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It's Time to Protect Social Security

The longer we wait, the harder it gets. Here are possible solutions from both sides of the political aisle

The Social Security Playbook illustration

Changes are needed to restore Social Security to long-term fiscal health. — Illustration by Pete Ryan

It's Time to protect Social Security logo

THE PROCESS

Money in … 

More than 80% of Social Security's revenue comes through the FICA (the Federal Insurance Contributions Act) payroll tax, which imposes a 12.4% tax on income, with 6.2% paid by employers and 6.2% paid by workers. Two other revenue sources: interest earned on reserve funds, and income taxes paid on benefits by higher-income retirees.
Pie chart, Where Social Security Money comes from

— Graphic by Thomas Porostocky

FICA revenue that isn't needed immediately is credited to the Social Security Trust Fund and invested in securities issued by the U.S. Treasury to fund government operations. Those bonds are backed by the full faith and credit of the government. When Social Security redeems bonds, that puts pressure on the federal budget.

Money out…
A formula averages and indexes lifetime earnings to determine benefits; the average monthly retiree benefit this year is about $1,180. For 64% of Americans 65 and over, Social Security provides more than half of their income. Total benefits this year: $727 billion.
 
 

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