Where Is The Money?

Let’s start this discussion with an excerpt from the
Status of the Social Security and Medicare Programs
directly from the Social Security Website's 1012 annual report.
Our comments will be added in red

What Were the Trust Fund Results in 2011? Trust fund operations, in billions of dollars, are shown below. (Totals may not add due to rounding.) The OASI and SMI Trust Funds each showed a net increase in assets in 2011; DI and HI Trust Fund assets declined.

(in billions of dollars)	Old Age and Survivor Insurance OASI	Disability Insurance DI	Medicare Hospital Insurance HI	Supplementary Medical Insurance SMI
Assets (end of 2010)	$2,429.0	$179.9	$271.9	$72.1
Income during 2011	698.8	106.3	228.9	301.0
Where did the money come from?	6.2% payroll tax up to withholding limit		1.45% Medicare Payroll Tax no limit	Medicare Supplemental Insurance Premiums
Percent of 6.2% in	5.28%	0.82%
Percent of 6.2% out	5.09%	1.11%
Outgo during 2011	603.8	132.3	256.7	292.5
Percent of outgo	82.03%	17.97%
Net increase in assets	95.0	-26.1	-27.7	8.6
Assets (end of 2011)	2,524.1	153.9	244.2	80.7

What Were the Components of Trust Funds Outlays in 2011? The following table shows payments, by category, from each trust fund in 2011 (totals may not add due to rounding).

Category (in billions)	OASI	DI	HI	SMI
Benefit payments	$596.2	$128.9	$252.9	$288.5
Railroad Retirement financial interchange	4.1	0.5	—	—
Administrative expenses	3.5	2.9	3.8	4.0
Total	603.8	132.3	256.7	292.5

What Were the Sources of Income to the Trust Funds in 2011? The following table shows income, by source, to each trust fund in 2011 (totals may not add due to rounding)

Source (in billions)	OASI	DI	HI	SMI
Payroll taxes	$482.4	$81.9	$195.6	—
Taxes on benefits	22.2	1.6	15.1	—
Beneficiary premiums	—	—	3.5	65.4
Transfers from States	—	—	—	7.1
General Fund reimbursements	87.8	14.9	0.5	—
General revenues	—	—	—	$222.8
Interest earnings	106.5	7.9	12.0	3.2
Other	^a	—	2.2	2.5
Total	698.8	106.3	228.9	301.0

^a Less than $50 million.

OK, back to our discussion!

The "General Fund reimbursements" in the third table represent the federal government repaying the Social Security Trust Fund back for the approximate loss from the 2% tax holiday in our OASDI withholdings.

Let’s take a look at the second table for a minute to see what the current percentages are. If we add RR to the normal benefits, the system pays out $600.3 billion to standard benefits and $129.4 to Disability, plus 6.4 billion in total expenses. 81.55% of the OASDI tax goes to retirement benefits, 17.58% goes to disability, and only 0.87% goes to administrative costs.

To refresh your memory, on the previous "The Fix" page we suggested that the 12.4% tax collected should be split up 10% to benefits (SSB) and 2.4% to Other Programs (SIP). That is an 80.65% to 19.35% split and very close to the actual costs indicated in this report

Year Published	2012	2011	2010	2009	2008	2007	2006
Assets (start of year)	$2,429.0	$2,336.8	$2,202.9	$2,023.6	$1,844.3	$1,663.0	$1,500.6
Income during year	$698.8	$677.1	$698.2	$695.5	$675.0	$642.2	$604.3
Outgo during year	$603.8	$584.9	$564.3	$516.2	$495.7	$461.0	$441.9
Net increase in assets	$95.0	$92.2	$133.9	$179.3	$179.3	$181.3	$162.4
Assets (end of year)	$2,524.1	$2,429.0	$2,336.8	$2,202.9	$2,023.6	$1,844.3	$1,663.0

The complete reports from 1997 to 2012 are available at www.ssa.gov.oact/tr/.

The baby boom generation represents Americans born from 1946, right after the end of WWII, to 1964. Those born in 1946 reached the early retire age of 62 in 2008. The 2010 annual report starts with the assets at the end of 2008 and covers the income and expenses of the fiscal year 2009. The significant drop in net increase in assets from 2010 to 2012 is most likely related to two factors: the leading edge of the baby boomers were forced into early retirement by the downturn in the economy, and the higher unemployment rates also meant that less people were contributing to the system.

Next - Implementing a new system