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GP is correct. Current taxpayers (individuals and their employers) pay tax into the trust fund, which then pays out to current social security recipients. You e
by Domenic_S 7y ago
GP is correct. Current taxpayers (individuals and their employers) pay tax into the trust fund, which then pays out to current social security recipients. You earn credits on the amount you pay in, which determines your eventual benefit, but make no mistake -- current taxes fund current recipients.
This is why some people call social security a pyramid scheme - built into the system is an assumption that the number of workers will always increase or that interest rates will make that moot.
- AnimalMuppet 7y agoDisagree in part. There is in fact this giant trust fund out there. The trust fund is taxes from people in the past. So current taxes aren't exactly funding current recipients. Past taxes are... ... but the trust fund is spending more than it's taking in. So current taxes are generating less than current recipients receive. Clearly that is unsustainable. And when the trust fund runs out of money, current taxes will have to equal current benefits, and one side or the other will have to give.