As we work from day to day, we pay a portion of our earnings to the federal government for Social Security taxes. 85 cents of every Social Security tax dollar is deposited into a trust fund that pays monthly benefits to current retirees and their families, as well as surviving spouses and children. The remaining 15 cents is deposited into a trust fund that pays benefits to individuals with disabilities, as well as their families. These trust funds also provide for the payment of the management costs of the Social Security programs. Of each Social Security tax dollar paid, The Social Security Administration (SSA) expends less than one cent for the management costs of the program.
These taxes are part of the FICA tax, or the Federal Insurance Contributions Act tax, which is a set of payroll taxes that are collected equally from both an employer and employee. With the exception of federal and state income taxes, FICA taxes account for the majority of other taxes regularly taken out of an employee’s paycheck. These taxes may exceed the cost of current benefits, which allows this money to be invested to pay for future benefits, as well as allowing the federal government to borrow against the surplus to fund other government programs.
Thus, any funds not used to pay benefits and administrative expenses may be invested by the U.S. government, which uses these funds to pay for federal services and projects. Under federal law, the funds are invested in special-issue Treasury securities that earn interest. Thus, these funds are loaned to the Treasury, which borrows the money as it borrows money when it sells Treasury securities to the public.
The trust funds are managed by a Board of Trustees consisting of the Secretary of the Treasury, who is the managing trustee, the Secretaries of Labor and of Health and Human Services, the Commissioner of Social Security, and two public trustees from both political parties who are appointed by the President and confirmed by the Senate. This Board of Trustees annually issues a report regarding the financial status of the Social Security program. These reports are essential in evaluating the economic stability of the Social Security system. The most current report indicates that the Social Security system will be fully funded until 2034.
If you have questions about the receipt of disability benefits, contact the Sullivan Law Office today by calling 888-587-0228 or visiting us online! One of the best ways to make sure you understand all of your options associated with applying for disability benefits is to retain the services of an experienced, knowledgeable, and qualified Kentucky Social Security Disability attorney. Contact Sullivan Law Office today. We offer free consultations, so there is absolutely nothing to lose! We look forward to hearing from you.