Newspaper stories regularly report that the Social Security trust fund is almost out of money. Many people who rely on Social Security Disability Insurance (SSDI) benefits are worried about what will happen when the trust fund is empty. At Gallo, Cazort, and Co., we understand these fears. However, there is good news, which ourArkansas SSDI lawyer explains below.
The Disability Insurance Trust Fund is in Good Shape
According toa report from the Social Security Administration (SSA), the Disability Insurance Trust Fund is expected to pay 100% of benefits until at least 2097. You read that right. The trust fund for disability benefits is in such good shape that it won’t be exhausted for another 75 years, if ever. As SSA explains, 2097 is as far into the future as the government projects, so the odds are good it won’t ever run out of money.
When media reports refer to “Social Security,” they are typically referring to the Old-Age and Survivors Insurance Trust Fund, which pays retiree benefits. That is expected to be depleted in 2033—a mere decade from now. By 2033, the government will be able to pay only 77% of schedule benefits.
Of course, if you receive SSDI benefits, they will convert to retirement benefits when you reach your full retirement age. This means your benefits will eventually be paid out of the trust fund that’s less well funded.
Should You Expect an Automatic Cut of Retirement Benefits?
It’s possible. If Congress doesn’t act, then the fund will no longer be able to pay 100% of scheduled benefits. We would anticipate an automatic cut of more than 20%.
Of course, Congress could change the law and increase funding. For example, they might make more income subject to payroll taxes, which would fill up the trust fund coffers. Or Congress might increase the tax rate for all workers. Some combination of tax increases and trimmed benefits might keep the Old-Age and Survivors Insurance Trust fund afloat for several more decades.
Should Younger Workers Purchase Disability Insurance?
Let’s say you aren’t disabled but are reading this blog. It might be time to consider purchasing private disability insurance. Some workers get long-term disability as an employer-sponsored benefit. But individuals should consider whether to buy a policy on their own even outside of work. Private insurance is a good investment if you are self-employed.
Even someone with an employer-sponsored plan might buy additional coverage. Some policies only 60% of a workers’ base salary, which could be insufficient to pay all your bills. You might benefit by purchasing individual disability insurance as a supplement.
Review all options before purchasing, with a focus on the rates. You might even meet with an insurance agent. Remember, you can end the coverage whenever you want to if you cannot afford premiums.
Call Our Firm if You Have Questions
Disabled workers should continue to file for SSDI benefits if they qualify. Call Gallo, Cazort, and Co. today to schedule a consultation with one of our Arkansas social security disability attorneys.