Where do your FICA taxes go each day?

Here is exactly how it breaks down right now:

1. Daily Operations: Yes, it still buys bonds

By law, the Social Security Administration cannot simply hold cash. Every single working day, as payroll taxes flow into the Treasury, that money is automatically used to purchase short-term government bonds called Certificates of Indebtedness.

Then, every year on June 30th, any of these short-term certificates that aren’t needed to pay immediate benefits are rolled over and converted into long-term, special-issue U.S. Treasury bonds.

2. The Net Financial Picture: No, it is a “Net Redeemer”

While the trust fund technically buys bonds daily with incoming tax cash, it is forced to cash in far more bonds than it buys.

Because the cost of paying out benefits exceeds what the program takes in from payroll taxes and interest, the Trust Fund is running an overall deficit. ^{According to the Social Security Trustees, the combined trust fund reserves shrank by $160 billion, drawing the total reserves down to $2.56 trillion.}

The Trust Fund still cycles money through Treasury bonds daily, but on a net basis, it is shrinking and redeeming its older bonds to make sure full monthly checks can be sent out.