Social Security trust fund

[milkalove]

Hi everyone,
Who can explain to me what the Social Security trust fund in the US is?
I'm reading an article about identity theft referring to that fund.

Thanks a lot!

C.

 

[languageGuy]

In the US, throughout your working life, you pay social security taxes which go into a trust fund. This money you later collect after you retire and reach age 63 (about). If someone stole your identity, I guess they could claim your retirement funds.

 

[jinti]

You might want to take a look at http://en.wikipedia.org/wiki/Social_Security_Trust_Fund

 

[milkalove]

Thank you!

 

[JamesM]

In the US, throughout your working life, you pay social security taxes which go into a trust fund. This money you later collect after you retire and reach age 63 (about). If someone stole your identity, I guess they could claim your retirement funds.

Just a note.. this is a common misconception in the U.S. Actually, our Social Security taxes go to pay the retirement benefits of others. It is not a trust fund or savings account. It is a tax. People are living much longer than originally expected, so on average they collect more than they ever put in.

 

[cuchuflete]

Just a note.. this is a common misconception in the U.S. Actually, our Social Security taxes go to pay the retirement benefits of others. It is not a trust fund or savings account. It is a tax. People are living much longer than originally expected, so on average they collect more than they ever put in.

Misconceptions piled on misconceptions...A lot depends on interpretation. Payments into the fund are not deductable from income for tax purposes, so they are, as James has said, a tax, and in effect, a double tax. Payments of Social Security are taxed. Thus a participant is taxed on the same income at least twice. Finally, if a participant were to manage their own funds, even at an easily available modest rate of return, they would get far more back than the average person gets from Social Security.
I have seen many statement in print that say that on an inflation-adjusted basis, people get back far less than they put in. This is not a certainty. There is much debate on the topic.

 

[languageGuy]

Just a note.. this is a common misconception in the U.S. Actually, our Social Security taxes go to pay the retirement benefits of others. It is not a trust fund or savings account. It is a tax. People are living much longer than originally expected, so on average they collect more than they ever put in.

Please don't attribute this misconception to me. Maybe I was not clear, but I do understand. This is not a personal trust fund; it is a public one. Those who contribute to it are entitled to benefit from it. Just how much is based on many factors, one of which is how much you put in to it. It is these benefits which may be stolen using identity theft.