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Cuddigan Law, P.C. L.L.O.

Are Your Disability Benefits in Danger?


Posted on Jun 21, 2013

Maybe you’ve seen the headlines: “Disability Fund to Run Out by 2016!” If you are one of the nearly 11 million Americans who depend on federal disability payments to make ends meet, you are probably concerned. What is really going on?

According to a 2012 government report, the Social Security Disability Insurance program is expected to exhaust its trust fund in 2016. When that happens, there will not be enough money to cover payments to the disabled.

When you earn a paycheck, a portion of your earnings is taken out and given to the Social Security Administration. This money is put into a trust fund and is supposed to be paid to you when you retire or stop working because of disability. The Social Security trust fund is divided into two pools of money: 

  1. The Old Age and Survivors Insurance Trust Fund (OASI)
  2. Disability Insurance Trust Fund (DI)

Payments to those receiving benefits come out of these pools of money.

Unfortunately, a tough economy, aging baby boomers, and increasing numbers of disabled citizens mean that more people are applying for SSDI. More money has been paid out in SSDI than has come in. This means that the pool of money is running low. It is expected to run out by 2013. At this time, money coming into the DI trust fund will only be enough to cover 80 percent of disability payments. If nothing changes, benefits are likely to be cut.

There are possible solutions. Right now, about 1.8 percent of your paycheck goes to disability, and 10.6 percent goes to retirement. Lawmakers have suggested taking some retirement money and putting it toward disability. However, the OASI trust fund is also being depleted. It is expected to run out of funds in 2035. Diverting money would mean both programs run out by 2033. Another option is to raise the Social Security payroll tax.

It remains to be seen if a divided Congress can agree on a solution. If they can’t, Social Security disability benefits are likely to be cut. 

For more information on this, or for help with your own disability claim, contact us today.

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