BillyV
Antidisestablishmentarian
- Oct 31, 2011
- 592
- 118
- 78
Apparently not that basic. You seem to have misunderstood. The investment will cover only the difference between benefits due and FICA collections. That will amount to less than 30% of the total.
Yes, but those new collections are also invested on a daily basis. The benefits will still be paid from those investments.
Only the difference between collections and current benefits, the surplus, is invested. That surplus was created precisely because of the shortfall the actuaries predicted.
No, all collections are invested immediately in special issue government securities, and all benefits are paid through the sale of those securities.
If all the income is invested, how do benefits get paid each month?
Money to cover expenditures (mainly benefit payments) from the trust funds comes from the redemption or sale of securities held by the trust funds. When "special-issue" securities are redeemed, interest is paid. In fact, the principal amount of special issues redeemed, plus the corresponding interest, is just enough to cover an expenditure.
The amount bought in 2011 was $1,015 billion, while the amount sold was $946 billion. See investment transactions for more detail and earlier years.
Trust Fund FAQs