Discussion about the future of Social Security and the trust funds are often part of my classes. While I cannot predict the legislative future, the Social Security website, www.socialsecurity.gov, has an entire section devoted to the trust funds located in the Solvency section or directly here.
Two separate trust funds exist, with each started to address different parts of Social Security near the time they were enacted. They are the Old Age and Survivors Insurance (OASI) Trust Fund established in 1937, and the Disability (DI) Trust Fund established in 1957.
Payroll tax paid by employees, employers and the self-employed are divided between these two trust funds. Since 2000, employees and employers each pay a combined Social Security and Medicare tax rate of 7.65 percent, with the self-employed paying both portions, of which 6.20 percent helps fund Social Security. Of this 6.20 percent, 5.3 percent goes to the Old Age and Survivors Insurance (OASI) Trust Fund and .90 percent to the Disability (DI) Trust Fund. Historical Social Security tax rates are here. In 2015, the maximum amount of taxable earnings for Social Security is $118,500. There is no maximum for Medicare.
Both trust funds are managed by the Department of the Treasury. Since they are for different purposes, the two funds are managed separately. You can read about transactions, holdings and interest rates of each fund on the Trust Fund data webpages.
Just available online, the newest Social Security bulletin, Social Security Bulletin, Vol. 75 No. 1, contains an interesting article about the trust funds.
This online article, “Social Security Trust Fund Cash Flows and Reserves,” by David Pattison, shares a lot of trust fund information, especially in relationship to the overall federal budget. Mr. Pattison is an economist in a research component of the Social Security Administration.
I found much of the article interesting. You might too. Consider reading at least the following sections:
Are the Trust Fund Reserves Assets? Is Interest on Trust Fund Reserves Income?
Level-Tax Financing and the Trust Fund Reserve Buildup