Where Do My Social Security Tax Dollars Go?
Many people wonder where their Social Security tax dollars go. Generally, out of every dollar you pay in Social Security taxes:
- 70 cents goes to a trust fund that pays monthly benefits to retirees and their families and to widows, widowers and children of workers who have died;
- 19 cents goes to a trust fund that pays for the health care of all Medicare beneficiaries; and
- 11 cents goes to a trust fund that pays benefits to people with disabilities and their families.
Your Social Security taxes also pay for administering Social Security. The administrative costs are paid from the trust funds described above and are less than one cent of every Social Security tax dollar collected.
Money not used to pay benefits and administrative expenses is invested. The U.S. government uses the money it has borrowed from Social Security – just as it uses money you may have invested in savings bonds – to pay for all the services and projects it provides for our citizens. And just as the government pays your interest on your bonds, so will it make good on its obligations to Social Security. You also need to know about Social Security’s financial stability. Each year, Social Security’s Board of Trustees reports on the financial status of the Social Security program.
These reports are valuable tools for evaluating and ensuring the economic health of the Social Security system. The latest report indicates that the Social Security system, as currently structured, will be able to pay benefits well into the next century. This means Congress has the time it needs to make changes to safeguard the program’s financial future.
Will Social Security Be Available When I Retire?
According to the Social Security Administration’s 2016 Annual Report, Social Security will be fully funded until 2034. After that, if additional investment is not made in the program, Social Security will be able to pay retirees 75 percent of scheduled benefits until 2090.
You can calculate your future Social Security earnings by visiting our Social Security Retirement Income Calculator. Enter wages, age and planned retirement age, for yourself and your spouse and see an estimate of how much income you can expect to receive when you retire.
In addition to predicting your future Social Security income, you should determine how much money you need to save within retirement accounts. Use our How Much Will I Need To Save For Retirement Calculator to determine your total savings goal.
American retirement savings data show that most people are not saving enough and have to put off retirement or forgo it completely. Make sure you get started now so you can enjoy your golden years.