Social Security Disability is Nearing Insolvency

Yes, it’s true.


Here are the main reasons for this disastrous event in the near future, if Congress does nothing to fix it:

  • There have been an increasing number of people receiving SSDI while there is less revenue in payroll taxes coming in.
  • The aging Baby Boomers reaching the prime disability age (70% of disabled workers are age 50+) , and the increase of the number of women in the workforce (and therefore being covered by this program), have caused 1/3 of the increase.
  • People living longer (therefore staying on the rolls instead of dying), and the increase in the age of retirement (shifting more people onto SSDI than retirement) have also contributed.
  • An additional factor is the new disease guidelines implemented in 1984, allowing disability payments for mental illness and musculoskeletal illness (back pain, depression and fibromyalgia are three often mentioned diseases in this category).  While heart attack and stroke have remained steady, the incidence in these new diseases has increased, accounting for a whopping 50% of the increase.
  • Also, there are myalgic encephalomyelitis (ME) patients who also suffer with fibromyalgia.
  • A loss of revenue from payroll taxes. On the demographic side, the Baby Boomers had less children, so there are less workers paying into the system. Where there used to be 17 workers contributing for every recipient, there are now only 3.
  • The increasing income inequality has also contributed to the problem. There is a cap for workers at wages of $118,000 a year. Those making more do not pay more into the system. As more people are making over this amount, revenue has decreased.
  • There is the issue of fraud in the system.  While nobody wants to deny deserving applicants benefits, fraud must be held in check so that funds are available for the truly disabled.

The subject of Social Security Disability application denial or acceptance is a hot one.  The fear of fraudulent claims has pushed our government to deny too great a percentage of applications that are truly deserving.  Nearly 65% of disability claims are denied by judges.


In order to understand how the Social Security Disability funds are allocated, it is important to note that the program is made up of two divisions:  a smaller one for disability; and a larger one for old age retirement.  Payroll taxes collected from those currently working are divided into two streams:  one for SSDI; and one for the retirement fund (also called the Old-Age and Survivors Insurance or OASI).

A little history:  Since the 1970s, funds have been reallocated 11 times from SSDI to OASI, and vice versa, when either fund was in need. This worked fine when overall, there was enough money to fully fund both. However, due to demographic and other factors, the overall program is projected to become insolvent in 2033. This is 18 years from now – not as far off as it might sound, given the time it takes our government to roll out reforms.

Many Senators stated that while nobody wants to cut funding for the disabled, they will not let a reallocation go through unless there are also reforms to the SSDI program (and possibly OASI) to either cut costs or bring in more revenue or both.

My advice:  Contact your Representatives and Senators to fix this before we have a very serious problem on our hands.  Our disabled citizens need the continuing support they deserve, and they are dependent upon our healthy, working Americans to help.  Those, who are healthy and can work, need to appreciate something they might not think about:  They could find themselves in the same situation one day, and then need the help of Social Security Disability.

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4 responses to “Social Security Disability is Nearing Insolvency

  1. Interesting post. Very factual. But we need to keep some things in mind.
    1. There is currently a 2.5 trillion dollar surplus in the SS funds. This is because excess funds have been invested for the last 30 years or so.
    2. “insolvent” does not mean “broke”. It means that the SURPLUS funds will run dry, but current payroll taxes will still be collected and will be able to pay about 75% of the benefits if no changes are made.
    3. SS could be indefinitely “solvent” (that is, have a perpetual surplus) if 90% of income was taxed . (About 80% is taxed today). As the article points out, the very wealthy do not pay SS taxes on most of their income. Simply changing the law to include SS taxes an ALL income solves the long term problem immediately.
    4. Social Security is an EASY fix. The only thing missing is the political will.
    5. Some of those who are trying to scare people about SS really want to privatize the system. That would mean LOWER benefits for all as Wall Street would be taking a cut to manage private accounts. Don’t fall for it.

    Liked by 1 person

  2. Joseph provided the information I would have. SSI is not ‘broke’, it has some issues but it is not what it appears on the surface. The best source of information? The Budget Office.

    Liked by 1 person

    • Thanks, Valentine. I know I didn’t investigate the subject as thoroughly as it should have been; however, I much appreciate yours and Joseph’s input. That’s one of the many reasons why I am so glad that I chose WordPress for my blog, and why I chose certain bloggers to follow. That’s a good thing! 🙂

      Liked by 1 person

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