For many baby boomers, it’s comforting to believe that part of the 12.4 percent Social Security payroll tax they — or they and their employer — have been paying is going into a $2.7 trillion Social Security Trust Fund designed specifically to ensure the tidal wave of boomers now retiring will be assured their benefits.
For those already on Social Security, the taxes they pay on a portion of their benefits has also been earmarked for the fund since 1983.
But the truth is, there is no trust fund. A number of elected officials, including former President George W. Bush, have acknowledged that.
We’re supposed to have $2.7 trillion in Social Security surplus, all earmarked for the baby boomers’ retirement, from money generated by amendments approved in 1983. But there’s no money in the fund.
Where did it go? Four administrations, from Reagan to George W. Bush, spent it on myriad non-Social Security efforts. Obama didn’t have a chance to use it – it was gone.
The 1983 amendments approved under Reagan generated revenue by accelerating Social Security payroll tax increases, allowing a portion of benefits to be taxed, and delaying cost-of-living adjustments from June to December.