Social Security isn't a retirement investment account. It is social insurance. They are different things.
Social Security does not add to the national debt. It is even prohibited by law from borrowing money.
Politicians who talk about cutting or changing Social Security to address the debt are lying to you.
Here is how Social Security funding works:
Social Security is funded by payroll taxes. When more money comes in from payroll taxes than benefits that need to be paid out, Social Security is obligated to invest the surplus in Treasuries.
Treasuries are bonds. Governments and corporations issue bonds to generate money. A bond is a loan from the purchaser to the issuer.
A bond has a principal, a maturity date, and an interest rate. The principal is the value of the bond. When you buy a bond, you pay the principal. When the bond reaches its maturity date, the issuer is required to pay the principal back to the holder. The interest rate is the amount the issuer pays to the bondholder.
It is similar to how, when you take out a 30-year mortgage, you agree to a repayment schedule and to pay interest until the loan is repaid.
As Treasuries mature, if Social Security doesn't need that extra money, it rolls them over by buying new Treasuries.
When Social Security needs more money to cover benefits, it cashes out Treasuries.
The federal government has had a deficit for the past 25 years. This means that when it has to meet its obligations, it needs to borrow money.
This is how people claim that Social Security adds to the debt. That is ridiculous.
Companies and countries buy US Treasuries. You and I can buy them. Anyone holding a Treasury when it matures isn't increasing the debt. The government’s unbalanced budget is causing the debt.
Cutting Social Security will do nothing to get the US out of debt, but it would create hardship for millions of Americans.
Social Security currently has a shortfall, primarily because people are living longer and the large Boomer generation is retiring. In 1960, there were 5.1 people paying into Social Security. Today, there are only 2.7. The trust fund from past surpluses is keeping it afloat, but it is running out.
The easiest way to address the shortfall is to remove the tax cap on Social Security. Benefits do not have to be increased to do this. This is exactly what was done for Medicare in 1993. The tax cap was removed, and benefits weren't increased to better fund the program.