According to the BenefitsPro, the Social Security Administration (SSA) will begin to run an annual deficit averaging 12 percent over the next decade, unless lawmakers do something to increase funding.
The statistics come from a report by the Congressional Budget Office (CBO). The website reported that in 2013, Social Security spending totaled $808 billion, representing about a quarter of all federal spending. Revenue into the system was $745 billion.
“The Social Security deficit will rise to more than 30 percent by 2030, according to the CBO forecast, as more baby boomers retire, increasing benefits payments as a share of the economy,” BenefitsPro reported.
The numbers include money for Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI). Both programs have trust funds in place, which provide funding during deficits; however, it is possible those funds could dwindle.
“The two trust funds for benefits payments – one for disability and the other for old age and survivors insurance – are in danger of being exhausted in the next 20 years,” BenefitsPro reported. “If that happens, benefit payments will be reduced because the only money available to make them will be from incoming tax collections. In that case, retirement benefits would be cut by 25 percent.”
According to the website, currently, about 96 percent of Social Security funding comes from payroll taxes.
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Many politicians are studying Social Security funding and trying to figure out how to keep the programs solvent. Some have proposed ideas about removing wage caps from Social Security payroll taxes. Currently, Social Security taxes are not paid on yearly income beyond $113,700. Some experts believe raising the cap or eliminating it would provide increased revenue to the programs.
Other politicians have suggested increasing the retirement age or making cuts to benefits, while others have suggested that lower-income earners should be able to opt out of paying into the system, while keeping their money and saving for retirement and/or disability.
Many people who work in SSDI law are concerned about the later suggestions, as many people are living paycheck to paycheck. If lower-income workers were able to opt out of the Social Security system, it is possible that they may not have enough money saved in the event of retirement or disability, and instead they would use the additional income to get by financially at the present time.
Last week, Sen. Tom Harkin D-Iowa, had an interesting editorial in the Huffington Post, which proposed eliminating the $113,700, while changing the way the SSA calculates its Cost of Living Adjustment (COLA). You can read the editorial by clicking here.
If you have questions about an application for disability benefits, do not hesitate to contact our Tulsa Social Security disability lawyers for a free consultation. You may also reach us by phone at (918) 587-0050.
Troutman & Troutman, P.C. – Tulsa Social Security disability lawyers