Sunday, August 21, 2011

Social Security Disability Close to Insolvent?

The AP news is reporting that Social Security disability is getting close to insolvent. The news article points out that with the aging of boomers and the economy more people are applying for disability benefits. So right when we are all concerned about debt and revenues we have another sign of the times. Despite the fact that for years the entire Social Security system was dipped into by the federal government instead of set aside we have another potential problem. I am not sure how many may think that those getting SSDI and SSI are not entitled but the vast majority of those drawing benefits have run a gauntlet to obtain benefits which are a fraction of what you can earn in the world of employment. I remember one time realizing how tough it must be for one client who was earning over $60000 a year to seek annual benefits that were perhaps 20% of what he had earned. Yet he had to go to a hearing (the wait took over a year) to prove he no longer was employable. When you are not working and in poor health the process can seem agonizingly slow. Sure some of those receiving benefits may not deserve them but almost all do deserve them and the program has worked for many years. There is a need for increased revenues into the system yet politics is getting in the way. I can say that some feel lifting the cap or lid for contributing into the system would make it solvent but that may not be passed. Currently all wage earners pay into it up to $106800. If you make more you do not pay more. So the athletes, the corporate executives and others making really good pay have a benefit none of the rest of us have. They do not pay a dime over $106800.
UPDATE AND A NEW VIEW ON THIS: Over at another website they are reporting that this story about insolvency is not totally accurate. The article points out SSD programs and the fund are not close to insolvent but that it is more of an accounting situation. In the past the disability fund and the retirement fund have separate accounts but have transferred funds between them from time to time. A simple accounting transfer and both are solvent until at least the year 2035. This should remind us to be careful about assuming all the stories swirling about Social Security are accurate. One source for further details to strengthen Social Security is here.

1 comment: said...

The current estimate is 2017, which is vast increase from reports just a few months ago which predicted Social Security to run dry by 2038.