Two of the more common remarks that one hears when complaining about Social Security is "I paid into it, it's my money", and "Social Security is in trouble because Congress (or Obama, or Bush, take your pick) borrowed (or stole) from it...when are they going to pay it back?".
Before I get into dispelling, or at least addressing, the myths and misinformation that give rise to those questions, let's address the term "entitlement". Occasionally there appears a Facebook meme that expresses outrage that Social Security benefits are called (or going to be called) an entitlement, assuming that an entitlement is welfare and welfare is bad. According the the Glossary of Political Terms published by Auburn University, an entitlement is a financial benefit that an indefinite number of people have a legal right to, provided that they meet the eligibility requirements set by law. In the case of Social Security the broad requirements are that you have made payments into the system (typically by way of payroll deductions) and have reached a certain age. Without taking into account survivors or disability benefits, you can't receive benefits if you've never worked or if you aren't old enough. Social Security benefits are an entitlement because you are entitled by law to receive them.
So, whose money is it anyway? Most people think that it's theirs. They "paid into it", they get it when they retire. Yes and no. The fact that in order to receive benefits one would have had to have paid Social Security taxes throughout their working life confuses some people. They imagine that it works like a bank account: you put money in, and when you retire, you take it out. In reality, it's simply a tax, like any other tax. The main difference is that, like say a local wheel tax, it's earmarked for a specific program. The other difference is that it's a pay-as-you-go program. The payroll tax collected from today's workers pays the benefits of today's retirees. When today's workers retire, if all goes well, their benefits will be paid by tomorrow's workers.
But it's still my money, right? I paid into it, so I get it...right? Yes and no. If you reach retirement age and meet any other requirements, you will receive benefits. But what if you die before reaching retirement age? (There is such a thing as spousal and survivors' benefits, but for the sake of simplicity I will not factor them in to this example). If you die before reaching retirement age, your bank account, stocks, etc does not evaporate, but will be distributed to your heirs. It doesn't work that way with Social Security benefits. Firstly, the benefits, despite having had Social Security taxes taken out of your paychecks over decades, is in no real sense "yours" until you meet the requirements. That money is not set aside for your future use. There is no special fund earmarked for your use that "disappears" if you die early. Remember pay-as-you-go? The money that you would have received would have come out of the payroll deductions of the people working when you retired. If you die, or otherwise do not meet the requirements those funds are not yours.
But what about the Trust Fund? The Government has been looting it to pay for their deficit spending, when are they going to pay it back? The question itself reflects a misunderstanding of how the Social Security Trust Fund works. As explained earlier, current benefits are paid out of payroll taxes collected from current wage earners. 50 years of accumulated payroll deductions aren't paying for today's retirees; that money has been spent on yesterday's retirees. What is accumulated is the surplus. Until 2009 the taxes collected exceeded the benefits paid, generating an annual surplus. So where is that money? Before I explain, let's look at what happens to your money when you deposit it in a bank. Even though there is a vault in every bank with cash in it, this does not represent all the bank's deposits. Once you put your money in a bank a percentage of it is loaned out, and some is invested in interest-bearing securities. Currently, banks are required to have a cash reserve of 12% of assets. That means that 80% of what has been deposited in a bank isn't physically there in the form of piles of cash. It's earning its keep. This is similar, but not identical, to what happens to the surpluses in the Trust Fund. The Social Security Administration is required by law to invest any surplus in US Treasury Securities. This is what is meant when you hear about "the government" borrowing money from the Trust Fund. Similar to how a bank is putting the money on deposit to work, the Trust Fund, rather than sitting on a pile of cash, is freeing up the cash for current use. If, rather than investing in Treasury securities, the Trust Fund invested in private securities, it would be a similar situation, except that the cash would now be in the hands of private companies (or individuals), rather than the US Government. Having this cash in government hands, rather than private investors reduces the amount of borrowing needed to make up annual budget deficits.
One of the problems with this setup is that eventually this internal debt will have to be paid back, but the bigger problem is that, at some time in the near future, the deficits between collections and benefits will eat up the accumulated surpluses. This has nothing to do with Congress or the President "raiding" the Trust Fund, but it has everything to do with demographics. There will, of course, still be money coming in from payroll taxes, but estimates project that by 2034 there will only be enough incoming revenue to pay for 79% of benefits, with the percentage shrinking to 73% by 2089. To repeat, this has nothing to do with anybody supposedly raiding the Trust Fund, but everything to do with demographics.
The way this is set up isn't what we generally see in our day-to-day household finances, and frankly, politicians over the years, either though ignorance or telling us what we want to hear, have misrepresented how Social Security works. However, in this day and age, with information at our fingertips though our computers and smart phones, there is no excuse to be ignorant.
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