You’ve likely heard that Social Security—and by extension, programs like SSDI—are running out. Is it true? Will Social Security and SSDI ever run out? What does that even mean? When would they run out by? Will payments stop if it does run out? Is there anything the government can do? Get some answers to all of that and more right here!
When Will Social Security Run Out?
Current estimates point toward Social Security and any benefits that come out of Social Security such as SSDI, will run out as soon as 2033. That’s only ten years away. You may also notice that if you looked at estimates a few years ago, they were further out than that. What’s happening there?
When you pay into Social Security, it doesn’t just go into an account to sit there until it needs to be drawn upon. Instead, they go into a trust fund where they are invested in interest-bearing Federal securities which means the available funds are somewhat subject to economic trends. The economic rough patch that we’ve gone through with the COVID-19 pandemic has brought the run-out date upon us a little sooner.
What Would Happen if Social Security Ran Out?
Technically, it can never actually run out. We know we said 2033, but that’s when the reserve funds become depleted. People pay into Social Security with every paycheck, and if those reserve funds ran out, then those payroll payments would go directly to people relying on Social Security and SSDI.
The problem is that there is currently not enough money entering the system to cover all those that would draw upon the system, so payments would have to be delayed or reduced. Current estimates point towards a 25% reduction in benefits. This isn’t the end of the world, but it will mean a much more difficult road ahead for those already on benefits, many of which are currently struggling to make ends meet as it is.
Read More: 5 SSDI Facts That You Need to Know
Is There Anything the Government Can Do To Fund Social Security?
There are actually several ways that the Federal government can fix this. Here are the most common proposals:
- Increase Retirement Age—By adjusting the retirement age higher, fewer people would draw on Social Security Retirement benefits, which would also mean more money for SSDI. This is an unpopular idea, but it has been used in the past.
- Raise Payroll Taxes—Another obvious way to solve it is to simply raise payroll taxes. This has also been done in the past with a raise in taxes to its current rate of 12.4% (combined employer and employee tax) back in 1990.
- Increase Maximum Taxed Earnings—This is the option that is most likely to help the lower class. Currently, this maximum goes up every year automatically which means the model is already accounting for the regular increase. As of 2023, the maximum taxed earnings are set at $160,000.
Of course, these aren’t the only solutions available, but they are the most well-known and economically understood ideas to solve the problem.
If the program was to run out in the future, the government could also issue a temporary budget measure to ensure the solvency of the program while a more permanent solution is explored.
How Much Could SSDI Increase in 2024?
Get Legal Help Getting the SSDI Benefits That You Need
Even if you think that the Social Security program is going to run out of money in 2033 and that all payments will cease (which they won’t) you still should ensure that you are getting all the benefits you can while they are available. If you have been denied your SSDI claim and are struggling to get approved for the benefits that you deserve, please reach out to the SSDI legal experts at Tabak Law. It’s Tabak for the Payback. Contact us for a free case review today!