is now 
Officials report the Social Security Disability Insurance (SSDI) program is in trouble financially and in less than two years is expected to not be able to pay full benefits.
SSDI provides supplemental income to the mentally or physically disabled who cannot work full-time. The Social Security Administration reports that more than 11 million Americans receive SSDI payments each year.
The SSDI has petitioned lawmakers to access funds in the broader, less financially stressed Social Security retirement program until its own funding deficit can be solved.
It’s not surprising that positions about this issue divide along party lines. Republicans want the SSDI to fix its underlying costly administration structure that drains funds, which could otherwise be paid as benefits. They also want to change eligibility requirements to limit benefit payments to those who are most needy.
Democrats claim the Republicans had already targeted SSDI for budget cuts and are using the current fiscal crisis as a way to cut benefits overall creating “a crisis where none exists.” They say Republicans are refusing for political reasons to accept a proposal supported by President Obama that they claim could fix the problem. A number of Democrats are pushing for increases in both disability and social security retirement benefits.
Financial and political analysts agree the issue will be a major debate topic and will be one of the first action items the next President must address in early 2016.
The health of the larger Social Security retirement fund remains unclear. Annual reports predict the fund will be depleted by 2033. The Heritage Foundation confirms the cash-flow deficit began in 2010 when $51 billion in benefits were paid above what was received in payroll taxes, and numbers show the deficit is getting worse each year. An effort to reallocate funds from one resource to another is considered a temporary fix. At the present payment rate all reserve funds may dry up in 20 years.
Some proposed solutions include increasing the Social Security tax from 6.2% to 7% of earnings, changing the cost-of-living adjustment, enacting a means test that would reduce or eliminate social security for retirees with higher incomes, and raising the retirement age to 68.
If you have questions about how your retirement plans may be affected by Social Security funding issues, contact McRuer CPAs for a review of your strategies and goals.
