People who have watched the news regularly over the past few years have heard a lot of discourse about the Social Security system in the United States. The truth is that those who have been counting on it to fund their retirement should think twice. Fortunately, people whose physical disability has prevented them from working will likely be safe from the same financial hardships as other Social Security beneficiaries.
Social Security Is Running Out of Money
As it stands right now, the Social Security Trust Fund will run out of money in 2035. This doesn’t mean that the system will cease to exist, but it does mean that the benefits for people currently in their 20’s and 30’s will be significantly less than those today’s seniors receive. In fact, there will only be sufficient funds to give future seniors 75% of the promised benefits.
Social Security Alone Doesn’t Provide Enough Income
Even at the rates seniors are getting now, the benefits are not enough to live on. A man or woman can easily find out about how much they can expect to receive in Social Security benefits when they retire. Sadly, it may not be as much as one would expect. In 2008, Social Security benefits only accounted for around 40% of the income of people 65 and over. Those without a savings account will find themselves in trouble.
You May Not Be Eligible As Soon As You Think
One of the solutions being considered is to raise the age of retirement from 65 to as high as 70. The increase would help to alleviate some of the strain put on the system by a population with a growing average lifespan. If this happens, men and women will have to wait five years longer than expected to become eligible for Social Security.
If Medicare Fails Social Security Won’t Cover the Extra Cost
At the same time that people may have to wait longer to receive less money, they could also face an increase in their medical costs. Medicare is in worse danger that Social Security and if it should fail we may be faced with extra out-of-pocket bills.
Physical Disability Benefits Are Not in Danger
There are almost 11 million people dependent on federal disability payments and all of this talk about the future of Social Security is bound to make them nervous. Luckily, physical disability benefits are unlikely to disappear.
Within the Social Security Administration there are two trust funds, one for Old-Age and Survivors Insurance (OASI) and a separate one for Disability Insurance (DI). Both are funded by payroll taxes. In the past, disability benefits have been saved by diverting a larger portion of the tax out of OASI and into DI for a limited period of time. That may happen again even though it would mean more trouble for retirement benefits. Another possibility would be to increase the payroll tax and put the extra into the disability fund.
However the American people choose to handle the problem, physical disability benefits will remain available for those who qualify. This is not the first time the program has been in danger. Congress has averted this same crisis before and they will do so again.