Current law requires that all Social Security payroll taxes be set aside exclusively for the program’s obligations (paying benefits and administering the program). Any surplus monies are put in the trust funds (Disability Insurance Trust Fund and Old-Age and Survivors Insurance Trust Fund). Surplus funds are invested in special-issue Treasury bonds guaranteed by the full faith and creditTax credits directly reduce the amount of taxes owed. of the US government. Regardless of how these funds are used (e.g., for debt The amount of money owed by the government, which is the accumulation of all prior annual deficits. reduction or to help fund other government programs), there is no impact on the trust funds’ solvency. They still hold the same amount of Treasury securities. This obligates the federal government to pay the trust funds, enabling them to pay future benefits (for more on Social Security and the budget, see Chapter 2, Budget and the Economy).
Social Security will require some adjustments to ensure that promised benefits continue to be paid in full in the future. Most experts agree that if changes are made sooner rather than later, they can be more modest and those affected will have more time to amend their financial plans. The 2016 Social Security board of trustees’ report, in its intermediate estimates, projected that without any change in current law the assets of the Social Security trust funds will continue to grow until the beginning of 2019. (The assets of the Old Age, Survivors, and Disability Insurance Trust Funds had grown to more than $2.8 trillion by the end of 2015.) The report also found that the combined trust fund assets, along with accrued interest, will be sufficient to continue paying full benefits on time until 2034 and about 79 percent of current benefits for decades thereafter. The Congressional Budget Office, using somewhat different assumptions and methodology, found that Social Security will have sufficient funds to continue paying full benefits on time through 2034
The Trust Funds: Policy
Trust funds reserves
The Old-Age, Survivors, and Disability Insurance Trust Funds should maintain a minimum reserve of one and a half to two years as a cushion against an economic downturn.