Social Security is sound financially: True or false?

By Jeanne Sahadi, senior writer


NEW YORK (CNNMoney.com) -- Since 1983, Social Security has taken in more revenue than it has needed to pay out in benefits.

That surplus revenue was borrowed by Uncle Sam and spent on other areas of the federal budget. In exchange, Uncle Sam promised to pay the program back with interest.

To date the federal government's tab to the program's trust fund has grown to roughly $2.5 trillion.

Starting in 2015, Social Security is projected to permanently take in less revenue than it has to pay out annually.

Those who say the program is nevertheless in good shape for years to come and shouldn't be a central part of any debt-reduction plan offer three main reasons:

Trust fund: The $2.5 trillion trust fund can ensure that the program continues to pay out 100% of promised benefits over the next quarter century.

U.S. backing: The promise to pay back the $2.5 trillion is backed by the full faith and credit of the United States, just like any bond sold to China or other investors.

Money maker: Far from contributing to the country's debt problems, Social Security through its surplus revenue actually made the federal deficits smaller than they otherwise would have been since 1983.

Those who say Social Security is in trouble financially offer two key reasons:

Empty coffers: To pay back that $2.5 trillion, the federal government will have to either borrow more, tax more or spend less. And that will put even more strain on taxpayers and the federal budget during a time of record debt.

Long-term shortfall: By 2037, the $2.5 trillion trust fund is projected to be tapped out anyway, at which point Social Security will only be able to pay out roughly 75% of promised benefits.

And here are some general points about the program that people on both sides of the debate seem to agree on, at least on days when they're listening to their better angels:

Gradual reform: Changes to close the program's long-term shortfall will be less painful and abrupt if they are implemented gradually.

Protect the vulnerable: Any changes agreed to should not affect current or soon-to-be retirees and should protect future retirees who are most vulnerable. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Overnight Avg Rate Latest Change Last Week
30 yr fixed4.12%4.18%
15 yr fixed3.25%3.21%
5/1 ARM3.48%3.32%
30 yr refi4.18%4.17%
15 yr refi3.30%3.21%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 17,042.90 -28.32 -0.17%
Nasdaq 4,493.39 -12.46 -0.28%
S&P 500 1,972.29 -5.51 -0.28%
Treasuries 2.45 -0.05 -2.15%
Data as of 9:28am ET
Company Price Change % Change
Microsoft Corp 46.36 -0.08 -0.17%
EMC Corp 29.26 0.43 1.49%
Comcast Corp 53.78 -0.38 -0.70%
Regions Financial Co... 10.04 -0.02 -0.20%
Mondelez Internation... 34.26 0.06 0.19%
Data as of Sep 30

Sections

Many publicly traded companies spend millions a year for political influence. It hasn't done much for their stock performance. More

In the last five years, pumpkin sales have risen 34% as people demand pumpkin in everything from beer to beef jerky. More

In the last five years, pumpkin sales have risen 34% as people demand pumpkin in everything from beer to beef jerky. More

For these seniors, the best retirement is not to retire. From a 102-year-old Wal-Mart worker to an activist park ranger, these workers have stayed on the job well into their golden years. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.