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Social Security Disability is Disabled

We had previously explored the most current forecast regarding the depletion of “Social Security”.  Actually, Social Security is comprised of two different trusts.  The retirement trust is the Federal Old-Age and Survivors Insurance Trust Fund and the disability trust is called Social Security Disability Insurance Trust (“SSDI”).  In that article, we discussed the retirement trust depleting assets in the 2030’s (see here). The SSDI is expected to be depleted next fall.  At that point, the $140 billion program will only pay out approximately three quarters of the benefits to which the recipients are entitled to, if no changes are made.

This is not a surprise.  The president and congress have known this problem exists for years, but cannot seem to agree on a solution. There have been proposals made in the past but it is easier to kick the can down the road and let others take the heat.  As we are currently in the heat of an election campaign it is unlikely we will see a resolution until it is too late.

A recent concept introduced is combining the two trusts into one trust for both purposes (see here). Although it would solve the immediate problem, the time horizon for the depletion of the retirement trust would then be shortened as assets in the retirement fund would be used for disability. Rather than doing the hard work of arriving at a solution that might work for both trusts, congress will take the easy way of encroaching on the retirement trust assets.  Because a resolution to making the program work has not been found and because most in congress will not be around in 2030, it is likely that nothing will happen for many years.  Currently, there are both assets and time in the retirement trust.  Although not politically comfortable, finding a solution sooner will be easier than later.

Please leave your thoughts and opinions in the comment section below. 


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