The pay-as-you-go nature of the Social Security system means that _____.
A)current beneficiaries are paid out of general tax revenues
B)current beneficiaries are paid out of the payroll taxes levied on current workers
C)current beneficiaries are paid based on contributions made during their last five working years
D)current beneficiaries are paid out of current earnings on the Social Security trust fund

Question

Quizplus · Accepted Answer

The pay-as-you-go system means that current beneficiaries are being paid out of the payroll taxes levied on current workers. This means that the current workers are financing the benefits of current retirees. It is not funded by general tax revenues or based on contributions made during the last five working years. Additionally, the Social Security trust fund is used to pay out benefits beyond the amount collected through payroll taxes, but it is not the only source of funding for the program.

The Pay-As-You-Go Nature of the Social Security System Means That