Order Code RL33028
CRS Report for Congress
Received through the CRS Web
Social Security: The Trust Fund
August 11, 2005
Christine Scott
Specialist in Tax Economics
Domestic Social Policy Division
Congressional Research Service ˜ The Library of Congress

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Social Security: The Trust Fund
Summary
The Social Security program is financed primarily through taxes, which are
deposited in the U.S. Treasury and credited to the Social Security trust fund. Any
revenues credited to the trust fund in excess of the costs (benefit payments and
administrative costs) are invested in special U.S. obligations (debt instruments of the
U.S. government).
The Social Security trust fund represents funds dedicated to pay current and
future Social Security benefits. However, it is useful to view the trust fund in two
ways: (1) as the balance of an internal federal accounting concept, and (2) as the
accumulated holdings of the Social Security program.
For internal accounting purposes, certain accounts within the U.S. Treasury are
designated by law as trust funds in order to properly track revenues dedicated to
certain purposes (or expenditures). There are a number of trust funds in the U.S.
Treasury including those for Social Security, Medicare, unemployment
compensation, and federal employee retirement. The monies in the Social Security
trust fund in the U.S. Treasury are owned by the U.S. government, which can (by
changing the law) raise or lower revenues to the trust fund, or payments from the
trust fund.
By law, any positive annual balance (or cash flow surplus) in the Social Security
trust fund must be invested in U.S. government obligations. The accumulated
holdings of U.S. obligations are often viewed as being similar to assets held by any
other trust on behalf of the beneficiaries. However, the holdings of the Social
Security trust fund differ from those of private trusts because: (1) the types of
investments it may hold are limited; and (2) the U.S. government is both the buyer
and seller of the investments.
This paper will review some of the basics of how the Social Security program
is funded, and how the Social Security trust fund works. This report will be updated
as needed to reflect legislative or other activity.

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Contents
How the Social Security Program is Financed . . . . . . . . . . . . . . . . . . . . . . . . 1
The Social Security Trust Fund As A Designated Account . . . . . . . . . . . . . . 2
Social Security Trust Fund Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Social Security Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Social Security Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Investment of the Social Security Balances . . . . . . . . . . . . . . . . . . . . . . 9
The Social Security Trust Fund and The Federal Budget . . . . . . . . . . . 9
On-Budget Versus Off-Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
The Social Security Trust Fund As Accumulated Holdings . . . . . . . . . . . . 10
The Social Security Trust Fund and the Level of Federal Debt . . . . . . 13
The Social Security Trust Fund and Federal Default . . . . . . . . . . . . . . 13
The Social Security Trust Fund and Benefit Payments . . . . . . . . . . . . 14
List of Figures
Figure 1. Ratio of Current (Annual) Revenues to Costs for the Social
Security Trust Fund, 1957-2040 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
List of Tables
Table 1. Annual Revenues, Costs, and Annual Balance for the Social
Security Trust Fund, 1957-1983 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Table 2. Annual Revenues, Costs, and Annual Balance for the Social
Security Trust Fund, 1984-2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Table 3. Estimated Annual Revenues, Costs, and Annual Balance for the
Social Security Trust Fund, 2005-2040 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Table 4. Accumulated Holdings of the Social Security Trust Fund,
1957-2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Table 5. Estimated Accumulated Holdings of the Social Security Trust Fund,
2005-2041 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

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Social Security: The Trust Fund
The Social Security program is financed primarily through taxes, which are
deposited in the U.S. Treasury and credited to the Social Security trust fund. Any
revenues credited to the trust fund in excess of the costs (benefit payments and
administrative costs) are invested in special U.S. obligations (debt instruments of the
U.S. government). The Social Security trust fund is both a designated account
within the U.S. Treasury and the accumulated holdings of special U.S. obligations.
Both represent the funds designated to pay current and future Social Security
benefits.
How the Social Security Program is Financed
The Social Security program is primarily financed by revenues from Federal
Insurance Contributions Act (FICA) taxes and Self Employment Contributions Act
(SECA) taxes, commonly known as “Social Security taxes.” FICA taxes are paid by
both employers and employees, but it is employers who remit the taxes to the U.S.
Treasury. Employers remit FICA taxes on a regular basis through the year (for
example — weekly, monthly, quarterly or annually), depending on the employer’s
level of total employment taxes (generally FICA, Medicare, and federal personal
income tax withholding). Currently, both the employer and employee pay a FICA
tax rate of 6.2% on the employee’s wages up to $90,000. SECA taxes are paid by
self-employed individuals, and are normally paid once a year as part of filing an
annual individual income tax return. The current SECA tax rate is 12.4% (of 92.35%
of net income, with one-half of the SECA taxes allowed as a deduction for federal
income tax purposes.
In addition to these two major sources of funding, the Social Security program
has two other sources of revenue. Certain Social Security recipients must include a
portion of Social Security benefits in taxable income for the federal income tax, and
the Social Security program receives part of those taxes.1 In addition, the Social
Security program receives interest from the U.S. Treasury on its investments (in
special U.S. obligations).
The Internal Revenue Service (IRS) processes the tax returns and tax payments
for federal employment taxes and federal individual income taxes. All of the tax
payments are deposited in the U.S. Treasury along with all other receipts from the
public for the federal government.
1 The taxes associated with including Social Security benefits in federal taxable income go
to the Social Security trust fund and the Health Insurance trust fund (Medicare). See CRS
Report RL32552, Social Security: Calculation and History of Taxing Benefits, by Christine
Scott.

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CRS-2
The Social Security Trust Fund As A Designated Account
Within the U.S. Treasury, there are numerous accounts for federal accounting
purposes. The Social Security trust fund is one of the accounts designated, by law,
as a trust fund. While all of the monies within the Treasury are federal monies, the
designation of an account as a trust fund allows tracking of certain funds for internal
accounting purposes. One reason an account would be designated as a special fund
in law is because the funds are dedicated to specific purposes, and are not for general
government program use. The monies or holdings of a trust fund in the Treasury are
owned by the U.S. government. The U.S. government can, by changing the law, raise
or lower the revenues going into the trust fund, and the payments made by the trust
fund.
Social Security Trust Fund Revenues. The Social Security trust fund
receives a credit equal to the employment taxes deposited in the U.S. Treasury by the
IRS. In practice, there are two separate accounts for the Social Security program:
the Old Age and Survivors Insurance (OASI) trust fund; and the Disability Insurance
(DI) trust fund. The FICA and SECA taxes are allocated between the OASI and DI
trust funds based on a proportion specified in law.2 The combination of the OASI
and DI trust funds, often referred to as OASDI, is generally what is meant by the
phrase “the Social Security Trust Fund.”

Social Security Costs. The U. S. Treasury on a regular basis makes Social
Security benefit payments to eligible individuals. The U.S. Treasury is directed by
the Social Security Administration (SSA) as to whom to pay, and the amount of the
payment. When benefit payments are made by the Treasury, the Social Security trust
fund is debited for the payments. Periodically, the Social Security trust fund is also
debited for the administrative costs of the Social Security program. These
administrative costs are incurred by several government agencies, including the
Social Security Administration, the U.S. Treasury, and the IRS.
Social Security Balance. The revenues to the trust fund each year are used
to pay Social Security benefits and program costs. If in any year revenues are greater
than costs, the Secretary of the Treasury, as Managing Trustee of the trust funds, is
required to invest this positive annual balance (or cash flow surplus) in securities
backed by the U.S. government.3 The purchasing of the securities allows the surplus
to be used for other government purposes.4 If in any year, costs are greater than
revenues, this negative annual balance (or cash flow deficit) is offset by selling
accumulated security holdings to pay the benefits and administrative costs.
2 Social Security Act, Title II, §201(b). Currently the 6.2% is split 5.3% for OASI and 0.9%
for DI. The DI share was last changed in 2000 (to 0.9%), and has been changed five times
in the last 20 years (since 1985).
3 Social Security Act, Title II, §201(d).
4 This is often referred to as “borrowing from the Social Security trust fund.”

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CRS-3
There are two measures of the Social Security balance: the current or annual
balance, and the accumulated holdings.5 The current or annual balance in the Social
Security Trust fund is a measure of current (or annual) revenues and current (or
annual) costs. The current balance can be either positive or negative. That is, current
revenues can exceed current costs, or current costs can exceed current revenues.
However, unlike other federal programs without trust funds, the Social Security
program may use the accumulated holdings of the Social Security trust fund from
prior years to pay current or future benefits.6
While Social Security is often referred to as a pay-as-you go system (meaning
that the current revenues are used to pay current costs), changes made to Social
Security in 1983, including coverage of federal workers, increasing the retirement
age, and the taxation of Social Security benefits began a sustained period of positive
annual balances. The positive annual balances are expected, by the Social Security
Trustees, to continue through 2016. Beginning in 2017, the Social Security Trustees
expect the annual balance to turn negative, when annual costs exceed annual
revenues.
As shown in Table 1 below, during the 1957 to 1983 period, the current balance
(annual revenues less annual costs) was negative in 21 of the 27 years.
5 The accumulated holdings of the Social Security trust fund in U.S. government obligations
is often referred to as “the Social Security trust fund balance.”
6 Certain government projects may be given “budget authority until expended,” which
allows the authority to spend funds on the project to be carried over each year until all of
the authority to spend funds has been exhausted.

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CRS-4
Table 1. Annual Revenues, Costs, and Annual Balance for the
Social Security Trust Fund, 1957-1983
($ in billions)
Annual Revenue
Current Balance
Annual
Year
(not including
(annual revenue less
Cost
interest)
annual costs)
1957
$7.5 $7.6
($0.1)
1958
8.50 8.90
(0.40)
1959
8.90 10.80
(1.90)
1960
11.90 11.80
0.10
1961
12.30 13.40
(1.10)
1962
13.10 15.20
(2.10)
1963
15.60 16.20
(0.60)
1964
16.80 17.00
(0.20)
1965
17.20 19.20
(2.00)
1966
22.60 20.90
1.70
1967
25.40 22.50
2.90
1968
27.00 26.00
1.00
1969
31.50 27.90
3.60
1970
34.70 33.10
1.60
1971
38.30 38.50
(0.20)
1972
42.90 43.30
(0.40)
1973
$51.9 $53.1
($1.20)
1974
58.90 60.60
(1.70)
1975
64.30 69.20
(4.90)
1976
71.60 78.20
(6.60)
1977
78.70 87.30
(8.60)
1978
88.90 96.00
(7.10)
1979
103.00 107.30
(4.30)
1980
116.70 123.60
(6.90)
1981
139.40 144.40
(5.00)
1982
145.70 160.10
(14.40)
1983
156.30 171.20
(14.90)
Source: Table prepared by the Congressional Research Service (CRS) from data provided in The
2005 Annual Report of the Trustees of the Federal Old-Age and Survivors Insurance and Disability
Insurance Trust Funds, Washington, DC, Mar. 23, 2005, Table VI.A4.

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CRS-5
Table 2 shows the annual revenues, costs, and annual balance for the 1984
through 2004 period. Table 3 shows the estimated (using the intermediate
assumptions of the Social Security trustees) annual revenues, costs, and annual
balance for the 2005-2040 period.
Table 2. Annual Revenues, Costs, and Annual Balance for the
Social Security Trust Fund, 1984-2004
($ in billions)
Annual Revenue
Current Balance
Annual
Year
(not including
(annual revenue
Cost
interest)
less annual costs)
1984
$183.1 $180.4
$2.7
1985
197.50 190.60
6.90
1986
212.80 201.50
11.30
1987
225.60 209.10
16.50
1988
255.20 222.50
32.70
1989
276.70 236.20
40.50
1990
301.10 253.10
48.00
1991
307.80 274.20
33.60
1992
317.20 291.90
25.30
1993
327.70 308.80
18.90
1994
350.00 323.00
27.00
1995
364.80 339.80
25.00
1996
385.70 353.60
32.10
1997
413.90 369.10
44.80
1998
439.90 382.30
57.60
1999
471.20 392.90
78.30
2000
504.80 415.10
89.70
2001
529.10 438.90
90.20
2002
546.30 461.70
84.60
2003
546.90 479.10
67.80
2004
568.70 501.60
67.10
Source: Table prepared by the Congressional Research Service (CRS) from data provided in The
2005 Annual Report of the Trustees of the Federal Old-Age and Survivors Insurance and Disability
Insurance Trust Funds, Washington, DC, Mar. 23, 2005, Table VI.A4.

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CRS-6
Table 3. Estimated Annual Revenues, Costs, and Annual
Balance for the Social Security Trust Fund, 2005-2040
($ in billions)
Annual Revenue
Current Balance
Annual
Year
(not including
(annual revenue
Cost
interest)
less annual costs)
2005
$596.1 $526.6 $69.5
2006
634.90 548.20 86.70
2007
667.00 574.10 92.90
2008
702.70 605.50 97.20
2009
736.60 643.50 93.10
2010
773.80 682.40 91.40
2011
814.30 725.80 88.50
2012
854.10 775.60 78.50
2013
894.30 828.90 65.40
2014
935.40 886.40 49.00
2015
978.70 947.10 31.60
2016
1,023.60 1,012.50 11.10
2017
1,070.30 1,082.40 (12.10)
2018
1,118.70 1,156.30 (37.60)
2019
1,169.20 1,234.50 (65.30)
2020
1,221.20 1,317.50 (96.30)
2021
1,275.40 1,404.80 (129.40)
2022
1,331.30 1,495.80 (164.50)
2023
1,389.40 1,591.00 (201.60)
2024
1,449.40 1,690.60 (241.20)
2025
1,511.70 1,794.80 (283.10)
2026
1,576.40 1,903.90 (327.50)
2027
1,644.40 2,016.70 (372.30)
2028
1,715.60 2,132.40 (416.80)
2029
1,789.10 2,250.40 (461.30)
2030
1,865.60 2,371.70 (506.10)
2031
1,945.40 2,497.60 (552.20)
2032
2,029.10 2,627.00 (597.90)
2033
2,116.60 2,758.20 (641.60)
2034
2,207.70 2,890.90 (683.20)
2035
2,301.80 3,026.10 (724.30)
2036
2,399.90 3,165.00 (765.10)
2037
2,502.50 3,307.40 (804.90)

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CRS-7
Annual Revenue
Current Balance
Annual
Year
(not including
(annual revenue
Cost
interest)
less annual costs)
2038
2,609.60 3,452.90 (843.30)
2039
2,721.30 3,602.00 (880.70)
2040
2,837.30 3,756.20 (918.90)
Source: Table prepared by the Congressional Research Service (CRS) from data provided in The
2005 Annual Report of the Trustees of the Federal Old-Age and Survivors Insurance and Disability
Insurance Trust Funds, Washington, DC, Mar. 23, 2005, Table VI.F8. (Intermediate Assumptions).
One way to measure the annual balance over time is to take the ratio of current
revenues to current costs each year. If the ratio is greater than 1, the current balance
is positive, and if the ratio is less than 1, the current balance is negative. In the past
there have been periods in which the current balance was negative (the ratio of
revenues to cost is less than 1). Figure 1 shows the ratio of annual revenues to
annual costs in the Social Security Trust fund for the historical period (1957-2004),
and for the future period (2005-2040) as projected by the Social Security Trustees in
their 2005 Annual Report.7 The forecast (of annual revenues and annual costs) for
the ratios shown in Figure 1 uses the intermediate forecast of the Trustees. Under
this forecast, the current balance is expected to begin to be negative (a ratio of less
than 1) beginning in 2017.
7 Social Security Trustees, The 2005 Annual Report of the Trustees of the Federal Old-Age and
Survivors Insurance and Disability Insurance Trust Funds, Washington, DC, Mar. 23, 2005. Based
on data from Tables VI.A4 and VI.F8 (intermediate assumptions).

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CRS-8
Figure 1. Ratio of Current (Annual) Revenues to Costs for
The Social Security Trust Fund, 1957-2040
1.50
Historical Period
Projected Period
1.00
0.50
1957
1959
1961
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
2031
2033
2035
2037
2039
Source: Figure prepared by the Congressional Research Service (CRS) from The 2005 Annual Report of the Trustees of the Federal Old-Age and
Survivors Insurance and Disability Insurance Trust Funds, Washington, D.C., Mar. 23, 2005, Tables VI.A4 and VI.F8 (Intermediate Assumptions).
Note: Annual revenues do not include interest on accumulated holdings of U.S. government obligations.

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CRS-9
Although the Social Security program has had negative annual balances (run
cash flow deficits) in the past, and is expected to become negative again beginning
in 2017 (assuming current benefit levels and projected revenues) Social Security
benefits can continue to be paid at the levels promised under current law by the U.S.
Treasury as long as the accumulated balance in the Social Security Trust Fund is
positive. This is because the Social Security program has budget authority to pay
benefits as long as the balance in the designated account is positive. However, if
current revenues are not sufficient to pay benefits, the U.S. government must raise
the funds necessary to honor the redemption of the U.S. obligations held by the
Social Security trust fund when they are needed to pay benefits. The U.S.
government may raise the necessary funds through increasing taxes, reducing
spending, or a combination of both methods.
Investment of the Social Security Balances. The Social Security trust
fund receives interest on its holdings of special U.S. government obligations. As
noted earlier in this report, the Secretary of the Treasury, as Managing Trustee of the
trust funds, is required to invest the taxes credited to the trust funds that are not
needed to pay current benefits and administrative costs in securities backed by the
U.S. government.8 Each security issued by the Treasury for purchase by the trust
funds must be a paper instrument in the form of a bond, note or certificate of
indebtedness.9 In addition, any interest or proceeds from the sale of securities held
by the trust funds must be paid in the form of paper checks from the general fund of
the U.S. Treasury to the trust funds.10 The interest rates paid on the securities are tied
to market rates.
For internal federal accounting, when the special obligations are purchased by
the trust fund, one account (the “general” account) is borrowing funds from another
account (the Social Security trust fund account). The Social Security trust fund
maintains a positive balance, with the balance invested in special obligations. The
special obligations are physical documents held by the Social Security
Administration (SSA), and not the U.S. Treasury. The obligations are redeemed on
a regular basis. The special securities however are not resources for the government
as they are both an asset and a liability for the government.
The Social Security Trust Fund and The Federal Budget. The Social
Security program is indirectly part of the annual congressional budget process. This
creates some confusion on the part of the public.
On-Budget Versus Off-Budget. For the federal budget, “on-budget”
generally refers to those programs included in the annual congressional budget
process, while “off-budget” generally refers to programs not included in the annual
congressional budget process.
8 Social Security Act, Title II, §201(d).
9 Social Security Act, Title II, §201(d). The trusts funds may purchase certain other
government securities, such as those issued by Fannie Mae or Freddie Mac, but this option
is seldom used.
10 Social Security Act, Title II, §201(f).

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CRS-10
The Social Security program is a government program, like the Postal Service,
that has had it receipts and (most) outlays designated as off-budget by law. The off-
budget designation has no actual effect on the funding, spending, or operations of
these programs. The congressional budget resolution, in its legislative language,
separates the off-budget totals (receipts and outlays) from the on-budget totals
(receipts and outlays). The report language accompanying the resolution usually
shows the unified budget totals, which combine the on- and off-budget amounts, as
well as showing the on- and off-budget totals. The President’s budget tends to use
the unified budget measures in discussing the budget totals. The Administrations’s
budget documents also include, as required, the totals for the on- and off-budget
components. The Congressional Budget Office uses the unified budget numbers in
its analyses of the budget; it does not generally include on- and off-budget data in its
regular annual reports.
The annual congressional budget process provides the budget authority for
relevant federal agencies (including the SSA), which are on-budget, to spend the
administrative funds provided by the Social Security trust fund to administer the
Social Security program. The Social Security program has budget authority to pay
benefits as long as the balance in the trust fund (the designated account) is positive.
The unified budget framework is important because, by including all federal
government revenues and expenditures, it provides a more comprehensive picture of
the size of federal government revenues and spending in the economy, and the impact
of the federal budget on the economy.
In the unified budget, Social Security is both a large source of federal
government revenues (24.3% of the total in FY2004) and expenditures (21.6% of the
total in FY2004).11 For the unified budget, the accumulated holdings of the Social
Security trust fund are counted in determining the federal budget deficit or surplus.
The Social Security Trust Fund As Accumulated Holdings
The Social Security Trust Fund can be, and often is, viewed as a trust fund,
similar to any private trust fund, that is to be used for paying current and future
benefits. As noted earlier, any revenues credited to the trust fund (in the Treasury)
in excess of costs are invested in non-marketable U.S. government obligations.
These obligations are physical (paper) documents issued to the trust fund, and held
by the SSA. When the obligations are redeemed, the Treasury must issue a check,
a physical document, to the trust fund for the interest earned on the obligation.
However, unlike a private trust that may hold a variety of types of assets, and
obligations of different borrowers, the Social Security trust fund can only hold non-
marketable U.S. obligations. The sale of these obligations by the U.S. government
to the trust fund is federal government borrowing (from itself) and counts against the
11 Percentages calculated by the Congressional Research Service (CRS) from data contained
in Office of Management and Budget, Historical Tables, Budget of the U.S. Government,
Fiscal Year 2006, Tables 2.1, 2.4, 6.1 and 13.1.

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CRS-11
federal debt limit. The requirement that the Social Security trust fund purchase U.S.
obligations serves several purposes:
! it offers a mechanism for Social Security to recoup the surpluses it
lent to the rest of the government,
! it pays interest so that the loan of the surpluses does not lose value
(over time),
! it ensures that the trust fund, and not general government receives
credit for the interest earnings,
! it ensures a level of return (interest) to the trust fund, and
! it provides a means outside of the securities market for the U.S.
government to borrow funds.
Investment of Social Security trust funds in other private security instruments
such as stocks, would increase the potential returns and the risk (for negative
earnings) for the trust fund. Purchases of private security instruments increases the
risk in the future value of trust fund holdings. It is important to note that the current
accumulated holdings of the Social Security trust fund are lower than the projected
future obligations (for benefits) of the Social Security program.
The accumulated holdings of the Social Security trust fund are the sum of the
positive annual balances for all past years (which were invested in U.S. obligations),
plus the interest earned on those holdings. As a result of more than 20 years of
positive annual balances, the accumulated holdings of the Social Security Trust fund
are large (approximately $1.7 trillion). It is these accumulated holdings that many
people are referring to when discussing the Social Security trust fund. Tables 4 and
5 show the accumulated holdings of the Social Security trust fund. Table 4 shows
the accumulated holdings each year for 1957-2004, the historical period. Table 5
shows the accumulated holdings each year for the projected period of 2005-2040,
using the estimates of the Social Security Trustees (intermediate assumptions). The
Social Security Trustees estimate that the level of accumulated holdings will begin
to decline in 2027, and be exhausted in 2041.

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Table 4. Accumulated Holdings of the Social Security Trust
Fund, 1957-2004
($ in billions)
Accumulated
Accumulated
Year
Year
holdings
holdings
1957
$23.0 1981
$24.5
1958
23.20 1982
24.80
1959
22.00 1983
24.90
1960
22.60 1984
31.10
1961
22.20 1985
42.20
1962
20.70 1986
46.90
1963
20.70 1987
68.80
1964
21.20 1988
109.80
1965
19.80 1989
163.00
1966
22.30 1990
225.30
1967
26.30 1991
280.70
1968
28.70 1992
331.50
1969
34.20 1993
378.30
1970
38.10 1994
436.40
1971
40.40 1995
496.10
1972
42.80 1996
567.00
1973
44.40 1997
655.50
1974
45.90 1998
762.50
1975
44.30 1999
896.10
1976
41.10 2000
1,049.40
1977
35.90 2001
1,212.50
1978
31.70 2002
1,378.00
1979
30.30 2003
1,530.80
1980
26.50 2004
1,686.80
Source: Table prepared by the Congressional Research Service (CRS) from data provided in The
2005 Annual Report of the Trustees of the Federal Old-Age and Survivors Insurance and Disability
Insurance Trust Funds, Washington, DC, Mar. 23, 2005, Table VI.A4.

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Table 5. Estimated Accumulated Holdings of the Social Security
Trust Fund, 2005-2041
($ in billions)
Accumulated
Accumulated
Year
Year
holdings
holdings
2005
$1,850.1 2024
$5,951.9
2006
2,037.70 2025
6,012.60
2007
2,241.70 2026
6,031.40
2008
2,461.80 2027
6,005.30
2009
2,690.20 2028
5,931.90
2010
2,930.30 2029
5,808.60
2011
3,182.00 2030
5,631.90
2012
3,438.60 2031
5,397.50
2013
3,697.10 2032
5,102.40
2014
3,954.60 2033
4,745.10
2015
4,211.10 2034
4,324.00
2016
4,463.70 2035
3,836.00
2017
4,709.70 2036
3,277.40
2018
4,946.60 2037
2,645.10
2019
5,171.90 2038
1,936.20
2020
5,378.50 2039
1,147.20
2021
5,563.30 2040
272.70
2022
5,722.90 2041
0.00
2023
5,853.90
Source: Table prepared by the Congressional Research Service (CRS) from data provided in The
2005 Annual Report of the Trustees of the Federal Old-Age and Survivors Insurance and Disability
Insurance Trust Funds, Washington, DC, Mar. 23, 2005, Table VI.F8. (Intermediate Assumptions).
The Social Security Trust Fund and the Level of Federal Debt. As
part of the annual congressional budget process, the federal debt level is set for the
budget by Congress. The federal debt limit includes not only debt held by the public,
but the internal debt of the U.S. government. The investment of the Social Security
trust fund in special U.S. obligations, and borrowing from the public fall under the
restrictions of the federal debt limit. This means that there may be implications for
the Social Security trust fund if the Congress does not establish a federal debt limit.
The sale of securities to the Social Security trust fund is between federal accounts;
it does not generate any resources for the government. It is the interest payments on
publicly held federal debt that is considered the more relevant measure of the impact
of the federal budget on the economy.
The Social Security Trust Fund and Federal Default. The special
obligations purchased by the Social Security trust fund are backed by “the full faith
and credit “of the U.S. government. This is a promise by the U.S. government to

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CRS-14
redeem the security (debt instrument). The federal government can technically, like
any other borrower, default on any or all of its outstanding securities. The
implications for the economy and the private market for government securities of the
federal government defaulting on the special obligations will depend upon the views
of private investors. The impact would be determined by whether or not they think
that this is a precursor to the government defaulting on its privately held securities
(a general government default). However, there is no precedent for a government
default, and therefore the actual implications of such a default cannot be accurately
predicted.
The Social Security Trust Fund and Benefit Payments. The
accumulated holdings can be viewed as a measure of funds dedicated to pay future
benefits. However, these funds will only be available as the government raises the
resources necessary to pay for the securities as they are redeemed to pay benefits.
The securities are a promise, by the U.S. government, to raise the necessary funds.
The funds used to purchase the securities were used to fund other government
activities, and cannot finance benefits directly. Projected benefits under current law
exceed projected trust fund balances in 2041.
When the accumulated holdings of the trust fund are exhausted in 2041, Social
Security benefits can continue to be paid, but benefits can only be paid up to the
funds available. This means that the Social Security benefits paid to beneficiaries
will be lower than the calculated benefits.12
12 For information on the legal entitlement to benefits and the exhaustion of the trust fund,
see CRS Report RL32822, Social Security Reform: Legal Analysis of Social Security Benefit
Entitlement Issues, by Kathleen S. Swendiman and Thomas J. Nicola.

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