Recently Wisconsin was the home for national politics playing out on a local level. As the national political scene heats up, so does speculation that the Social Security Administration will run out of cash. The year it will run out probably depends upon who you listen to.
A recent news article indicates that 2016 is the year that the Social Security disability trust fund will run out of cash. Other programs, such as retirement and Medicare are expected to be solvent for longer by comparison.
According to news sources, the reason that the SSD trust fund is expected to go broke is due to the baby boomers. In their pre-retirement years the boomers who are marginally employed, or unemployed, have applied for disability as an interim step to retirement.
As a result, SSDI claims have gone up in recent years. Claims are up 30 percent since the recession began in December of 2007. The number of individuals actually receiving benefits is up 23 percent in the same time period. Simply put, the reason that more people are receiving benefits is because disability is often age-related, and 77 million baby boomers are stressing the system.
If the trust fund runs out of cash, disability amounts may need to be reduced. Sources report that a 21 percent cut would be triggered if the fund runs out of funds. An automatic cut would occur because the fund is not allowed to run a deficit, and the lower amount reflects the amount of Social Security payments coming in to the system from those who are still working.
Although Social Security disability is a federal program, it is administered by the states and the states vary in the rate at which they grant disability. For example, West Virginia has 9 percent of its residents receiving aid while Utah and Alaska have just 2.8 percent. Currently there are 1.4 million disability claims that are awaiting determinations.
Any time there is a federal program which needs funding, the solution becomes a political one. There are at least 1.4 million individuals who are waiting to see what may happen to the financial viability of this very important program.
Source: The Washington Post, "Social Security disability trust fund projected to run out of cash by 2016," Brian Faler, May 30, 2012