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Are Social Security disability benefits out of control?

There are those in Ohio and the rest of the nation who claim that the rise in the number of people receiving disability benefits is "out of control" and that the system will be bankrupted in the near future. While some of their specific criticisms have merit, there are some facts that need to be understood in order to remove the political hysteria from the equation.

Social Security disability insurance provides some small benefits to workers who can no longer work due to various physical or psychological disabilities. The disability must be expected to last for one year or more or cause the death of the applicant and the disability must render the applicant totally unable to work. SSD is funded as part of the larger Social Security system, which also provides retirement benefits. The source of the funds is a deduction from worker's payroll checks. Thus, every worker pays into the system so that this valuable insurance is there if needed. It is estimated that one-third of workers will need either Social Security survivor's benefits or SSD benefits before retirement.

While it is true that the number of people on disability has risen over the past couple decades, this is generally the result of normal demographic factors, such as the aging of the baby boomer generation, the rise in population overall, official retirement age changes from 65 to 66 and a higher percentage of women in the workforce. Statistically, the growth of the percentage of SSD recipients, when adjusted for overall demographics, is quite modest.

Lastly, while the retirement and disability trust funds are technically separate, there is only one payroll deduction for both funds; these funds are often referred to collectively as the Social Security trust fund. In aggregate, the funds have sufficient assets available to continue to fund both benefits programs through 2033. The SSD fund is expected to run out in 2016, but this could be fixed by a simple reallocation of the percentage of the payroll tax that goes into each trust fund. This reallocation is something that has been done by Congress quite often in the past.

Obviously, a long-term plan to help fund Social Security programs will be needed. However, for now, a simple fix by the government can ensure that Social Security disability benefits will continue to be there for those in need of them.

Source: U.S. News & World Report, "The Myth of 'Out of Control' Disability Benefits," Chad Stone, Aug. 22, 2014

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