SSD: an economic or political problem?

Concerns continue to mount in the face of the impending shortfall of the Social Security Disability (SSD) trust fund. The trust fund, which provides a share of the monthly benefit payments to the programs beneficiaries, is expected to go into negative cash flow within the next year or so.

That means that SSD benefits would have to be paid solely from current revenue generated by the payroll tax (FICA). This tax will only cover about 81 percent of the current monthly payments. If Congress fails to act, recipients would see an immediate cut to their checks.

The solution is financially simple. All Congress needs to do is to reallocate a tiny part of the revenue from the much larger retirement trust fund to the SSD fund. This would have little impact on the retirement trust fund, and would only advance the depletion by one year, assuming Congress fails to take any action.

Congress has reallocated funds in this fashion numerous times during the last four decades. They last did this in 1994. This year, the House passed a rule change that would prevent such a reallocation.

If the deadlock remains, the cuts will eventually occur, and millions of recipients will need to deal with the nearly 20 percent cut to their benefits. If you can find some type of work, the SSD program permits beneficiaries to earn a limited amount of income, which in 2015 was $1,090 per month, which could help make up for some of the reduced payments.

Of course, for millions, work is simply not an option. This means you will have to determine where you can cut expenses to deal with the potential reduction.

Because this is really a political question, writing to your representative and senators is also important. For many SSD beneficiaries who cannot earn any additional income, the cut would be devastating, and so political action may be their only option.

Source:, "Plan for cuts in disability benefits, but hope for the best," Robert Powell, August 29, 2015

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