Misconceptions About Social Security

With political debates heating up, it is time to put to rest some myths about the Social Security program. We commonly hear that the trust fund will run out of money; that the trust fund has been raided by this or that politician; that individuals have a right to everything they paid in; or that current benefits will be cut. None of these are true. Let’s examine the program in more detail:

Social Security is made up of financial accounts kept at the US Treasury. Our taxes are paid into these funds along with interest earned from the securities owned by the program, and benefits are paid out. By law, the fund monies can only be used for benefits. No politician has ever “raided” the SS trust funds. The US government routinely borrows against the fund by selling it securities. But this is no different from an investor buying a Treasury note: the government is in that case borrowing from you, and you are repaid both interest and principal.

The fund works much like a corporate pension fund, taking in money while at the same time paying out money for benefits. It is a “pay as you go” system: young workers pay retirees’ benefits. SS was never designed to keep track of individual payments into the plan so those could be returned to you; it is a social safety net. It replaces more income for low income workers and less income for high earners. Actuarial calculations gauge how healthy the funding ratio is: SSA knows roughly who it will pay out to and for how long, and who is paying in. Currently, there is a surplus in the old age trust fund, but that is expected to disappear by 2035. The disability trust fund is fully funded and over a 75 year horizon will continue to have a surplus.

When the old age trust fund surplus runs out, there will still be enough money to pay all benefits at 80% of current levels. The fact that the benefit level does not match the current level is not due to any political party, law, or other nefarious behavior – in fact, Congress has taken action in the last few years to ease the funding situation for the trust fund and make it last longer. The real reason the trust fund surplus is declining is because people are living longer and drawing more from SS, and the retiring Baby Boom generation is one of the largest population cohorts this country has ever seen, while at the same time, there are fewer young workers who are paying into the system. This is a demographic and mathematical problem, and it will not go away until politicians decide to do something about it. Maintaining the safety net requires that taxes rise; benefits be means tested; retirement age be increased; or the cost of living adjustment be altered; or some combination of these. Declaring SS “off the table” is akin to subtracting from the retirement safety net that many depend on.

For further information, please see the following resources:

“10 Social Security Myths That Refuse to Die”, at this link:


“Actuarial Status of the Social Security Trust Funds”, at this link:


“Top Ten Facts about Social Security”, at this link: