The answer to the question is yes. The Social Security Disability trust fund, one of the three main trust funds (Retirement and Medicare are the other two) supported by FICA tax withholding from paychecks is “cowering” under the weight of a “perfect storm.”
The combination of a lousy economy and stampeding baby boomer populations has caused a real crisis in fund reserves. Those filing for disability claims due to aging and associated ailments, the lack of available jobs in the economy causing more of all ages to “take a shot” at disability. All this adds up with over 50% more claims filed now than just 20 years ago. With more people receiving benefits each succeeding year, the fund is moiving towards a breaking point by 2017 according to the latest projections.
Now looking at this realistically, will the President and our legislators actually allow this to happen? History, says no. The Social Security system has been around for over 75 years. It is the most significant financial foundation for about one in five US citizens. If the economy improves (hopefully sooner than later) the projected shortfall will move further in the future without any systems change. There are many other options such as borrowing temporarily from the larger Retirement Trust fund to raising taxes and/or lowering projected benefits for those born after a certain year.
The real solution is for legislators to find the right formula that can keep the entire Social Security system solvent for another 75 years. This will certainly entail changes to what we have now, but it WILL be there for future generations…
- Dave L.