Editing Social Security (United States) (section)

=== System financing ===
Social Security payments to beneficiaries, which totaled $1.23 trillion in 2022, are generally financed by payroll taxes on workers in Social Security covered employment, trust fund reserves, and income taxation of some Social Security benefits. The payroll tax rate totals 12.4 percent of earnings up to the taxable maximum (the rate is 6.2 percent from workers and 6.2 percent from employers and 12.4 percent from the self-employed).

The OASI Trust Fund and the DI Trust Fund are legally separate. For employees and employers combined, the OASI payroll taxes are 10.6 percent and the DI payroll taxes are 1.8 percent. In 2022, trust fund reserves for the OASI and DI programs were $2.7 trillion and $118 billion, respectively. Income taxation of some Social Security benefits brought in $47.1 billion for OASI and $1.6 billion for DI in 2022.<ref name="2023Report" />

Assessments of system financing often focus on the combined programs together (OASI and DI) and focus on key measures such as trust fund depletion date, actuarial balance over a 75-year period, and comparisons of program costs to U.S. GDP.

Regarding trust fund depletion, the Social Security Trustees in 2024, based on technical work by the Social Security Administration's actuaries, project the combined OASDI trust fund will be depleted in 2035.<ref name="Konish 2024" /><ref name="Duehren 2024" /><ref name="Hinkle 2024" /><ref name="SSA annual report 2024 p. 6" /> In 2021, the Penn Wharton Budget Model (University of Pennsylvania) projected depletion in 2032–2034, depending on the shape of the economic recovery in the U.S. following the COVID-19 pandemic.<ref>{{Cite web | title=The Impact of the Coronavirus Pandemic on Social Security's Finances | url=https://budgetmodel.wharton.upenn.edu/issues/2020/5/28/social-security-finances-coronavirus | access-date=2025-04-27 | website=Penn Wharton Budget Model | date=May 28, 2020 | language=en-US}}</ref>

With regard to actuarial balance, the Social Security Trustees estimate a 75-year actuarial deficit of 3.61 percent of payroll. This is approximately the total payroll tax increase that would be necessary to keep the system solvent for 75 years. The figure is designed to illustrate the size of the deficit. Legislation could close the deficit in ways other than raising the payroll tax rate.

Because taxable earnings are a fraction of GDP, sometimes the system's finances are put into context by using GDP. Social Security's cost are 5.2 percent of U.S. GDP as of 2023. Program costs will rise to 6.3 percent of GDP by 2076, and then decline to 6.0 percent of GDP by 2097.<ref name="2023Report" />

In the past, legislation has been enacted to prevent trust fund depletion. Should the trust funds be depleted, Social Security would still have revenue coming into the system from payroll taxes. The Social Security trustees estimate that revenue would be sufficient to pay 77 percent of the program's benefits. There has been debate about a trust fund depletion scenario regarding whether monthly benefits would be lowered or whether full amounts would be paid but not on a timely basis.<ref>{{Cite web | title=Social Security: What Would Happen If the Trust Funds Ran Out? | url=https://www.congress.gov/crs-product/RL33514 | url-status=live | access-date=2025-04-28 | website=congress.gov}}</ref>

The amount of the monthly Social Security benefit to which a worker is entitled depends upon the earnings record on which they have paid FICA or SECA taxes and upon the age at which the retiree chooses to begin receiving benefits.<ref>{{Cite web | title=Earnings Record | url=https://www.advocator.com/definitions/earnings-record/ | url-status=live | access-date=2025-04-28 | website=advocator.com}}</ref> That said, the U.S. Supreme Court ruled in ''[[Flemming v. Nestor]]'' (1960) that no one has a contractual right to Social Security benefits.

Medicare is a separate program from Social Security, although disabled and aged (65 or older) Social Security beneficiaries qualify for Medicare. The financing for [[Medicare (United States)]] is also based on payroll taxes, trust fund reserves, and the taxation of some Social Security benefits.

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