Social Security Trust Fund

AAA

DEFINITION of 'Social Security Trust Fund'

An account used by the United States federal government to record excess contributions paid into the Social Security system. The Social Security Trust Fund is used when contributions made by workers and employers exceed the amount currently needed to fund the Social Security system and those retired workers currently collected Social Security benefits. The monies held within the fund are invested in interest-bearing federal securities in order to increase while being held in trust.

INVESTOPEDIA EXPLAINS 'Social Security Trust Fund'

The Social Security Trust Fund was originally created to account for an anticipated future shortfall in benefits needed to pay out retirees. Following an increase in the Social Security payroll tax in the 1980s, the excess contributions from the tax increase were deposited into the Social Security Trust Fund to be used at a future date when the current assets of the Social Security system are no longer sufficient to cover their obligation.

RELATED TERMS
  1. Pension Plan

    A type of retirement plan, usually tax exempt, wherein an employer ...
  2. Social Security Number - SSN

    A nine-digit number assigned to citizens, some temporary residents ...
  3. Social Security

    A United States federal program of social insurance and benefits ...
  4. Disability-Income (DI) Insurance

    An insurance product that provides supplementary income in the ...
  5. Social Security Administration ...

    A U.S. government agency created in 1935 by President Franklin ...
  6. Pension Pillar

    One of three pension formats as outlined by the World Bank in ...
Related Articles
  1. How Much Social Security Will You Get?
    Retirement

    How Much Social Security Will You Get?

  2. Maximize Your Social Security Benefits
    Retirement

    Maximize Your Social Security Benefits

  3. Avoid The Social Security Tax Trap
    Taxes

    Avoid The Social Security Tax Trap

  4. Introduction To Social Security
    Retirement

    Introduction To Social Security

comments powered by Disqus
Hot Definitions
  1. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  2. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  3. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  4. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  5. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  6. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
Trading Center