When one hears the term “disability insurance,” most people think about social security. This is what most people find on the Internet when they search for it, and it makes them believe that social security funds are enough to help them meet their basic ends. However, this is not true, and social security funds may run out.
If Social Security’s financial mechanisms are not reformed in the next decade, there could be cuts to disability benefits. A significant percentage of the funding comes from annual tax revenue, and a minor portion comes from the trust fund, which is running low. If no appropriate action is taken, the funds may run out by 2034. This is a worrisome topic. To know more, speak to a disability attorney today.
Why is Social Security running out of funds?
There has been a combination of demographic changes. For instance, the baby boom generation is retiring at an increasingly fast rate. The life expectancy of older Americans today is higher than that of the previous generations. This means that they will be receiving monthly Social Security payments for more time than expected.
The increasing number of retirees and longer lifespans have led to a 45% rise in Social Security beneficiaries since 2000.
Another thing to factor in here is the decrease in the overall birth rate. The number of older and retired Americans is greater than the people paying into the program. Therefore, more money is taken out of the Social Security trust fund every year.
When is Social Security running out?
Current estimates indicate that the benefits coming out of Social Security, such as SSDI, may run out by the year 2034, which is less than a decade now. The available funds are subject to the economic trends of the country and the world. The rough patch that COVID-19 had put the global economy into was a big one, and the world has not yet recovered completely.
What can be done to fix the issue?
There are a few solutions the government can adopt to ensure the funds are sustained beyond the 2030s. These include:
- Reduce benefit payouts,
- Increase revenue,
- or a combination of both.
President Biden and other Democrats supported the Social Security 2100 Act in 2021. This Act is aimed at increasing revenue.
The bottom line
The bottom line for Social Security facing funding issues is that the government still has time to implement solutions and make a positive change.
If you have been denied Social Security, speak to an attorney today.