Social Security Taxes
When Social Security taxes are taken out of your paycheck they are not held in perpetuity to be given back to you when you retire. Social Security money is not held in some vault somewhere, nor is it put in to an account with your name on it, nor is it invested in the stock market. All the money collected through these taxes are put in to one of two different trust funds, The Old-Age Survivors Insurance Fund and The Disability Insurance Trust Fund. In these trust funds they earn interest at an average rate of 3.37%. This interest rate is based off of a formula from 1960 that is recalculated each month. In 2014 the Social Security funds held $2.789 trillion, larger than any other retirement or pension account in the country by more than four times. For more information on this, visit this article by Jill Cornfield with BankRate.com.
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