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.

BREAKING DOWN '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. Social Security Tax

    The tax levied on both employers and employees used to fund the ...
  2. National Social Security Fund (China)

    A government-controlled investment fund established primarily ...
  3. Actuarial Balance

    The difference between future Social Security obligations and ...
  4. Actuarial Deficit

    The difference between future Social Security obligations and ...
  5. Outside Earnings

    Income that temporarily reduces a retired individual's Social ...
  6. Social Capital

    An economic idea that refers to the connections between individuals ...
Related Articles
  1. Retirement

    Will the Social Security Cap Increase Help It Last Longer?

    The Social Security cap increase will be 7% in 2017, but even that may not be enough to keep Social Security from running out of funds.
  2. Retirement

    Introduction to Social Security

    You've probably contributed to this fund, but will you reap the benefits? Find out here.
  3. Retirement

    Can the Market Affect Social Security Benefits?

    What you should know about the relationship between the stock market and your monthly Social Security check.
  4. Retirement

    10 Common Questions About Social Security

    Find out everything you need to know about this program.
  5. Retirement

    What Will Social Security Look Like When You Retire?

    Many workers are not confident that Social Security will be around during their retirement. Here's what you need to know about its future.
  6. Retirement

    8 Types of Americans Who Won't Get Social Security

    Most Americans eventually get Social Security retirement benefits. Those who don't need a solid Plan B.
  7. Retirement

    Are Social Security Benefits a Form of Socialism?

    Socialism is a loaded word in the U.S., but Social Security, one of the nation's most popular benefit programs, is wholly government-run.
  8. Financial Advisor

    Social Security's Insolvency and Your Retirement

    The Social Security system could run out of money by 2031. Here's a look at some proposed solutions to the problem and what can be done to prepare.
  9. Retirement

    Will Social Security Be Around for My Retirement?

    Here's what you may not know about our Social Security system and how it can affect your future.
  10. Retirement

    When Do I Stop Paying Social Security Tax?

    Almost never, unless you belong to one of these special groups.
RELATED FAQS
  1. Why is Social Security running out of money?

    Find out why you may not have Social Security benefits available to you when it's time to retire. Read Answer >>
Hot Definitions
  1. Financial Statements

    Records that outline the financial activities of a business, an individual or any other entity. Financial statements are ...
  2. Operating Cost

    Expenses associated with the maintenance and administration of a business on a day-to-day basis.
  3. Money Market

    A segment of the financial market in which financial instruments with high liquidity and very short maturities are traded. ...
  4. Block (Bitcoin Block)

    Blocks are files where data pertaining to the Bitcoin network is permanently recorded.
  5. Fintech

    Fintech is a portmanteau of financial technology that describes an emerging financial services sector in the 21st century.
  6. Ex-Dividend

    A classification of trading shares when a declared dividend belongs to the seller rather than the buyer. A stock will be ...
Trading Center