SSA Trustees Release 2013 Report: SSDI Short on Funds
Posted on Jun 15, 2013
On May 31, the Social Security Trustees released their annual report on the financial status of Social Security trust funds. The report received a lot of attention in the media. Much of the attention was focused on the possibility that the Social Security Disability Insurance program will exhaust its trust fund in 2016.
If you are disabled and depend on Social Security disability benefits to make ends meet, you may wonder, “what is the Social Security Disability Insurance Trust Fund?” and “What does this mean for me?”
When you work, a percentage of your income goes towards Social Security taxes. This money is used to pay Old-age, Survivor, and Disability benefits. Any excess money is put into a trust fund. That money is invested in non-marketable securities that are guaranteed by the US government. There are two separate trusts funds:
- The Old Age and Survivors Insurance Trust Fund (OASI) which contains retirement funds
- Disability Insurance Trust Fund (DI) which funds SSDI
Recently, Social Security costs have exceeded income. The main reason is that baby boomers are getting older and are reaching their high-disability years. An historic 11 million Americans currently receive disability benefits.
When the Social Security Administration collects less money than it pays out, money is taken from the trust fund to help make up the deficit. Because money has been taken out for many years, the DI trust fund will run out of money in 2016. At that time, the money paid into social Security will only be enough to cover about 80% of disability payments. Unless something is done, payments to disabled Americans will be reduced.
Congress has two options. The first is to temporarily divert money from the retirement fund to the disability program. The other is to increase the payroll tax for disability by 0.2 percent. Neither option is popular with politicians. However, if no action is taken, SSDI payments will certainly be cut.
If you have questions about how these events might affect your social security benefits in Massachusetts, contact us today.