Social Security Disability Insurance may go dry in 4 years
In 2005, the Social Security Disability Insurance fund began to dish out more money than it was bringing in via tax receipts. That trend has continued each year — plus the number of Social Security beneficiaries grew by 489,488 in 2010, the highest one-year increase in history. This has led experts to predict that SSDI will exhaust surplus funds in four to seven years, reports the Wall Street Journal.
Social Security will spend $22 billion more than it makes
By 2015, projections indicate that Social Security will spend $153 billion in benefits and other costs. That’s $22 billion more than it is expected to take in, underscoring a problem that many Americans will soon face. With no changes at all, the Social Security retirement fund will last until about 2040 (and Medicare until 2029). Federal intervention will be required to keep SSDI alive for more than 7 years, say government auditors.
Social Security: Drowning in applicants
The recession sent a huge wave of new applicants into the Social Security program. Over the past decade, numbers swelled from 6.6 million beneficiaries to 10.2 million. Numerous U.S. states and territories depend upon SSDI funds. Texas’ enrollment has reportedly increased by 85 percent over the last 10 years, while New Hampshire’s has grown by 69 over the same span. As a percentage of total population, West Virginia receives more SSDI money than anywhere else.
Health problems related to manual labor are believed to be the cause, a common theme among states where agriculture and manufacturing are vital. U.S. territories like Puerto Rico heavily depend upon Social Security, considering the rash of factory and military base closures in recent years. Not coincidentally, such states also tend to have the highest unemployment numbers. In the case of Puerto Rico, political corruption is also an issue.
SSDI depends upon doctor’s orders
Unlike age-based programs like Medicare and Social Security retirement benefits, SSDI is closely tied to medical opinion. As someone else pays the bills, local medical officials don’t have the immediate incentive to keep enrollment numbers down. While SSDI benefits can be modest in scope – payments averaged $1,064 per month in 2009 – participants gain access to other government benefits, which increases the cost for taxpayers. SSDI expert David Autor of the Massachusetts Institute of Technology estimates that such additional programs amount to an average of $300,000 paid out per person over the lifetime of someone who receives SSDI benefits regularly.
Are higher taxes on the way?
In the short term, the only way Congress can save SSDI without tax increases is to fold it into the main Social Security fund. This would drain away retirement funds, forcing retirees to swallow benefit cuts sooner than they would have otherwise. However, as Nancy Altman of the activist group Social Security Works contends, something must be done.
“This is a program of crucial importance to every working American and his or her family,” she said.