When they take Social Security tax from your paycheck, here’s what happens to it

4 min read
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Social Security operates in a strictly controlled investment environment: Treasury securities only, and no stocks or corporate or municipal bonds.

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People may think the money taken from their checks is sitting in some gigantic vault or that it’s invested in the stock market or in municipal bonds. Another common misconception, according to AARP, is that the money from your check is put into an account under your name. At retirement, you get it all back, plus interest. The “shortchanged on benefits” scenario says you get back less than you pay in. Theoretically, this could happen, but an Urban Institute study examined 7 scenarios for people in various circumstances (married, single, various wage levels) and found that most received more in benefits than they had paid in taxes.