The Future of Social Security and Potential Solutions to Extend Its Life

We have all heard the talk of how the Social Security program is insolvent and can not be supported at its current level as the Baby Boomers begin entering into retirement. But this oversimplifies the matter a bit. The reality is, there are two kinds of social security benefits: those paid out to retired persons, and those paid out to disabled persons. Workers who pay into “Social Security” pay into both of these two different “funds.”
In 1994, the Social Security Disability Insurance Trust Fund (this is where Social Security disability benefits are taken from) was on the brink of exhaustion. The solution Congress came up with was to adjust the ratio of how incoming funds were dispersed. So, more money was put into the Disability Trust and less into the Retirement trust. This naturally extended the life of the Disability trust (at the expense of the Retirement trust). But this obviously cannot go on forever. That plan essentially just shifts money from one trust to the other. It doesn’t change how much money in total is going the program as a whole.
The Social Security Disability Insurance Trust Fund is again in dire straits and, by some estimates, will be exhausted by 2016 if nothing is done. Congress could do the same thing it did back in 1994 and shift the amount of incoming money into each of the funds, but that has already been done. So there will likely need to be new solutions.
One solution is what been called the “Chained CPI,” or Consumer Price Index. Each year, social security benefits increase slightly due to inflation, the concept that this year’s money can’t buy as much as it could last year. The Chained CPI approach would take into account the probable reality that, when prices rise, people buy cheaper goods. Currently the inflation adjustment assumes people continue to buy the same price and quality of goods. This would have the effect of decreasing recipients benefits.
Another alternative has been dubbed the “scrap the cap” solution. This would eliminate that cap on social security contributions. Currently, all workers contribute to social security up to the point where they make about $113k. Any money made in addition to that amount will not have social security taxes taken out. “Scrap the cap” does exactly what it sounds like, it gets rid of that cap on social security contributions and requires all earnings to have social security tax taken out. A middle ground might be to raise the cap but not get rid of it entirely. For example, if the cap were raised from $113K to $215K the gap could be filled. This solution would keep benefit amounts the same.
If you have suffered an injury and can not work, you might be eligible for social security disability payments. I am an experienced disability attorney and have the passion and know how to ensure you have the best shot at obtaining the benefits you deserve. Give me a call to set up an appointment.
See Related Blog Posts:
– Disability for Minor Children Under the Age of Eighteen
– Availability of Disability Benefits for Mental Health Concerns