Social Security Trust Fund Accounting

This is the Truth Network. Welcome to Finishing Well, brought to you by CardinalGuide.com with certified financial planner Hans Scheil, best-selling author and financial planner, helping families finish well for over 40 years. On Finishing Well, we'll examine both biblical and practical knowledge to assist families in finishing well, including discussions on managing Social Security, Medicare, IRAs, long-term care, life insurance, investments, and taxes.

Now, let's get started with Finishing Well. Welcome to Finishing Well as Certified Financial Planner Hans Scheil. And today's show is Social Security Trust Fund Accounting. And so you may have heard these reports about the Social Security Trust Fund, which that term in itself, I think, is greatly misunderstood. But there is this giant trust fund, there's no doubt.

And there's all sorts of reports that, but if you listen to them, I thought about, I couldn't help but think about Proverbs 22, 13, where the sluggard says, there's a lion outside. I could be killed if I go into the streets. Or Ecclesiastes 11, 4 says, he who observes the wind will not sow, and he who regards the clouds will not reap. In other words, you need to do what you need to do based on. You're planning in your life.

And then you need to seek the truth when it comes to these ideas about Social Security. And so I'm so glad that you tuned in this show today because it's going to help you, you know, not react based on fear, but realize that the truth will set you free, that God has got all sorts of plans for people through Social Security. And it is billions of dollars that we're going to be talking about. And I think through understanding the truth that Hans is going to supply for you today and the actual accounting, you're going to see there's every reason in the world to be diligently sowing in this area of Social Security. And so, Hans.

Yeah. I do this video every year. Canvas. Right after the Social Security Trust Fund. accounting report comes out.

And so just it is a law. That every year the Treasury Secretary, or it's really the President's responsibility, and the Treasury Secretary does it for him. is prepares an accounting. of Social Security. Yeah.

If you ever read this thing, which I don't necessarily suggest, I read it every year. kind of speed read it because I don't have to read every word. But I read it and I read it thoroughly and it Um So it's the report to Congress, and it says this is the status of the Social Security trust fund and the social security system of how well it's funded and that sort of thing. And then the news people get a hold of it, and it's really painfully obvious to me. That None of the people who report on this.

have read the report. They've just all read each other's articles and they've skimmed over the report or never looked at it. Yeah. What they just zero in on is Social Security is going to run out of money in 2034. That's what it says.

It's just bump, you know, and then that gets translated as Social Security is going broke. Then it gets into, well, what's going to happen then?

Well, benefits are going to be cut by as much as 20%. Um Da da da da da da da da da, and there's all this. Information. That is out there. And of course, I'm while I'm reading all these articles, I pull because you can get it online.

And if you go to our video, um that we made on this. Or you go to our website, cardinalguide.com. Um There and you go to the show notes. There's actually a copy of the whole 300-page report. And I put it in there just to show people: I've read the report.

Here it is. I'm not suggesting you go read it. because I pulled out of it the necessary numbers to just make my case. And so my position is Yeah, we got some problems with Social Security. There's not enough money in the trust fund.

And the predictions Or the actuarial predictions of the whole system that go out for 75 years. We need more money coming in to pay all the benefits for everybody for seventy five years.

Okay? Oh no kidding. I mean it's it's it's just So there are problems. But what they're saying in the news He is really different than what's put in the report. And it's not as fatalistic, okay.

Yeah. The reason I'm addressing this and putting it so important is that you Are liable, if you're like a lot of folks, to just draw those same conclusions from the same articles and then people repeating that. And so you pretty soon think that Social Security is not going to be there.

So what's the use? And you're afraid of this. Talk to me a little bit, Robbie. Yeah, and for me, I guess I didn't understand the fundamentals before I started doing this program with you. That when people are talking about the Social Security Trust Fund, You know, I have this picture that you know, that I guess that that this is actually what's going on with income and expenses.

And the trust fund is actually like the money that's set aside to over encase the income and and the money going out, you know, expenses don't line up. And so the trust fund is so gigantic, it's unbelievable that you think, or I always thought, that had to do with ongoing expenses, but it really isn't. It's like this giant savings account from my perspective. It's a giant savings account that they have to sit back to say, okay. You know, this is to take us on into the future.

And what that really does give us, because of the size of the trust fund, is this like long runway to get the thing straight.

Okay, so let's start at the basic numbers here. And you'd mentioned billions earlier. Unfortunately, we're talking about trillions here. You know, and a trillion is a thousand billion. And so it's a lot of money.

And the trust fund at the end of 2024 Head. 2,721 billion in it.

Okay. The it probably has a little bit less than that right now. But I'm talking about a little bit. We're in the middle of 2025, so let's not worry about what's in there till next year. Last year, the beginning of this year.

two point seven trillion dollars. that we got before Social Security runs out of money.

Okay. Let's move over to the income statement.

So let's look like the benefit payments.

So the Social Security checks of everybody in the US. is getting Social Security. in 2024 was one trillion four hundred seventy one billion. And that number is so large, it's hard to comprehend But You know, let's call it one and a half billion. Trillion, one and a half trillion.

It was paid out in benefits.

Okay, and that's what everybody's worried about. Like that's not going to continue.

Okay, that's going to stop. And I'm telling you right now, it's not going to stop.

So One comma four hundred seventy one trillion.

Now where does the government get that money? to pay out the 1.5 trillion.

Well, let's start it. First of all, we got payroll tax contributions. during twenty twenty four. almost 1.3 trillion dollars.

So Yeah, out of every paycheck for those of you that are working or when you were working, You paid six point two percent. Every check you get from the Truth Network, Robbie, you pay 6.2 percent. of your income. goes into Social Security, every paycheck. And then the truth network.

matches that 6.2% out of their money, So On behalf of your income 12.4%, goes into the trust fund or it goes into the government.

Okay, to pay these benefits.

So The taxes, the 12.4%, that went in added up.

So almost $1.3 trillion.

So most of the Social Security last year. You got paid out of the money coming in. from the people paying taxes. and then the recipients collect the checks.

Okay. that there was a deficit. Are you with me still, Robbie? Oh, yeah. Yeah, I understand completely.

Okay. And then they got other sources of income.

So there was $69 billion. that came in. which was interest on the Social Security Trust Fund.

So That's a lot of money. I mean, it's $69 billion. Question. we earn interest on the two point seven Trillion that's in the trust fund.

So that's money available to pay benefits. And then there's another column on the income statement. Taxation of benefits, all of the people that are well to do. to pay taxes on their Social Security. that money goes was collected federal tax it goes straight into the trust fund or straight into the social security account.

That's 55 billion.

So When you add all those numbers up, we got one. Trillion 417 billion. of income that the Social Security fund had during twenty twenty four And the paid out was one trillion four hundred seventy one billion.

So we almost collected enough money to pay all the benefits, but we were short $67 billion. Which is a Small amount of the trust fund, and they took it the 67 billion that we were short. out of the trust fund. And it's about it's not It's about 2.5% of the trust fund. Um was taken out during 2024 to pay benefits.

So it went down by sixty seven billion dollars.

So I know I've thrown a lot of numbers at you and it's kind of boring accounting. But I look at this and there's You know, so there's a problem because I believe the actuaries, as they presented, and they presented several scenarios. They kind of have the worst case scenario. The expected scenario and the best case scenario. And of course, the people zero in on the worst case scenario, which is the thing runs out of money in.

2034. But the numbers, first of all, they don't know what the numbers are going to be. But I'm telling you that last year we used up two point five percent of the trust fund.

Okay. And so it's my feeling it's not going to run out of money anytime soon. And I think what I'd like You all to do that are listening is: I'd like you to, I'd like to change your. action steps that you take from fear Two. Holding your politicians accountable on either side of the aisle, or to get together.

Yeah. simply start working toward a solution for this.

So I know we're about ready for a break. Right, right. And again, it's From previous programs for years and years and years, and we never took any money out of the. Trust fund. Right?

That didn't even ha take place until What, two years ago? But we're going to remind you right now, this show is brought to you by Cardinal Guide, CardinalGuide.com. And there at CardinalGuide.com, you're going to find the seven worries tabs, the first of which is Social Security. And we're hoping that by listening to this show, that won't be a worry. And you can get a great video on the same lines with both Hans and Tom.

Show notes, a board to give you these numbers so you can actually kind of see them a little bit more clearly. Again, just to give you more information so that you can act out of faith and not fear when it comes to your Social Security, a major part of your planning. And so when you go to CardinalGuide.com, you're going to find another wonderful tool. It's Hans's book, The Complete Cardinal Guide to Planning for Living in Retirement, as well as a workbook that goes along with that, which is also amazing. And also my favorite, the Contact Hans and Tom page.

And so when we come back, we'll have a whole lot more on the Social Security Trust Fund accounting. Stay tuned. Investment advisory services offered through Brookstone Capital Management LLC, abbreviated BCM. a registered investment advisor. BCM and Cardinal Advisors are independent of each other.

Insurance products and services are not offered through BCM, but are offered and sold through individually licensed and appointed agents. Cardinal Advisors is not affiliated with or endorsed by the Social Security Administration or any other government agency. Welcome back to Finishing Well with Certified Financial Planner Hans Scheil, and today's show.

Social Security Trust Fund accounting. And so we gave you a good idea of the issue.

Now. Fortunately, Hans, there's a lot of solutions.

Well, there are. And so, you know, for those of you that maybe missed part of that, we. We went through this and all the news media and they just. They go to the worst case scenario. Most of them don't understand finances and accounting and how money moves around, but Social Security has $2.7 trillion in the bank.

And we used during twenty twenty four to pay benefits. sixty seven billion or about two point five percent. Of the 2.7 trillion to pay benefits.

So we got a problem here. And when you project things into the future, Um if we don't change some things.

Social Security has some financing issues. Um But we're not going to be broke. In 10 years or nine years, and at least in my opinion. And if we ever got to broke. which I don't think we're going to get there.

we're still going to be able to pay out. 80% of the balance notes Um but they're going to find the money somewhere.

So what I want to talk about here are just some solutions. This is what I'd like to change your Outlook on social security. And so the way Social Security is paid for. is a six point two percent payroll tax on every employee in the country. and self-employed people pay more 'Cause they gotta pay the employer and the employee portion.

You personally pay sixty six point two percent. If you're still working this year, And the maximum earnings that Social Security will Protect is $176,000. annually.

So when if you make more than that, they stopped taking out the 6.2%. Uh when you exceed one hundred seventy six thousand. Yeah. The employer matches your 6.2%.

So the government is collecting twelve point four percent of your wages. And that's going in to pay benefits and beef up the trust fund. Yeah. Just sitting here looking at it. That's not enough.

I mean, it just and we did a little math and we said, okay. How much would be enough? to cover the 67 billion that they used last year. We did some simple math and it comes to like attacks of Um is 6.5%.

So if the 6.2% went to 6.5 had been 6.5 And then the employer matched that. we wouldn't have had a deficit over the sixty seven billion dollars.

So I'm not suggesting that as a simple solution because the deficit could be bigger You know, in years down the road, but Yeah. trying to say is that's one option. Yeah, you know, the AARP did a study. Um and they studied people that were Democrats that were Republicans, that were 30 years old, that were 70 years old, that were 60 years old. Um Pretty much widely, people would prefer to have increased contributions to Social Security versus reduced benefits.

So and that was young people, it was older people, and it was overwhelmingly high that people, the electorate out there wants this problem solved. Yeah, even young people want that. And of course, they're putting aside for their retirement.

So that's one way to fix it. Another way to fix it is to raise the retirement age again or do a combination of these things. Is the retirement age way back when was 65 and it was that um all the way till the mid-1980s. And then the last time they revamped this, They raised it to 67. But it's still not at 67, so they phased it in.

you know, like my full retirement age was 66. in eight months. And the people born I think in 1960 are actually at the full age 67 retirement age.

So anyhow. That's where it is now is age 67. And if that would be changed to 70. Um Dan. You know, again, I'm not necessarily just recommending this on a whim, but that would be another option that would.

significantly reduce the future the need for future contributions. or the amount of the future contributions.

So that would be another fix. you could raise the income That's taxed at 6.2% or 12.4%. you know, meaning that when a person would hit 176,000. and they'd stop taking it out. They could keep taking it out.

Um And none of these tax increases are going to be very popular. But that's the problem. Yeah. this is a pay in and then you reap benefits out of it. Yeah, we're we're we're just not paying in enough for everything we're promising.

So yeah, I mean, isn't that always Yeah, we all feel too. You know, it's hard to sew. uh when it comes to saving. And, you know, it's pretty easy to sell people the idea on the benefits and not so easy to sell people on the taxation, but Now I was sitting there just thinking about those solutions. And yeah, who wouldn't?

And once you begin to really understand how wonderful Social Security is. To raise it, you know, whatever percent, even if it was one percent, you know, it would really fix it. Um, it seems like that that seems really favorable. Uh, But then also, you know, they've never done anything with the fact that you can begin to draw Social Security at 62.

So that's another age. thing that they could possibly change. that would affect the benefits 'cause to me a lot of people just mess with their world by selecting to start their Social Security at 62. And there just there are numerous ways to fix it, but I guess one of the huge things w we need to do is have a discussion with our congressman or our senator or whatever person to say, Hey, you know, I just want you to know that I'd really, really support this if you decided to increase the The taxes on this issue, we would love it. You know, if the senators and congressmen had that.

kind of support, I think it would really help them jump in there and make that hard decision.

Well, and then again, here's what I'm going to say is when as soon as you start suggesting solutions, People come out. With all these statements that are a lot of times they say, oh, they gave all the Social Security away to. uh illegals or immigrants or whatever and Not true. I mean, they pay Social Security, they're not going to pay you Social Security benefits unless you paid in.

Okay. I mean it's just that's how the system works. And, you know, there there's. They they they just uh they don't They don't pay it. I mean, there's a whole formula.

Anybody wants to take this up with me, just do it because I. I can show you that Social Security doesn't pay benefits out to people who didn't contribute. And you have to have contributed. For 10 years or 40 quarters. of a certain amount or you're not getting so scared, okay?

Um People will say, Oh, let let everybody put them in. their own account. You know what, I'm just going to tell you bad idea.

Okay, and it's just I know I might get some people throwing people that have money and they got a bunch of money in a 401k. They say this. They say, let me manage the money. And all I'll do better with it than the government. And I don't doubt that.

The problem is they will do that. You give a lot of people the access to the money and the ability to manage it, and they're going to be nothing there when they retire. I mean, I could I can watch my own employees. robbing their 401k plan. Under emergencies and all kinds of things, that just to me, that's a bad idea.

is privatizing Social Security. And so I get a lot of people. When I start, I mean, I'm going to be like the guy sitting there that's getting dunked in the water where you're throwing the baseballs. When I come out with all these solutions and the real facts, but You know, I just, I think the real pros need to sit down with this report and sit down with the people that wrote the report. And then the congresspeople need to have their people that understand the report all sitting around the table and they need to come up with a solution.

And the solution is to get more money coming into the system, and it's not a huge amount of money. Yeah, and to do it. fairly quickly and to put this program on you know, on some solid ground. Yeah, because every day that they waste is another it makes it make it more difficult for when they finally get around to doing it.

So the quicker they move, the the the less that they're gonna have to move the dial. Oh yeah. Yeah. Stop reading the news. For your You know, facts on the status of Social Security.

It's probably the worst. Place you can go, and at the very least. Look at the credentials. of who wrote the article, okay? I mean, just look at them.

And if they don't have any financial credentials, then they better be quoting people with financial credentials. And then if you're appointing people with financial credentials, I want to know what their agenda is. Because there's a lot of people with an agenda that just they want to just talk about how the whole world's going. in the toilet you know and it's just Wow. Part of that may be true, but I'm one of these people.

We got Social Security, here it is. It's wonderful for a lot of people. And I'm just not going to adhere to all the doomsday thinking.

Okay. No, I'm with you and I you know To me, and I'm on Social Security, but I'm also able to work, and God blessed me with all that. I never would have dreamed when I was a kid or even when I was in my 50s, as you well know, how wonderful Social Security was going to be. And I heard my grandfather, very conservative, Republican ancestors just put it down and put it down and put it down my whole life. And so when all of a sudden I went, wait a minute, you know.

All this I've been complaining about all these years, and now I'm getting all this that really makes my life so much easier at this point in my life. Like, oh my goodness, what a wonderful thing that is.

So, I'm with you wholeheartedly that we don't need to pray. Privatize this thing because You know, people just don't see the value of it until they actually see the value of it. And, you know, praise God, he set it up for us. And I'm with you. I think that there's got to be some wonderful solutions.

But we remind you: the show is brought to you by Cardinal Guide, CardinalGuide.com. And if you go to CardinalGuide.com, you'll see the first worry on the seven worries tab is Social Security because it's so critical to the rest of your planning. And there you're going to find a wonderful video on that tab along these same lines on Social Security. trust fund and Show notes, etc., all with that. And again, Hans's book, The Complete Cardinal Guide to Planning for and Living in Retirement, gives wonderful information on this idea of the Social Security Trust Fund, helps you really understand it a lot better.

And it's also in the workbook that goes alongside that. And then again, the famous Contact Hans and Tom page. It's all there at cardinalguide.com. Amazing stuff. Thanks, Hans.

Thank you, and God bless you. God bless. The opinions expressed by Hans Scheil and guests on this show are their own and do not reflect the opinions of this radio station. All statements and opinions expressed are based upon information considered reliable, although it should not be relied upon as such. Any statements or opinions are subject to change without notice.

Investments involve risk and, unless otherwise stated, are not guaranteed. Past performance cannot be used as an indicator to determine future results. Any strategies mentioned may not be suitable for everyone. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for you. Before acting on any information mentioned, please consult with a qualified tax or investment advisor to determine if it's suitable for your specific situation.

Finishing Well is designed to provide accurate and authoritative information with regard to the subject covered. Investment advisory services offered through Brookstone Capital Management LLC, abbreviated BCM, a registered investment advisor. BCM and Cardinal Advisors are independent of each other. Insurance products and services are not offered through BCM, but are offered and sold through individually licensed and appointed agents. Cardinal Advisors is not affiliated with or endorsed by the Social Security Administration or any other government agency.

We hope you enjoyed Finishing Well, brought to you by CardinalGuide.com. Visit CardinalGuide.com for free downloads of this show or previous shows on topics such as Social Security, Medicare, IRAs, long-term care, life insurance, investments, and taxes, as well as Han's best-selling book, The Complete Cardinal Guide to Planning for and Living in Retirement and the Workbook. Once again, for dozens of free resources, past shows, or to get Han's book, go to CardinalGuide.com. If you have a question, comment, or suggestion for future shows, click on the Finishing Well radio show on the website and send us a word. Once again, that's CardinalGuide.com.

CardinalGuide.com. Oh. This is the Truth Network.