://www.democrats.org/about/party_platform

 

"We will fulfill our obligation to strengthen Social Security and to make sure that it provides guaranteed benefits Americans can count on, now and in future generations. We will not privatize it."

 

[140] Web page: "Obama '08, Seniors and Social Security." Obama for America. Accessed November 11, 2008 at http://www.barackobama.com/

 

"In the midst of the 2005 debate over Social Security privatization, Obama gave a major speech at the National Press Club forcefully arguing against privatization. He also repeatedly voted against Republican amendments that aimed to privatize Social Security or cut benefits."

 

[141] Speech: "A Hope to Fulfill." Barack Obama, April 26th, 2005.

 

"I think we will save Social Security from privatization this year."

 

[142] Web page: "Reform Group." José Piñera, 2010. http://www.josepinera.com/pr/penref_refgroup.htm

 

Chile [1980] - Peru [1993] - Australia, Colombia [1994] - Uruguay [1996] - Mexico [1997] - Bolivia, El Salvador, Hungary, Kazhakstan [1998] - Hungary [1998] - Poland, Sweden [1999] - Hong Kong [2000] - Costa Rica, Latvia [2001] - Bulgaria, Croatia, Estonia, Russia [2002] - Dominican Rep., Kosovo [2003] - Korea, Lithuania [2004] - Nigeria, Slovakia [2005] - Macedonia [2006] - Romania [2008]

 

[143] Web page: "History: Frequently asked questions." United States Social Security Administration. Accessed August 31, 2014 at

http://www.ssa.gov/history/hfaq.html

 

Q21:  When did Social Security cards bear the legend "NOT FOR IDENTIFICATION"?

A:  The first Social Security cards were issued starting in 1936, they did not have this legend. Beginning with the sixth design version of the card, issued starting in 1946, SSA added a legend to the bottom of the card reading "FOR SOCIAL SECURITY PURPOSES -- NOT FOR IDENTIFICATION."

 

[144] Web page: "Social Security Number Chronology." United States Social Security Administration. Updated November 9, 2005. http://www.ssa.gov/history/ssn/ssnchron.html

 

1961

The Civil Service Commission adopted the SSN as an official Federal employee identifier.

 

Internal Revenue Code Amendments (P.L. 87-397) required each taxpayer to furnish identifying number for tax reporting.

 

1962

The Internal Revenue Service adopted the SSN as its official taxpayer identification number.

 

1964

Treasury Department, via internal policy, required buyers of Series H savings bonds to provide their SSNs.

 

1965

Internal Revenue Amendments (P.L. 89-384) enacted Medicare. It became necessary for most individual s age 65 and older to have an SSN.

 

1966

The Veterans Administration began to use the SSN as the hospital admissions number and for patient record keeping.

 

1969

The Department of Defense adopted the SSN in lieu of the military service number for identifying Armed Forces personnel.

 

1970

Bank Records and Foreign Transactions Act (P.L. 91-508) required all banks, savings and loan associations, credit unions and brokers/dealers in securities to obtain the SSNs of all of their customers. Also, financial institutions were required to file a report with the IRS, including the SSN of the customer, for any transaction involving more than $10,000.

 

[145] Web page: "History: Frequently asked questions." United States Social Security Administration. Accessed August 31, 2014 at

http://www.ssa.gov/history/hfaq.html

 

"Q21:  When did Social Security cards bear the legend "NOT FOR IDENTIFICATION"? A:  … The legend has not been on any new cards issued since 1972."

 

[146] Bill Summary and Status for Public Law 103-465: "Uruguay Round Agreements Act." 103rd Congress. Signed into law by Bill Clinton on December 8, 1994. http://www.gpo.gov/fdsys/pkg/BILLS-103hr5110enr/ …

 

[147] Public Law 103-465: "Uruguay Round Agreements Act." 103rd Congress. Signed into law by Bill Clinton on December 8, 1994. http://www.gpo.gov/fdsys/pkg/BILLS-103hr5110enr/ …

 

Section 742:

 

TAXPAYER IDENTIFICATION NUMBERS REQUIRED AT BIRTH.

(a) EARNED INCOME CREDIT- Clause (i) of section 32(c)(3)(D) is amended to read as follows:

(i) IN GENERAL- The requirements of this subparagraph are met if the taxpayer includes the name, age, and TIN of each qualifying child (without regard to this subparagraph) on the return of tax for the taxable year.

(b) DEPENDENCY EXEMPTION- Subsection (e) of section 6109 is amended to read as follows:

"(e) FURNISHING NUMBER FOR DEPENDENTS- Any taxpayer who claims an exemption under section 151 for any dependent on a return for any taxable year shall include on such return the identifying number (for purposes of this title) of such dependent."

(c) EFFECTIVE DATE-

(1) IN GENERAL- Except as provided in paragraph (2), the amendments made by this section shall apply to returns for taxable years beginning after December 31, 1994.

(2) EXCEPTION- The amendments made by this section shall not apply to--

(A) returns for taxable years beginning in 1995 with respect to individuals who are born after October 31, 1995, and

(B) returns for taxable years beginning in 1996 with respect to individuals who are born after November 30, 1996.

 

[148] Web page: "When am I legally required to provide my Social Security number?" United States Social Security Administration. Updated December 14, 2010. http://www.ssa.gov/

 

© 2014 Just Facts

Information provided by Just Facts is not legal or investment advice.

 

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