The Social Security Board of Trustees released its annual report on the financial health of Social Security’s combined trust fund reserves earlier this month. The Old Age and Survivors Insurance and Disability Insurance (“OASDI”) trust funds are expected to be depleted in 2034. At that time, recipients would only be eligible for 79 percent of their estimated benefits unless Congress takes action to strengthen the programs that fall under the Social Security Administration’s umbrella.
Last year alone, SSA paid out $941 billion to 62 million beneficiaries. Total expenditure by SSA for 2017 amounted to over $952 billion. SSA brought in a total income of $997 billion for 2017.
At the same time, the total number of Americans seeking Social Security disability benefits is plunging, a startling reversal of a decades-old trend that threatened the program’s solvency. It is the latest evidence of a stronger economy pulling people back into the job market or preventing workers from being sidelined in the first place. In fact, the drop is so significant that the agency has revised its estimates of how long the program will continue to be financially secure. Two years ago, the government had warned that the funds might be depleted by 2023, as opposed to the new estimate of 2034.
In addition to stronger economic growth, the drop reflects newly tightened standards for eligibility and the increasing number of baby boomers who are leaving the program because they have become eligible for Social Security retirement benefits and Medicare. Fewer than 1.5 million Americans applied to the Social Security Administration for disability coverage last year, the lowest since 2002.
While SSA has helped countless numbers of retirees and disabled individuals since 1935, there is no guarantee that it will continue to exist in the exact format that we are used to seeing. Keep in mind that the programs administered by SSA were never meant to be complete income replacement programs. Rather, SSA is set up to operate like any other insurance program and is meant to supplement people’s savings and other private investments. Thus, it is important to continue to try to save for your future independently to what you expect to receive from SSA down the line. After all, you have no idea what SSA will look like by the time you retire or if you are affected by disabilities.
SSA Trust Fund Report: https://www.ssa.gov/news/press/releases/2018/#6-2018-1
By: Thomas Klint of Premier Disability Services, LLC®