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77-609: This is unlike Social Security Disability in the United States which is a federally funded program under the umbrella of an Old Age Pension but provides similar benefits — regardless of the state of residence. The ODSP is defined by provincial legislation, the ODSP Act, and its supporting regulations. It is managed through policy directives. Unlike Ontario Works, ODSP does not require recipients to undertake employment-related activities like job searching , or vocational training . This

154-510: A 3.6% rate in 2014) the program will run an overall surplus that adds to the fund through the end of 2019. Under current law, the securities in the Trust Fund represent a legal obligation the government must honor when program revenues are no longer sufficient to fully fund benefit payments. However, when the Trust Fund is used to cover program deficits in a given year, the Trust Fund balance is reduced. One projection scenario estimates that, by 2035,

231-570: A Benefits Calculators web page with several stand-alone online calculators that help individuals estimate their benefits and prepare for retirement. These include benefit calculators for spouses, calculators for persons affected by the Windfall Elimination Provision or the Government Pension Offset and calculators to determine a person's full retirement age or the effect of the earnings test on benefits. SSA also provides

308-659: A combination of social security payroll taxes paid by current workers and interest income earned by the Social Security Trust Fund. According to the projections of the Social Security Administration, the Trust Fund will continue to show net growth until 2022 because the interest generated by its bonds and the revenue from payroll taxes exceeds the amount needed to pay benefits. After 2022, without increases in Social Security taxes or cuts in benefits,

385-467: A higher rate of assistance and asset limits than Ontario Works does. The program is paid monthly to a "benefit unit" which can consist of a single person between 18 and 65 (or a senior citizen who is ineligible for Old Age Security or Canada Pension Plan ) and any others who may require the person's support. This can be any corresponding dependent adults who do not qualify for assistance (though they are subject to workfare requirements), children under

462-419: A legal obligation of the federal government to program beneficiaries. Under current law, when the program goes into an annual cash deficit, the government has to seek alternate funding beyond the payroll taxes dedicated to the program to cover the shortfall. This reduces the trust fund balance to the extent this occurs. The program deficits are expected to exhaust the fund by 2034. Thereafter, since Social Security

539-459: A life expectancy calculator to help with retirement planning. If a person first claims a retirement benefit at the full retirement age (FRA), the individual will receive a monthly benefit amount equal to 100 percent of the individual's primary insurance amount (PIA). If first claimed before the FRA, the monthly benefit amount is smaller than 100 percent of PIA and if claimed after the FRA the monthly amount

616-480: A prominent theme of his State of the Union Address . One consequence was increased public attention to the nature of the Social Security Trust Fund. Unlike a typical private pension plan, the Social Security Trust Fund does not hold any marketable assets to secure workers' paid-in contributions. Instead, it holds non-negotiable United States Treasury bonds and U.S. securities backed "by the full faith and credit of

693-450: A reduced monthly benefit amount and a worker who claims at an age after the full retirement age (up to age 70) receives an increased monthly amount. The 90, 32, and 15 percent factors in the PIA computation lead to higher replacement rates for persons with lower career earnings. For example, a retired individual whose average earnings are below the first bend point can receive a monthly benefit at

770-471: A replacement Social Security card or check the status of an application. A printed copy of the Social Security Statement is mailed to workers age 60 or older. In 2021, SSA began producing Retirement Ready fact sheets, available online and as part of the online Statement, that tailor retirement planning information to different age groups (young, middle age, and older workers). SSA also has

847-458: A timely basis. The amount of the monthly Social Security benefit to which a worker is entitled, currently depends upon the earnings record on which they have paid FICA or SECA taxes and upon the age at which the retiree chooses to begin receiving benefits. That said, the U.S. Supreme Court ruled in Flemming v. Nestor (1960) that no one has a contractual right to Social Security benefits. Medicare

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924-488: Is $ 168,600. Social Security is nearly universal, with 94 percent of individuals in paid employment in the United States working in covered employment. However, about 6.6 million state and local government workers in the United States, or 28 percent of all state and local workers, are not covered by Social Security but rather pension plans operated at the state or local level. Social Security payroll taxes are collected by

1001-513: Is a separate program from Social Security, although disabled and aged (65 or older) Social Security beneficiaries qualify for Medicare. The financing for Medicare (United States) is also based on payroll taxes, trust fund reserves, and the taxation of some Social Security benefits. Workers in Social Security covered employment pay FICA ( Federal Insurance Contributions Act ) or SECA (Self Employed Contributions Act) taxes and earn quarters of coverage if earnings are above minimum amounts specified in

1078-581: Is administered by the Social Security Administration (SSA). The Social Security Act was passed in 1935, and the existing version of the Act, as amended, encompasses several social welfare and social insurance programs. The average monthly Social Security benefit for September 2023 was $ 1,706. The total cost of the Social Security program for 2022 was $ 1.244 trillion or about 5.2 percent of U.S. gross domestic product (GDP). Social Security

1155-459: Is determined through a subjective evaluation of four criteria that are defined within the ODSP Act: For recipients wishing to work, an optional component provides employment support funding, such as referral to a specialized employment counsellor . ODSP is meant to replace the income lost due to the recipient's disability making them unable to work enough to gain self-sufficiency and thus has

1232-526: Is expected to peak in 2021 at approximately $ 3.0 trillion. If the parts of the budget outside of Social Security are in deficit, which the Congressional Budget Office and multiple budget expert panels assume for the foreseeable future, there are several implications: On the other hand, if other parts of the budget are in surplus and program recipients can be paid from the general fund, then no additional debt need be issued. However, this scenario

1309-479: Is funded primarily through payroll taxes called the Federal Insurance Contributions Act (FICA) or Self Employed Contributions Act (SECA). Wage and salary earnings from covered employment, up to an amount determined by law (see tax rate table), are subject to the Social Security payroll tax. Wage and salary earnings above this amount are not taxed. In 2024, the maximum amount of taxable earnings

1386-531: Is higher than 100 percent of PIA. Sometimes the full retirement age is referred to as the normal retirement age. Social Security Trust Fund The Federal Old-Age and Survivors Insurance Trust Fund and Federal Disability Insurance Trust Fund (collectively, the Social Security Trust Fund or Trust Funds ) are trust funds that provide for payment of Social Security (Old-Age, Survivors, and Disability Insurance; OASDI) benefits administered by

1463-413: Is highly unlikely. Some commentators believe that whether the trust fund is a fact or fiction comes down to whether the trust fund contributes to national savings or not. If $ 1 added to the fund increases national savings, or replaces borrowing from other lenders, by $ 1, the trust fund is real. If $ 1 added to the fund does not replace other borrowing or otherwise increase national savings, the trust fund

1540-475: Is lowering balances. Without legislative changes, trust fund reserves are projected to be depleted in 2033 for the OASI fund. Should depletion occur, incoming payroll tax and other revenue would be sufficient to pay 77 percent of OASI benefits starting in 2035. With few exceptions, all legal residents working in the United States have an individual Social Security Number . Social Security timeline A limited form of

1617-444: Is only authorized to pay beneficiaries what it collects in payroll taxes dedicated to the program, program payouts will fall by an estimated 21%. Gross federal debt consists of debt held by the public and debt issued to government accounts (for example, the Social Security trust funds). The latter type of debt does not directly affect the economy and has no net effect on the budget. — Congressional Budget Office The trust fund

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1694-420: Is required by law to be invested in non-marketable securities issued and guaranteed by the "full faith and credit" of the federal government. These securities earn a market rate of interest. Excess funds are used by the government for non-Social Security purposes, creating the obligations to the Social Security Administration and thus program recipients. However, Congress could cut these obligations by altering

1771-628: Is the Old-Age and Survivors Insurance (OASI) Trust Fund, which holds in trust special interest-bearing federal government securities bought with surplus OASI payroll tax revenues. The second, smaller fund is the Disability Insurance (DI) Trust Fund, which holds in trust more of the special interest-bearing federal government securities, bought with surplus DI payroll tax revenues. The trust funds are "off-budget" and treated separately in certain ways from other federal spending, and other trust funds of

1848-473: The Federal Reserve ), to investigate what additional changes to federal law were necessary to shore up the fiscal health of the Social Security program. The Greenspan Commission projected that the system would be solvent for the entirety of its 75-year forecast period with certain recommendations. The changes to federal law enacted in 1983 and signed by President Reagan and pursuant to the recommendations of

1925-585: The U.S. Treasury Department announced that the Old-Age and Survivors Trust Fund was projected to be able to pay scheduled benefits until 2033 while the Disability Insurance Trust Fund was projected to be able to pay its benefits through 2057 (and through 2034 when the funds were hypothetically combined), 1 year and 8 years earlier respectively than the previous report found. In June 2022, the Treasury Department issued an updated report for

2002-456: The "full faith and credit" of the U.S. government. To escape paying either principal or interest on the "special" bonds held by the trust funds, the government would have to default on these obligations. This cannot be done by executive order or by the Social Security Administration. Congress would have to pass legislation to repudiate these particular government bonds. This action by Congress could involve some political risk and, because it involves

2079-426: The 90% multiplier in the first PIA bendpoint to 40–85% depending on the number of Years of Coverage. Foreign pensions are subject to WEP. A special minimum benefit, based on an alternative PIA calculation, is available for some workers with long careers but low earnings. However, it is rarely higher than the regularly computed PIA and thus few workers qualify for the special minimum benefit. 32,000 individuals received

2156-596: The 95th Congress increased the FICA tax to fund Social Security, phased in gradually into the 1980s. In the early 1980s, financial projections of the Social Security Administration indicated near-term revenue from payroll taxes would not be sufficient to fully fund near-term benefits (thus raising the possibility of benefit cuts). The federal government appointed the National Commission on Social Security Reform , headed by Alan Greenspan (who had not yet been named Chairman of

2233-551: The Fund is projected to decrease each year until being fully exhausted in 2034. At this point, if legislative action is not taken, the benefits would be reduced. The 2015 Trustees Report Press Release (which covered 2014 statistics) stated: Some basic equations for understanding the fund balance include: "Program revenues" has several components, including payroll tax contributions, taxation of benefits, and an accounting entry to reflect recent payroll tax cuts during 2011 and 2012, to make

2310-569: The Government's ability to pay benefits. Other public officials have argued that the trust funds do have financial or moral value, similar to the value of any other Treasury bill, note or bond. This confidence stems largely from the "full faith and credit" guarantee. "If one believes that the trust fund assets are worthless," argued former Representative Bill Archer, then similar reasoning implies that "Americans who have bought EE savings bonds should go home and burn them because they're worthless because

2387-526: The Greenspan Commission advanced the time frame for previously scheduled payroll tax increases (though it raised slightly the payroll tax for the self-employed to equal the employer-employee rate), changed certain benefit calculations, and raised the retirement age to 67 by the year 2027. As of the end of calendar year 2010, the accumulated surplus in the Social Security Trust Fund stood at just over $ 2.6 trillion. Social Security benefits are paid from

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2464-471: The ODSP provides health-related benefits to assist recipients with their medical needs. These include: Social Security (United States)#Disability Bowles–Simpson Commission 2007–2008 financial crisis 2013 budget sequestration Related events In the United States , Social Security is the commonly used term for the federal Old-Age, Survivors, and Disability Insurance ( OASDI ) program and

2541-509: The Old-Age and Survivors Insurance and Disability Insurance Trust Funds with revised projections for their ability to pay scheduled benefits to 2034 and 2057 respectively and by 2035 when hypothetically combined due to accelerated recovery from the COVID-19 recession . In March 2023, the Treasury Department issued the annual trustees report for the Old-Age and Survivors Insurance and Disability Insurance Trust Funds with depletion date projections for

2618-431: The PIA. Once the PIA is computed, it is indexed for price inflation over time. Thus, Social Security monthly benefit amounts retain their purchasing power throughout a person's retirement years. A worker who first starts receiving a retirement benefit at the full retirement age receives a monthly benefit amount equal to 100 percent of the PIA. A worker who claims the retirement benefit before the full retirement age receives

2695-558: The PIAs of a spouse or a deceased spouse. Aged spouse and divorced spouse beneficiaries can receive up to 50 percent of the PIA. Survivor benefit rates are higher and aged widow(er)s and aged surviving divorced spouses can receive 100 percent of the PIA. Federal, state and local employees who have elected (when they could) NOT to pay FICA taxes are eligible for a reduced FICA benefits and full Medicare coverage if they have more than forty quarters of qualifying Social Security covered work. To minimize

2772-587: The Penn Wharton Budget Model (University of Pennsylvania) projected depletion in 2032–2034, depending on the shape of the economic recovery in the U.S. following the COVID-19 pandemic. With regard to actuarial balance, the Social Security Trustees estimate a 75-year actuarial deficit of 3.61 percent of payroll. This is approximately the total payroll tax increase that would be necessary to keep

2849-970: The Social Security Act are: The SSA administers two of these programs (OASDI and SSI). The Social Security program in the United States pays benefits to three broad categories of individuals: retired individuals and some family members, disabled persons and some family members, and survivors. Within these broad categories, the program defines more specific types of beneficiaries. For example, spouses and divorced spouses are distinct categories, with somewhat different eligibility requirements. Survivor benefits include several categories including aged widow(er)s, aged surviving divorced spouses, disabled widow(er)s, disabled surviving divorced spouses, paternal and maternal orphans, and widow(er)s caring for minor or disabled children. As of 2023, there were about 66.8 million individuals receiving Social Security benefits. Individuals receiving Retirement Insurance Benefits constitute

2926-425: The Social Security Statement. The Statement can be accessed online by opening an online account with SSA called my Social Security . With that account, workers can also construct "what if" scenarios, helping them to understand the effect on monthly benefits if they work additional years or delay the start of retirement benefits. The my Social Security account also offers other services, allowing individuals to request

3003-422: The Social Security payments to those who have not contributed to FICA for 35+ years and are eligible for federal, state and local benefits, which are usually more generous, the U.S. Congress passed the Windfall Elimination Provision (WEP). The WEP provision does not eliminate all Social Security or Medicare eligibility if the worker has 40 quarters of qualifying income, but calculates the benefit payments by reducing

3080-466: The Social Security program began, during President Franklin D. Roosevelt's first term, as a measure to implement " social insurance " during the Great Depression of the 1930s. The Act was an attempt to limit unforeseen and unprepared-for dangers in modern life, including old age, disability, poverty, unemployment, and the burdens of widow(er)s with and without children. Opponents, however, decried

3157-549: The Trust Fund could be exhausted. Thereafter, payroll taxes are projected to only cover approximately 83% of program obligations. There have been various proposals to address this shortfall, including: reducing government expenditures, such as by raising the retirement age; tax increases; investment diversification and, borrowing. The "Social Security Trust Fund" comprises two separate funds that hold federal government debt obligations related to what are traditionally thought of as Social Security benefits. The larger of these funds

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3234-593: The Trust Fund: Some in our country think that Social Security is a trust fund – in other words, there's a pile of money being accumulated. That's just simply not true. The money – payroll taxes going into the Social Security are spent. They're spent on benefits and they're spent on government programs. There is no trust. These comments were criticized as "lay[ing] the groundwork for defaulting on almost two trillion dollars' worth of US Treasury bonds". However, even right-leaning politicians have been inconsistent with

3311-586: The U.S. government". The trust funds have been invested primarily in non-marketable Treasury debt, first, because the Social Security Act prohibits "prefunding" by investment in equities or corporate bonds and, second, because of a general desire to avoid large swings in the Treasuries market that would otherwise result if Social Security invested large sums of payroll tax receipts in marketable government bonds or redeemed these marketable government bonds to pay benefits. The Office of Management and Budget has described

3388-502: The United States Social Security Administration . The Social Security Administration collects payroll taxes and uses the money collected to pay Old-Age, Survivors, and Disability Insurance benefits by way of trust funds. When the program runs a surplus, the excess funds increase the value of the Trust Fund. As of 2021, the Trust Fund contained (or alternatively, was owed) $ 2.908 trillion. The Trust Fund

3465-582: The budget of the United States Government as submitted by the President, (2) the congressional budget, or (3) the Balanced Budget and Emergency Deficit Control Act of 1985. The trust funds run surpluses in that the amount paid in by current workers is more than the amount paid out to current beneficiaries. These surpluses are invested in special U.S. government securities, which are deposited into

3542-416: The combined programs together (OASI and DI) and focus on key measures such as trust fund depletion date, actuarial balance over a 75-year period, and comparisons of program costs to U.S. GDP. Regarding trust fund depletion, the Social Security Trustees in 2024, based on technical work by the Social Security Administration's actuaries, project the combined OASDI trust fund will be depleted in 2035. In 2021,

3619-642: The depletion date of the combined funds would be in 2037, and the 2020 annual report estimated the depletion date of the combined funds would be in 2035. In a survey of 210 members of the American Economics Association published in November 2006, 85 percent agreed with the statement: "The gap between Social Security funds and expenditures will become unsustainably large within the next fifty years if current policies remain unchanged." On February 2, 2005, President George W. Bush made Social Security

3696-600: The distinction as follows: These [Trust Fund] balances are available to finance future benefit payments and other Trust Fund expenditures – but only in a bookkeeping sense.... 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

3773-458: The federal Internal Revenue Service (IRS) and are formally entrusted to the Federal Old-Age and Survivors Insurance (OASI) Trust Fund and the federal Disability Insurance (DI) Trust Fund, the two Social Security Trust Funds . Social Security revenues exceeded expenditures between 1983 and 2009 which increased trust fund balances. The retirement of the large baby-boom generation however,

3850-585: The federal government. From the U.S. Code: EXCLUSION OF SOCIAL SECURITY FROM ALL BUDGETS Pub. L.   101–508 , title XIII, Sec. 13301(a), Nov. 5, 1990, 104  Stat.   1388-623 , provided that: Notwithstanding any other provision of law, the receipts and disbursements of the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund shall not be counted as new budget authority, outlays, receipts, or deficit or surplus for purposes of - (1)

3927-464: The financial security of older Americans, seems unlikely. An alternative to repudiating these bonds would be for Congress to simply cap Social Security spending at a level below that which would require the bonds to be redeemed. Again, this would be politically risky, but would not require a "default" on the bonds. From the point of view of the Social Security trust funds, the holdings of "special" government bonds are an investment that returned 5.5% to

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4004-424: The first $ 1,174 of average indexed monthly earnings, plus (b) 32 percent of average indexed monthly earnings between $ 1,174 and $ 7,078, plus (c) 15 percent of average indexed monthly earnings over $ 7,078 For workers who turn 62 in the future, the 90, 32, and 15 percent factors in the computation formula will remain the same but the dollar amounts in the formula (called bend points) will increase by wage growth in

4081-520: The following to fill seats on the board. They await Senate confirmation. The Board of Trustees holds the trust funds. The Managing Trustee is responsible for investing the funds, which has been delegated to the Bureau of the Fiscal Service . The Social Security system is primarily a pay-as-you-go system, meaning that payments to current retirees come from current payments into the system. The program

4158-516: The full retirement age that equals 90 percent of the person's average monthly earnings before retirement. The table shows replacement rates for workers who turned 62 in 2013. The PIA computation formula for disabled workers parallels that for retired workers except the AIME is based on fewer years to reflect disablement before age 62. The monthly benefit amount of a disabled worker is 100 percent of PIA. Benefits for spouses, children, and widow(er)s depend on

4235-771: The full spouse benefit for which they qualify. In addition, Social Security beneficiaries with low income and limited resources may qualify for additional income through the Supplemental Security Income (SSI) program. SSI is separate from the Social Security program, but it is administered by SSA. In 2022, 2.5 million Social Security beneficiaries received additional income through SSI. Social Security payments to beneficiaries, which totaled $ 1.23 trillion in 2022, are generally financed by payroll taxes on workers in Social Security covered employment, trust fund reserves, and income taxation of some Social Security benefits. The payroll tax rate totals 12.4 percent of earnings up to

4312-534: The fund "whole" as if these tax cuts had not occurred. These all add to the program revenues. During 2016, the initial balance as of January 1 was $ 2,780 billion. An additional $ 710 billion in payroll tax revenue and $ 87 billion in interest added to the Fund during 2016, while expenses of $ 776 billion were removed from the Fund, for a December 31, 2016 balance of $ 2,801 billion (i.e., $ 2,780 + $ 710 + $ 87 - $ 776 = $ 2,801). In an annually issued report released in August 2021,

4389-406: The funds estimated at 2033 and 2097 respectively and by 2034 when combined. In May 2024, the annual trustees report was released with depletion date projections for the funds estimated at 2033 and 2098 respectively and by 2035 when combined. The 1990 board of trustees annual report estimated the depletion date of the combined funds would be in 2043, the 2000 and 2010 annual reports estimated

4466-471: The individual's care, or a spouse. The ODSP benefit has two main components: a fixed basic needs allowance, and an amount for housing that is variable. For those who do not have independent cooking facilities and/or cannot provide grocery receipts, a "Board and Lodging" amount is provided instead. All costs are verified through submitted receipts and information sharing among other government agencies. In addition to employment supports and financial assistance,

4543-443: The language they use when referencing Social Security. For example, Bush has referred to the system going "broke" in 2042. That date arises from the anticipated depletion of the Trust Fund, so Bush's language "seem[s] to suggest that there's something there that goes away in 2042." Specifically, in 2042 and for many decades thereafter, the Social Security system can continue to pay benefits, but benefit payments will be constrained by

4620-494: The largest group of beneficiaries, with 52.4 million retired workers or family members receiving monthly payments. Social Security Disability Insurance benefits were paid to 7.4 million disabled workers and 1.2 million dependents (children and spouses). About 5.8 million individuals, including 2 million children, received some type of survivor benefit from Social Security. Some individuals qualify for more than one type of benefit, but program rules on dual entitlement generally prevent

4697-551: The law. Trust Fund obligations are considered "intra-governmental" debt, a component of the "public" or "national" debt. As of December 2022 (estimated), the intragovernmental debt was $ 6.18 trillion of the $ 31.4 trillion national debt. Of this $ 6.18 trillion, $ 2.7 trillion is an obligation to the Social Security Administration. According to the Social Security Trustees, who oversee the program and report on its financial condition, program costs are expected to exceed non-interest income from 2010 onward. However, due to interest (earned at

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4774-427: The law. Workers with 40 quarters of coverage (QC) are "fully insured" and eligible for retirement benefits. Retirement benefit amounts depend upon the average of the person's highest 35 years of "adjusted [for inflation]" or "indexed [for inflation]" earnings. A person's payroll-taxable earnings from earlier years are adjusted for economy-wide wage growth, using the national average wage index (AWI), and then averaged. If

4851-463: The money has already been spent." At a Senate hearing in July 2001, Federal Reserve Chairman Alan Greenspan was asked whether the trust fund investments are "real" or merely an accounting device. He responded, "The crucial question: Are they ultimate claims on real resources? And the answer is yes." Like other U.S. government debt obligations, the government bonds held by the trust funds are guaranteed by

4928-466: The national economy, as measured by the AWI. Because the AIME and the PIA calculation incorporate the AWI, Social Security benefits are said to be wage indexed. Because wages typically grow faster than prices, the PIAs for workers turning 62 in the future will tend to be higher in real terms but similar relative to average earnings in the economy at the time age 62 is attained. Monthly benefit amounts are based on

5005-468: The past, legislation has been enacted to prevent trust fund depletion. Should the trust funds be depleted, Social Security would still have revenue coming into the system from payroll taxes. The Social Security trustees estimate that revenue would be sufficient to pay 77 percent of the program's benefits. There has been debate about a trust fund depletion scenario regarding whether monthly benefits would be lowered or whether full amounts would be paid but not on

5082-423: The payment of two full benefits. For example, a person eligible for a retirement benefit and a higher spouse benefit will receive the full retirement benefit and a partial spouse benefit. The dual entitlement rules disproportionately affect women (7 million women in 2022 ) because historically they have earned less than current or former husbands and this leads to retirement benefits for women that are often lower than

5159-590: The poor, dependent children, spouses, survivors and the disabled. Poor farms were common in the US before Social Security took effect, then most disappeared by about 1950. By 1950, debates moved away from which occupational groups should be included to get enough taxpayers to fund Social Security to how to provide more benefits. Changes in Social Security have reflected a balance between promoting "equality" and efforts to provide "adequate" and affordable protection for low wage workers. The larger and better known programs under

5236-412: The proposal as socialism. Secretary of Labor Frances Perkins wrote that during a Senate Finance Committee hearing, Senator Thomas Gore (D-OK) asked "Isn't this Socialism?" She replied that it was not, but he continued, "Isn't this a teeny-weeny bit of Socialism?" The provisions of Social Security have been changing since the 1930s, shifting in response to economic worries as well as coverage for

5313-467: The reduction in the employees' share of payroll taxes from 6.2% to 4.2% of compensation. The resulting shortfall was appropriated from the general Government funds. This increased public debt, but did not advance the year of depletion of the Trust Fund. Joe Biden's campaign platform proposed new payroll taxes for those making $ 400,000 or more per year (but after taking office, his tax proposal included only Medicare tax changes). The Trust Fund represents

5390-401: The revenue base from the 12.4% FICA (Social Security payroll) tax on wages. According to the Social Security trustees, continuing payroll tax revenues at the rate of 12.4% will enable Social Security to pay about 74% of promised benefits during the 2040s, with this ratio falling to about 70% by the end of the forecast period in 2080. In 2011 and 2012, the federal government temporarily extended

5467-404: The special minimum benefit in 2019. The benefits someone is eligible for are potentially so complicated that potential retirees should consult the Social Security Administration directly for advice. Many questions are addressed and at least partially answered on many online publications and online calculators. The Social Security Administration (SSA) provides benefit estimates to workers through

5544-467: The system solvent for 75 years. The figure is designed to illustrate the size of the deficit. Legislation could close the deficit in ways other than raising the payroll tax rate. Because taxable earnings are a fraction of GDP, sometimes the system's finances are put into context by using GDP. Social Security's cost are currently 5.2 percent of U.S. GDP. Program costs will rise to 6.3 percent of GDP by 2076, and then decline to 6.0 percent of GDP by 2097. In

5621-692: The taxable maximum (the rate is 6.2 percent from workers and 6.2 percent from employers and 12.4 percent from the self-employed). The OASI Trust Fund and the DI Trust Fund are legally separate. For employees and employers combined, the OASI payroll taxes are 10.6 percent and the DI payroll taxes are 1.8 percent. In 2022, trust fund reserves for the OASI and DI programs were $ 2.7 trillion and $ 118 billion, respectively. Income taxation of some Social Security benefits brought in $ 47.1 billion for OASI and $ 1.6 billion for DI in 2022. Assessments of system financing often focus on

5698-449: The trust funds in 2005. The trust funds cannot resell these "special" government bonds on the secondary bond market, although the interest rate is determined based on market interest rates. Instead, the "specials" can be sold back to the government at face value, which is an advantage when interest rates are rising. The week after his State of the Union speech, Bush downplayed the importance of

5775-457: The trust funds. If the trust funds begin running deficits, meaning more in benefits are paid out than contributions paid in, the Social Security Administration is empowered to redeem the securities and use those funds to cover the deficit. The Board of Trustees of the Trust Funds is composed of six members: The current board members as of September 24, 2024: President Biden has nominated

5852-517: The worker has fewer than 35 years of covered earnings, these non-contributory years are assigned zero earnings. The sum of the highest 35 years of adjusted or indexed earnings divided by 420 (35 years times 12 months per year) produces a person's Average Indexed Monthly Earnings or AIME. The AIME is then used to calculate the Primary Insurance Amount (PIA). For workers who turn 62 in 2024, the PIA computation formula is: (a) 90 percent of

5929-488: Was initially established in 1935 in response to the Great Depression. The first to file for Social Security was Ida Mae Fuller in 1940. Fuller paid $ 24.75 in taxes during her three years working under the social security program, and drew an aggregate of $ 22,889 in benefits before passing at age 100. This represents a ratio of $ 925 in benefits for every dollar she paid into the program. In 1977, President Jimmy Carter and

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