Editor’s Note: After a long career in the data processing industry, Russell Gloor joined the Association of Mature American Citizens in 2013. Gloor received training from the National Social Security Association and was accredited by the NSSA® as a Social Security adviser in 2016. Currently part of the AMAC Foundation’s Social Security Advisory team, he annually counsels thousands of American seniors about their Social Security options. In addition to answering Social Security questions daily, he also authors the AMAC Foundation’s nationally syndicated weekly “Ask Rusty” advice column and has written three instructional books about Social Security.

Dear Rusty: Is there any way Congress will vote to pay back the Social Security funds they took for their stupid reasons and left IOUs in place of the funds? Because of the funds they took going back many years, we didn’t have any decent Cost of Living Adjustments for a few years. In fact, there were I think 3-5 years that we didn’t get any COLA. Please Rusty, can you find out if this is true or false? Help us seniors! Signed: Resentful Senior

Dear Resentful Senior: I can assure you that I’ve fully investigated the allegation that politicians have squandered Social Security’s money and found that charge to be, simply speaking, a myth. I’ve gone back and looked at Social Security revenues and expenses since the government first started collecting FICA payroll taxes in 1937 and found that every dollar ever collected for Social Security has been used only for Social Security purposes. Over the years, various claims have been made that the money has been used for other things, but I’ve researched each of these charges and found them all to be false.

Where the misconception mostly originates is that any excess money collected from working Americans for Social Security is invested in “special issue government bonds” which pay interest, as mandated by President Roosevelt when Social Security began.

As with any investment, a financial obligation instrument is given in return for dollars received. Remember when we used to buy “U.S. Savings Bonds?” We’d use our money to buy those bonds, hold them and later redeem them for a higher amount than we paid. That’s exactly how Social Security contributions have always worked – excess money collected from working Americans is used to purchase special issue government bonds which are held in reserve, earning interest, for future Social Security needs.

These special bonds reside in a Social Security Trust Fund and, as of the end of 2022, were worth about $2.8 trillion. Are these bonds “worthless IOUs” as some would claim? Hardly, since they are redeemable as needed to pay Social Security benefits.

Considering that, since 2010, Social Security’s income from payroll taxes on American workers has been less than needed to cover benefits paid out, redemption of bonds held in the trust fund is the only reason Social Security has been able to continue paying full benefits to every beneficiary.

The trust fund is a financial safety net which is now protecting all Social Security beneficiaries from having their benefits cut. The problem is, unless Congress acts soon to reform Social Security’s financial picture, the trust fund will be fully depleted in about 2033 resulting in about a 23% cut in everyone’s monthly Social Security benefit.

I’m optimistic that will not happen (it would be political suicide) and, hopefully, Congress will act soon to reform Social Security and restore it to financial solvency and avoid a future cut in everyone’s benefits.

Regarding Cost of Living Adjustment and the lack thereof for several past years, COLA is determined by the government’s standard inflation measure – the Consumer Price Index. There were several years (2010, 2011 and 2016) in which the CPI showed no inflation so, therefore, no COLA increase was given.

Last year, due to soaring inflation, everyone got an 8.7% increase in their Social Security benefit, but that doesn’t happen every year. The average annual COLA increase over the last two decades has been about 2.6%, although COLA for each year can be wildly different depending on each year’s inflation measure. In any case, the lack of a COLA increase in past years was not a result of any political chicanery, it was the result of low inflation during those years.

This article is intended for information purposes only and does not represent legal or financial guidance. It presents the opinions and interpretations of the AMAC Foundation’s staff, trained and accredited by the National Social Security Association. NSSA® and the AMAC Foundation and its staff are not affiliated with or endorsed by the Social Security Administration or any other governmental entity. To submit a question, visit the website (amacfoundation.org/programs/social-security-advisory) or email ssadvisor@amacfoundation.org.