Milford chronicle., 1957-11-08
Survivors Insurance
Program Is Sound
There Are Plenty OF Funds Avail
able To Pay Benefits

Some people may have been dis
turbed recently by published re-
ports alleging that the old-age
and survivors insurance program
was running into financial trou-
BILE. You can be assured that the
program is financially sound, that
there will be enough money to pay
all future benefits, and that the
facts about how the system is f.
nanced will show you that this is
true, according to Myron Mil
bouer, manager of the Whining
ton district office of the Social Sc
curity Administration.
The old-age and survivors insur-
ance program is financed out of the
social security tax contributions
of employees and their employers
and the self-employed. These tax
contributions go into a separate
Trust Fund in the U. S. Treasury
and that part of the Fund not need
ed for current expenditures is in
vested in interest-bearing U. S.
Government Bonds, Mr.. MilboueT
stated today. The interest on these
bonds is added to the Fund. In the
20 years since 1887, the OASI Trust
Fund has grown to $23 billion.
More than 10 million men, wo-
men and children, over 10000 OF
them in Delaware, are now re-
ceiving monthly benefits and the
number of beneficiaries is expected
to grow steadily for the next so to
IS years. To cover the cost of MAX
ing payments to all these people,
Congress has written into the law
a gradually rising schedule of So
ciai security taxes.
Under this schedule employed
people now pay social security
tax of pa % of their wages up to
$4,000 a year. A matching 214% is
paid by their employers. Self-em-
ployed people pay tax of 3-3s%
on their net earnings up to $4,000
a year. CA fixed percentage of this
tax goes into the disability insur-
ance Trust Fund to finance dis
ability insurance benefits.) The
amount of social security taxes is
scheduled to go up slightly in 1860
and again in 1865, 1870, and 1875.
With the $23 billion now in the
OASI Trust Fund and with the in
come from taxes paid under this
schedule, plus interest on bond in
vestments, there will be enough
money to pay all future benefits.
During the fiscal year which
ended June 80, 1857, income to the
Trust Fund totaled ST. billion Of
this, $65 billion was tax contribu-
tions and $3.50 million was interest
on the invested assets of the Fund.
Benefit payments and administra-
tive expenses totaled slightly less
than $67 billion. So the Fund in
creased by more than $400 million
in the fiscal year just ended.
The Trust Fund has increased
every year since the program went
into operation in 1897 Since the
long range trend of the Fund is
upward, it will continue to in
crease. But it has been anticipated
that there will be periods when
the margin of income over outgO
would narrow-and that outgo
might even exceed income-for a
time before each increase in the
tax rate becomes effective, Mil
bouer explained.
With the next change in the tax
rate scheduled for 1860, a tempo
rary halt in the growth of the
Fund was expected some time be-
fore 1860 This temporary halt, it
now appears, may take place a
little earlier than anticipated, be-
cause benefit payments are some
what higher than they were ex-
pected to be at this particular
time. However, when the tax rate
increases in 1860, the Fund will
again start to grow.
Present benefit expenditures are
running higher than expected
largely as a result of the 1854 and
1856 amendments, which extended
social security coverage to over
10 million people in occupations
that were not previously covered.
Many more older workers in these
OccupatiOnal groups have become
eligible and applied for benefits
than was expected. But while the
payment of benefits to these addi-
tiOnal people affects the short
range situation of the Trust Fund,
it has almost no significance at all
when compared to total benefit pay
ments over the years, and no effect
on the lOng-range financial sound
ness of the program.
Some published reports seem to
have disregarded the strictly tenn
pOrary nature of the present sit
uation and have enormously con-
cluded that the trend of Trust Fund
growth has been reversed.
However, the Fund will start to
grow again as soon as the 1860 tax
increase goes into effect and will
continue to grow for the next so to
rs years. With the income from
the taxes now scheduled in the
law, and the interest on invest
ments, there will be enough money
to pay all future benefits. The old
age and survivors insurance sys-
tenn is self-supporting and it will
continue to be self-suppOrting Mil