05 Aug What Happens if the SSD Trust Fund Runs Dry?
The Social Security Disability trust fund is set to run out of money sometime in 2016, according to reports by the Social Security trustees. At that time, individuals who are receiving Social Security disability benefits (which includes both Social Security disability income (SSDI) and Supplemental Security Income (SSI) benefits) as well as individuals who apply for benefits will likely encounter a Social Security disability program that looks significantly different from the program today.
What Does It Mean When They Say the Trust Fund Will “Run Dry”?
Social Security disability payments are paid out of a specially designated trust fund (there is a separate and distinct trust fund for Social Security retirement benefits). Beneficiaries are presently paid benefits as a result of contributions made by current workers and the money available in the trust fund.
When trustees and other government officials say the trust fund will “run dry,” what they are indicating is that the fund will no longer have enough money to continue making payments to beneficiaries at the current level. Beneficiaries will still be able to receive some measure of benefits because of the contributions that are received from workers; however, these contributions will not be sufficient to continue paying beneficiaries the benefits they currently receive.
What Can I Expect if the Trust Fund Runs Dry?
Politicians in Washington, D.C. have until next year to decide how to respond to this situation. Some have suggested that the disability trust fund should be replenished using funds from other sources, including the retirement trust fund. This would keep the disability trust fund solvent for an additional period of time.
If politicians do not take action, current Social Security disability beneficiaries can expect to see their disability benefits cut. Some estimates show that current contributions can fund 81% of current benefits payments; thus, a current beneficiary receiving $1,000 in monthly benefits may see his or her benefits cut by about $190 per month (leaving the beneficiary with a monthly benefits check of $810). Individuals who are not presently receiving benefits but who would apply for benefits after the trust fund runs dry can likewise expect that, if approved, the benefits they would receive would be less than benefits similarly-situated applications would have expected to receive in the past.
What Do I Need to Do?
Beneficiaries and those anticipating receiving benefits in the near future can lobby their members of Congress and other federal lawmakers and encourage them to find a lasting solution to the trust fund’s monetary problems. Without a congressional solution, it is highly unlikely that benefits payments will continue at their present levels.
Our Social Security disability attorneys can also help. At the Klok Law Firm LLC, we keep abreast of changes to the Social Security disability program and are able to advise you as to the benefits new applicants are likely to receive if their claim is approved. If you live in South Carolina, we can help you plan for the future if you are no longer able to work. Contact our office or call us at (843) 216-8860 and schedule a free initial consultation today.