While much of the rest of the budget is a significant deficit, the Social Security surplus enables the government to acquire less from the public to fund the deficit. Some Social Security benefits use a specific government trust fund to secure payments to beneficiaries that qualify for subsidies under different definitions. Beneficiaries that are eligible for Medicare coverage may also get a form of Social Security payments from this trust fund.
Defining Surplus Within the Social Security Trust Fund
Funds for the Social Security Trust Fund comes from income taxes. If the amount they’re funding is more than what pays, this is a surplus.
When a surplus occurs, the U.S. Treasury will use the extra funds somewhere else within the federal budget. In trade, it will transfer specific securities into the fund. A deficit is when more gets paid to beneficiaries than is received through taxes. When this occurs, trustees can redeem the funds for securities to change the debt.
The trust fund’s financial condition can change when policies about its funding change. The Social Security Administration provides data that shares the status of the fund each year. Reports on the state of the fund will follow the calendar year before the report’s date.
What is the Social Security Trust Fund?
The Social Security Trust Fund is the name for The Federal Old-Age and Survivors Insurance Trust Fund (OASI Trust Fund). It’s also the name for the Federal Disability Insurance Trust Fund (DI Trust Fund).
A trust fund holds investments in the interest of beneficiaries. Beneficiaries will then get distributions from the trust fund in scheduled payments. With the Social Security Trust Fund, income taxes that beneficiaries pay are placed into securities. The Social Security Trustees oversee the program.
Benefits That Run Through the Social Security Trust Fund
Medicare coverage isn’t immediately related to the Social Security Trust Fund. But plenty of beneficiaries get payments from the fund. Why? Most beneficiaries qualify for monthly Social Security payments due to disability or age. Below are the benefits that run through the Social Security Trust Fund.
At age 62, those eligible can start getting early retirement benefits. Early benefits will come through the Federal Old-Age and Survivors Insurance Trust Fund. The year you’re born will determine your full retirement age. And late retirement age is 70 years old. When you retire early, you’ll get a smaller benefit payment each month. The amount is lower than what you would typically get at full retirement age. Retiring later can help you earn credits to increase your benefit payment.
Disability Insurance Benefits
If you have a qualifying disability and have enough work credits, you can get benefits through Social Security. You’ll receive your payments from the Federal Disability Insurance Trust Fund. The monthly amount you receive will depend on what your employment earnings were.
Survivor and Dependent Benefits
Survivors of beneficiaries that are deceased may qualify for payment. The monthly payment would be based on a percentage of what the beneficiary was getting.
When the beneficiary is either deceased or retired, fees will go into the OASI Fund. If the recipient has a disability, the DI Trust Fund will allot the payment amounts.
Supplemental Security Income benefits go to disabled children and adults that don’t have enough work credits. But these payments won’t come directly from the DI or OASI Trust Funds.