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The Future of Full Social Security Benefits is Questionable

The ability of the Social Security Administration to pay full benefits, both retirement and disability, in the future is questionable. This article briefly explains how these benefits are funded, issues facing future benefits, and issues surrounding potential solutions.

Currently, 11 million Americans receive disability benefits through Social Security, either Social Security Disability Insurance (“SSDI”) or Supplemental Security Income (“SSI”). Millions more receive Social Security retirement benefits and that number is expected to jump as the baby boomer generation hits retirement. The issue facing Social Security is the ability to pay full benefits to those already on disability or those soon to retire.

Social Security is funded by tax revenues, paid both by employers and employees, as well as interest income generated by the Social Security trust fund. Tax revenues collected are either paid out immediately as needed or, if more tax revenue is collected than needs to be paid out, the surplus is deposited into the Social Security trust fund. Created in 1956 and overhauled in 1983, the trust fund holds surplus tax revenue, and gains interest on this surplus, for the purpose of guaranteeing payment of Social Security benefits. Separate trust funds exist for disability and retirement benefits.

Beginning in 2010, benefits paid annually began to exceed tax revenues collected, meaning that the trust is no longer growing and is now being consumed by benefit payments. Once the trust fund is fully consumed, benefits will be funded by only annual tax revenue. When this occurs, it is expected that disability benefits will be reduced by 19% and retirement benefits by 21% as this represents the amount of tax dollars annually collected to fund social security benefits. The Social Security Disability fund is predicted to be exhausted by 2016 and the Retirement fund by 2034 or 2035.

Four options exist to resolve this issue: reduce benefits; raise taxes to increase revenues; reform the benefit system; or to divert money from the retirement trust fund into the disability trust fund. Raising taxes is always a political hot button as is any reform of public benefits. Diverting money from the retirement fund into disability would guarantee full payment of disability benefits for a period while shortening the life of the retirement trust fund. The idea is to buy time to find a long-term solution while still paying full benefits. Reports suggest that if retirement funds are diverted to disability, both trust funds will exhaust by 2034. Since Congress must resolve the issue and given the political volatility of reforming Social Security, the solution will likely not occur quickly.

If you have any questions regarding social security benefits, chat with us live online at or contact one of our experienced attorneys at one of our eight convenient offices. We are here to help you during this difficult time.


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