By: Disability Group
Right now, there is a lot of discussion and debate about the health of the Social Security trust fund. And, to help clarify the discussion, it might be helpful to remember that Social Security is split into two funds — one for retirement and survivor benefits, and one for disability. Some analysts suggest that the retirement fund is projected to run out of money in 2035 while the disability fund is projected to run dry in 2016. Combined, the two funds will last until 2033.
The reality is that our government is quite functional in the operation of these programs. Millions of people regularly receive the benefits they’ve been promised through systems and processes that have very modest administrative costs.
The rise in Social Security claims has been anticipated for decades, and the Office of the Chief Actuary of the Social Security Administration recently reported in a congressional committee that a temporary redirection of 0.2% of the FICA tax, for just 12 years, would meet the current and future demands of the Disability Trust Fund.
In addition, the Trustees project that Social Security benefits will increase next year, though the increase could be small. They project a cost-of-living-adjustment, or COLA, of 1.8 percent for 2013; the actual amount won’t be known until October. It’s also important to note that beneficiaries got a 3.6 percent increase this year, the first after two years without one.
Pundants and observers have offered many likely remedies, should there be any sort of anticipated shortfall including the possibility of simply abolishing the current trust fund model, and paying for promised benefits by allocating appropriate government budgetary funds . Just as the government finances other promised benefits, like pensions and healthcare for retired government workers and military retirees, the government could also budget for social security disability benefits.
In addition, the Trustees suggest several changes that could restore the program to solvency for the next 75 years. An immediate payroll tax increase of about 1.3 percent for both workers and employers would correct the projected deficit, as would immediately reducing benefits by 16.2 percent, or some combination of these two approaches. In the end, there are many solutions to any anticipated shortfall in funding, and we are confident that we will be able to meet the demands on the current system.