When I started representing disabled people over 25 years ago many people didn’t even know there was such a thing as Social Security Disability. In those days, when people asked me why I was in this field part of my elevator speech was that, “I am helping people get their Social Security now since it won’t be around when they retire.” I am still convinced that those nice numbers you see when you get your Benefit Estimate every year in the mail are going to have to be reduced, indexed to income, or somehow modified in order to save the system.
Don’t worry about the system going under completely. First of all it means too much to too many people. And those dates when it is estimated to be in the red or run completely out of money don’t mean much either, since they are dependent on variables that no one can control—like the number of jobs created, the unemployment rate and inflation. But there are some things that are real, and should scare you.
The most important thing to know is that there is no way that the system can continue as it has without some major changes. As we Baby Boomers retire, there will be fewer people paying into the system and more drawing from it. And those who draw from it will live longer than when the system was created.
Everyone gets back far more than they contribute if they reach their life expectancies, and certainly if they receive DIB (Disability Insurance Benefits, or Social Security Disability). Thus the system will clearly be in the red at some point before the middle of this century. Not that it won’t have money; it will just be paying out more than it takes in, and thus the Trust Funds will start shrinking. Eventually, if nothing is done, they will disappear. But as I said, that isn’t going to happen.
What I think will happen will be a combination of things: indexing to income so that people with other income will have their benefits reduced; raising the age at which benefits are payable (again) since most of us are living longer than when the system was created; and increasing the payroll tax as well as the amount of income subject to taxation to fund Social Security. That has already happened to fund Medicare.
In my next post, I’ll tell you what I think we all need to do to protect ourselves.