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SSD insolvency is not inevitable, part two

Earlier this week, we discussed the recent alarmist media reports spelling impending doom for Social Security Disability and related programs. While not disputing the claim that the SSD trust fund would run dry by 2018 if Congress does not take action, Kathy Ruffing of the Center on Budget and Policy Priorities explained how the reports of the unprecedented increase in Social Security Disability recipients may not be completely accurate.

As we reported earlier, two reasons for the jump in SSD recipients are that many members of the aging baby boomer generation are now seeking disability benefits, and that the many women who entered the workforce in the 1970s, '80s and '90s have now worked long enough to qualify for SSD. A third reason for the increase is the raising of the Social Security retirement age from 65 to 66.

When SSD recipients reach retirement age, they are automatically switched to standard Social Security benefits from SSD. However, because that age has gone up, about 300,000 65-year-olds currently receive SSD benefits when, before the age was increased, would be receiving retirement benefits.

Controlling for these factors, the number of people receiving SSD benefits reportedly increased from 3.5 percent of the working-age population in 1995 to 4.4 percent in 2010. This jump is not as alarming as many media reports would have us believe.

However, this is not meant to undercut the need for federal lawmakers to take action to protect the SSD trust fund. According to Ruffing, Social Security has two separate trust funds: Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI). While DI is expected to run dry by 2018, both funds together could pay full benefits to all Social Security recipients until 2036.

So if Congress simply reallocates payroll tax revenue, as they have done in the past, they could avoid - or at least postpone - a loss of funding to SSD, which would protect recipients from immeasurable harm.

Source: Center on Budget and Policy Priorities, "Alarmist Stories Misportray Social Security Disability Insurance," Kathy Ruffing, August 23, 2011

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