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CRS — Social Security: Trust Fund Investment Practices (August 20, 2014)

August 27, 2014 Comments off

Social Security: Trust Fund Investment Practices (PDF)
Source: Congressional Research Service (via Federation of American Scientists)

The Social Security Act has always required surplus Social Security revenues (revenues in excess of program expenditures) to be invested in U.S. government securities (or U.S. government-backed securities). In recent years, attention has been focused on alternative investment practices in an effort to increase the interest earnings of the trust funds, among other goals. This report describes Social Security trust fund investment practices under current law.

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CRS — Primer on Disability Benefits: Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) (August 1, 2014)

August 15, 2014 Comments off

Primer on Disability Benefits: Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) (PDF)
Source: Congressional Research Service (via Federation of American Scientists)

In general, the goal of disability insurance is to replace a portion of a worker’s income should illness or disability prevent him or her from working. Individuals may receive disability benefits from either federal or state governments, or from private insurers. This report presents information on two types of disability programs provided through the federal government: the Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) programs. SSDI is an insurance program that provides benefits to individuals who have paid into the system and meet certain minimum work requirements. In contrast, SSI is a means-tested program that does not have work or contribution requirements, but restricts benefits to those who meet certain financial eligibility criteria.

CRS — Social Security: Calculation and History of Taxing Benefits (August 4, 2014)

August 13, 2014 Comments off

Social Security: Calculation and History of Taxing Benefits (PDF)
Source: Congressional Research Service (via Federation of American Scientists)

Social Security provides monthly cash benefits to retired or disabled workers and their family members, and to the family members of deceased workers. Those benefits were exempt from federal income tax, but in 1983, Congress approved recommendations from the National Commission on Social Security Reform (also known as the Greenspan Commission) to tax the benefits of some higher-income Social Security beneficiaries. Beginning in 1984, up to 50% of Social Security and Railroad Retirement Tier I benefits were taxable for individuals whose provisional income exceeds $25,000. The threshold is $32,000 for married couples. Provisional income equals adjusted gross income (total income from all sources recognized for tax purposes) plus certain otherwise tax-exempt income, including half of Social Security and Railroad Retirement Tier I benefits. The proceeds from taxing Social Security and Railroad Retirement Tier I benefits at up to the 50% rate are credited to the Old-Age and Survivors Insurance (OASI) trust fund, the Disability Insurance (DI) trust fund, and the Railroad Retirement system respectively, based on the source of the benefit taxed.

CRS — Social Security: The Trust Fund (July 31, 2014)

August 13, 2014 Comments off

Social Security: The Trust Fund (PDF)
Source: Congressional Research Service (via Federation of American Scientists)

The Social Security program pays benefits to retired or disabled workers and their family members, and to family members of deceased workers. (A person may receive retired-worker benefits and continue to participate in the labor force.) Program income and outgo are accounted for in two separate trust funds authorized under Title II of the Social Security Act: the Federal Old-Age and Survivors Insurance (OASI) trust fund and the Federal Disability Insurance (DI) trust fund. This report refers to the two trust funds as an aggregate Social Security trust fund and discusses the operations of the OASI and DI trust funds on a combined basis.

Social Security’s Financial Outlook: The 2014 Update in Perspective

July 30, 2014 Comments off

Social Security’s Financial Outlook: The 2014 Update in Perspective
Source: Center for Retirement Research at Boston College

The brief’s key findings are:

The 2014 Trustees Report shows little change from last year:

  • Social Security’s 75-year deficit rose modestly to 2.88 percent of payroll.
  • But the deficit as a percent of GDP is still 1 percent.
  • And trust fund exhaustion is still 2033, after which payroll taxes still cover about three quarters of promised benefits.

The shortfall is manageable but, with the deficit rising to about 4 percent in two decades, action should be taken soon to avoid larger tax/benefit changes later.

And the disability insurance program needs immediate attention, as its trust fund is expected to be exhausted in 2016.

Social Security Board of Trustees: No Change in Projected Year of Trust Fund Reserve Depletion

July 28, 2014 Comments off

Social Security Board of Trustees: No Change in Projected Year of Trust Fund Reserve Depletion
Source: Social Security Administration

The Social Security Board of Trustees today released its annual report on the long-term financial status of the Social Security Trust Funds. The combined asset reserves of the Old-Age and Survivors Insurance, and Disability Insurance (OASDI) Trust Funds are projected to become depleted in 2033, unchanged from last year, with 77 percent of benefits still payable at that time. The DI Trust Fund will become depleted in 2016, also unchanged from last year’s estimate, with 81 percent of benefits still payable.

In the 2014 Annual Report to Congress, the Trustees announced:

  • The combined trust fund reserves are still growing and will continue to do so through 2019. Beginning with 2020, the cost of the program is projected to exceed income.
  • The projected point at which the combined trust fund reserves will become depleted, if Congress does not act before then, comes in 2033 – the same as projected last year. At that time, there will be sufficient income coming in to pay 77 percent of scheduled benefits.
  • The projected actuarial deficit over the 75-year long-range period is 2.88 percent of taxable payroll — 0.16 percentage point larger than in last year’s report.

CRS — Social Security: The Lump-Sum Death Benefit

July 25, 2014 Comments off

Social Security: The Lump-Sum Death Benefit (PDF)
Source: Congressional Research Service (via Federation of American Scientists)

When a worker who is insured by Social Security and living with a spouse dies, the spouse is entitled to a lump-sum death benefit of $255. If there is no such spouse, the payment can be made to a surviving child who is receiving or is eligible to receive benefits based on the deceased person’s work. In the majority of deaths, however, no payment is made.

The death benefit used to be a more important part of Social Security, but the payment has been fixed at $255 for the past four decades, during which inflation has eroded its value. At the same time, the real value of other Social Security benefits has increased. Total federal spending on lump-sum death benefits is now about $200 million, only 0.03% of the total Social Security benefits.

Although the benefit was once linked to burial expenses and is sometimes still referred to as a “funeral benefit,” it no longer has any legal connection with funeral expenses.

Some proposals would have targeted the death benefit to those with the greatest need, increased the benefit, or eliminated it.

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