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Social Security Disability on a Dangerous Path

February 17, 2015

If projections are true, a potential disaster is on the horizon for the nearly 9 million disabled workers (and their spouses and dependents) receiving Social Security disability benefits. 

That’s because the Disability Insurance Trust Fund that funds these benefits is on course to become insolvent in late 2016

 

The reasons for this situation are numerous and complex – and also beyond the scope of this post. But make no mistake, this is a serious issue with a large ripple effect.

 

Remedies for the problem have not worked, and now across-the-board cuts are being proposed. Unfortunately, the main fix seems to be for Congress to simply reallocate money.

Our “leaders” like to take from a solvent fund (Social Security retirement trust fund), which is funded until at least 2033, and give to a potentially insolvent one (the aforementioned disability trust fund). This has happened 11 times since the 1970′s.

 

To me, this is worse than the typical “kicking the can down the road” that we often see from our elected officials. It’s robbing Peter to pay Paul. Reallocating funds simply weakens the retirement program, while doing absolutely nothing to fix the disability program. 

 

And to be sure, the disability program has issues beyond insolvency - fraud being chief among them. The whole ball of wax is ripe for serious, meaningful reform.

 

Expect this issue to gain more traction, especially as 2016 is an election year. We need to fix the disability program so that it helps those who truly need it, and not those who are simply allergic to work.

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This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. Please consult with a professional specializing in these areas regarding the applicability of this information to your situation.

Andrew Wood, Dan Simon and Alison Slezak are Investment Advisor Representatives. Advisory services are offered through CoreCap Advisors, LLC., a Registered Investment Advisor. CoreCap Advisors, LLC and Daniel A. White & Associates, LLC are separate & unaffiliated entities. 

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