How to pay for Social Security's Missing Trust Fund?

Alicia H. Munnell, Wenliang Hou and Geoffrey T. Sanzenbacher

Journal of Pension Economics and Finance, 2022, vol. 21, issue 3, 344-358

Abstract: Decisions made early in Social Security's history resulted in benefits in excess of contributions for early cohorts. This approach gave away the Trust Fund and the resulting interest that could have accumulated, which has increased the size of the payroll tax required to finance the program. This paper finds that, for the Old-Age and Survivors portion of Social Security, the Missing Trust Fund of $29.5 trillion is driven by the excess benefits given to early cohorts. Should tax increases be considered to improve the program's finances, a broad tax – such as the income tax – could be appropriate since these early payments benefitted all of society.

Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:cup:jpenef:v:21:y:2022:i:3:p:344-358_3

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