Every insurance company has a reserve fund, and Social Security is no exception.
An insurance reserve fund provides a backup source of money for those times when
claims paid out exceed income from premiums and investments.
Social Security's reserve fund is often referred to as the
surplus, because it is
replenished from the surplus income Social Security has taken in over the
last several decades.
The Social Security Reserve Fund started out, in 1937, with a balance of about $766
million dollars. By 2012, the balance was
about $2.6 trillion dollars.
Between 1957 and 1983, Social Security drew on this reserve fund 12 times, in amounts varying
from $126 million in 1957
to $4,971 million (4.971 billion) in 1978.
Since Reserve Fund monies are stored (invested) in U.S. Treasury bills, drawing on the Reserve
Fund requires the U.S. General Fund to repay some of the principal
(not just interest) on these bills.
The following graphs depict the history of the Social Security Reserve Fund balance,
over some selected representative years.
The first graph shows the fund fluctuation in the years when it varied
between $766 million and about $38