Social Security Administration Retirement, Survivors And Disability Insurance Date: Fill & Download for Free

Excellent question![And here's the tl;dr response: 2017, for disability benefits; 2033, for retirement benefits.]The good news is that pretty much every year from 1982, OAS/DI tax receipts, interest payments, and other income streams for the Social Security Trust Fund have exceeded benefit payments, operational Costs, and other expenditures by a fairly significant margin. In 2004 alone, for example, the surplus in revenue was nearly $140 billion in all. This has resulted in a Social Security "nest egg" of special series, non-marketable U.S. Government bonds, valued at approximately $2.2 trillion in 2007.However, as the Post–World War II "baby boom" generation continues to age and begin retiring in large numbers, these expenditures are projected to increase. At the same time, the total working-age population is simultaneously projected to decrease, as Baby Boomers transition away of the workforce and into retirement, increasing the Social Security Administration's reliance on a workforce primarily dominated by so-called Echo Boomers or "Millennials" and their descendants. At that point, the system will begin drawing on its reserves of United States Treasury securities, continuing to pay benefits at current levels until the Trust Fund is exhausted.The problem is compounded by the fact that unlike their parents' generation, Baby Boomers are expected to live longer, and in larger numbers, than any other generation in recent history. Indeed, according to the National Center for Health Statistics, Life expectancy at birth was 47.3 years in 1900, rose to 68.2 by 1950 and reached 77.3 years of age in 2002. And the Social Security Agency (SSA) trustees projects that life expectancy will increase just six years in the next seven decades, to 83 in 2075. (Data from the U.S Census Bureau, however, predicts an even more rapid growth, with an 83-year average life expectancy being achieved by around 2050). The issue of longevity is further compounded by the fact that aging Baby Boomers will also begin interacting with the healthcare system in record numbers (and at record cost), simultaneously drawing significant benefits claims out of the Medicare system as well.Unfortunately, Actuarial science, of the kind used to project the future solvency of Social Security, is (despite its name) in many respects as much "art" as it is "science." By very nature, it is subject to uncertainty and educated "best guess" estimates of future behavior and patterns, which are inherently difficult to predict and subject to unexpected change and adjustment. It is entirely possible that demographic changes, market and labor forces, or even (dare I say it?) government action might cause the actuarial and financial picture to change dramatically, drastically altering the projections and rendering much of the previous discussion moot.Thus, a more accurate question to ask might be:"How long will the Social Security system as it stands right now, survive in the U.S. unchanged?"And according to the Congressional Budget Office (as of December 2013) the answer to that question is the following:Under current law, the Disability Insurance (DI) trust fund will be exhausted in fiscal year 2017, while the Old-Age and Survivors Insurance (OASI) trust fund will be exhausted in 2033.The good news is, there are many ways to avoid this--assuming, of course, that the American people and their elected officials desire and endeavor to do so.Lift the payroll ceiling. Under current legislation, the "payroll ceiling" is now adjusted for inflation, and is currently capped at $113,700 for individuals. However, former United States Secretary of Labor Robert Reich suggests lifting the ceiling to increase the amount of American incomes subject to federal payroll taxes, such as Federal Insurance Contributions Act tax (FICA) or Self Employed Contributions Act Tax (SECA). And some economists (controversially) have even suggested abolishing the cap entirely, dramatically increasing the revenues available to fund the retirement of the Baby Boomer generation.Increase Social Security taxes. Current legislation puts the cumulative rate of federal payroll taxes at around 6.2%. However, if workers and employers each paid 7.6% (a 1.4% increase), it would eliminate the current financing gap altogether. This 1.4% increase (2.8% for self-employed) has over 60% support in surveys conducted by the National Academy of Social Insurance, making it one of the few (relatively) popular long-term solutions.Raise the minimum retirement age(s). Some economists have suggested (controversially) that raising the early retirement option from age 62 to 64 would help cut down on Social Security benefit payouts. Proponents argue that this would mitigate some of the effects of the sudden influx of Baby Boomers into the Social Security beneficiaries pool, allowing time for labor markets, private pension funds, and market forces to stabilize and compensate for the disruption. However, others argue that this would simply delay the problem until these individuals finally do retire, and does nothing to fix the underlying problem of outlays outpacing revenue.Means-test benefits payment. A relatively unpopular, but arguably effective solution, would be to phase out of Social Security benefits for those who already have income over a certain financial threshold--for example, $48,000/year ($4,000/month). This would eliminate over 20% of the funding gap, however once again critics point out that this only mitigates the effects of the larger socioeconomic problem, and does little to address the underlying democraphic picture, or provide a comprehensive, long-term solution.Change the cost-of-living adjustment, COLA. This equally unpopular solution would alter the manner in which the SSA calculates and awards adjustments to benefits payments as a result of rising Costs of living. Once again, critics point out that this only mitigates the problem, places a greater burden on retirees living on Fixed income, and ultimately does not address the underlying issues facing the Social Security program.Reduce benefits for new retirees. Another (somewhat unpopular) solution, would be to reduce the benefits payments for new retirees, establishing a two-tiered system of benefits payments. Older retirees--the ones who retired before the benefits payments were adjusted--would receive higher payments reflective of their advanced age and (presumably) greater need. But critics point out that younger retirees--those who entered into the system after whatever arbitrary date is used to alter the benefits plan--would be penalized for delaying retirement, and as a result would have a stronger incentive to retire sooner, so as to avoid having their benefits fixed at a lower rate. This would exacerbate the problem of large numbers of Baby Boomers leaving the workforce en masse, without addressing the underlying problem. Even so, proponents point out that if Social Security benefits were reduced by 3% to 5% for new retirees, about 18% to 30% percent of the funding gap would be eliminated.Tighten up Disability rules. A two-year investigation by the Senate Permanent Subcommittee on Investigations claimed to find widespread fraud in the Social Security Administration's Disability Program. Proponents of this method argue that Disability fraud, which has allegedly proliferated in recent years, has cost the program millions of dollars in unjustified, fraudulent disability payments, and that by punishing violators and rooting out fraud, millions of dollars of dollars could be saved, alleviating some of the burden on the system. However, critics point out that the disability program is only one small part of the overall Social Security Trust, and that even eliminating the program altogether would not resolve the underlying generational and demographic dilemma.Average in more working years. Under current law, Social Security benefits are now based on an average of a worker’s 35 highest paid salaries, with zeros averaged in if there are less than 35 years of covered wages. Proponents claim that the averaging period could be increased to 38 or 40 years, creating an incentive for workers to delay retirement, and remain in the workforce longer, and lowering payments for individuals who retire early. Although this could potentially reduce the Social Security deficit by 10 to 20%, respectively, critics once again point out that encouraging workers to delay retirement only "delays the inevitable." Furthermore, even by adjusting the working year average, the deficit will only be mitigated, not eliminated, necessitating other, more drastic measures to address the looming budgetary crisis.Require all newly hired people to join Social Security. Under current legislation, participation in the Social Security system is purely voluntary. But increased participation in the program (especially by young workers entering the workforce for the first time) would increase revenue generated for the Social Security trust fund, which would only partially be offset by benefits they might later collect as they retire. Nevertheless, in 2004, the Social Security Administration estimated that 96% of all U.S. workers were covered by the system. The remaining 4% mostly constituted a minority of government employees enrolled in public employee pensions and not subject to Social Security taxes due to historical exemptions. As a result, critics point out that there is little to be gained by making Social Security mandatory, as over 90% of all workers already pay FICA and SECA taxes.Hope this helps![Edit: Some of this information is rather dated. But rather than constantly edit this page with the latest facts and figures, I'm including a link to the Social Security page of the CBO's website. There you can not only read the most recent projections, but also peruse the "Policy Options" produced by the CBO for reducing the deficit.]

Social Security won't stop writing checks, even if the trust fund runs out, unless the US Government fails. But the need for reform is real and very urgent. The problem is that most reforms talk about raising taxes or decreasing benefits, and doing either is political suicide for politicians who would vote for such a plan.What we call Social Security was designed to save up your own money for you by involuntarily taxing you, collect interest on the money that was raised through the tax, and then pay you benefits when you are eligible due to age, death of a parent or spouse, or disability. The Federal Insurance Contributions Act (FICA) withholding tax you pay goes to a trust fund formally known as the Old Age, Survivor and Disability Insurance fund, or OASDI. Ideally, the money coming in would build up a huge fund, and the money going out would be in proportion to what the beneficiary put in. FICA taxes are always coming into the fund, but we're drawing it down way faster than we're building it. So at the time we "run out of money", we'd merely have to have the outgoing checks start matching the incoming payroll tax revenue, which might mean a sudden 20% or larger drop in benefits. The Simpson-Bowles Report of the National Commission on Fiscal Responsibility and Reform had a large section on Social Security, and a chart that showed this effect, was projected to happen in 2037. Now, only three years later, the new guess might be 2033.The thing is, any date you hear is going to be based on a whole lot of assumptions. I don't know how many grandchildren I'm going to have, much less whether they'll make a lot of money, and neither do the trustees of the Old Age, Survivor and Disability Insurance trust fund, as it is formally called. They often make optimistic assumptions about how the economy is going to fare in the future. So 2033 and a 22% drop is just a plausible guess (see The 2013 OASDI Trustees Report)Make no mistake -- this is the sort of problem that only gets bigger the longer we ignore it. Many criticized Republicans for wasting time discussing Big Bird and Planned Parenthood in 2011, because, as they correctly noted, the real money is in Social Security, Medicare, Medicaid, and Defense. I think some are dismayed that the sights are now trained on Social Security after all. Now is the time to begin reform, because we need to give fair warning to future retirees about their anticipated benefits. And here's a hint: they won't be what they are now for everyone - the math doesn't work.Originally, Social Security was passed because Americans were becoming more and more likely to live to an age where they were physically not able to earn an income. It covered survivors partly because women live longer than men and they were likely to become widowed housewives without a job history or other skill that was valued highly. It covered children, who would otherwise have fallen into terrible poverty, and it covered those who were injured or disabled and were unable to continue working in factories, fields and other typically physical jobs.Republicans tend to trust people to take care of themselves. If you are saving money for your retirement, you want to have control of your own money as you save it. If you invested poorly, you'd become poor, and there would be other government programs that would take care of you (though not comfortably). The 2008 downturn virtually killed this idea, because it's absolutely a fact that many people lost a big part of their private retirement funds if they sold their stocks at the bottom of the market. On the other hand, nobody lost money they put into Treasury bills, which is what the wiser investors did as they approached retirement. Nobody lost Social Security payments in this crash, because the government can change the law at will, raising or lowering taxes, changing benefits (as they did in 1983), or even injecting general income tax revenue into the fund. That would be one way to "rescue" Social Security, but here's a little irony: Social Security has had to rescue the rest of the budget, in the sense that a trillion and a half dollars of the fund has been loaned to the general fund. Talk about rearranging the deck chairs...Discussions about the Social Security trust fund often focus on factors that I'll discuss below, including tax rates, demographics, employment levels and life expectancy. But I personally think the much more basic question we're not asking often enough is where the program is most needed, and where it isn't needed. In my opinion the role of government should be to help the disadvantaged and those who are most in need, and in many cases that's not what Social Security does. It's a great example of a well-intentioned idea that becomes a massive one-size-fits-all government program that solves problems that don't exist, and creates new and bigger ones. It's a major feature of our safety net, needless to say. It consumes a whopping 7% of our GDP. Supposedly, it is a savings program (not a need-based program) that serves everyone who works, as well as their families, when they reach retirement age or if they are disabled. Who could oppose such a thing? It does a lot of good, so it must be a good program, right? I have a different take on it entirely. It should be restructured to help only the people who need it, to the extent they need it, and those who can look after themselves should do so. This is a Republican idea that was part of the Republicans' Path for Prosperity budget for fiscal year 2012. This "Ryan Plan" was met with great protest by those who like a big federal program for the sake of having big federal programs. In reality, means testing was in the Simpson Bowles report. And in fact, to go back to the beginning of the history of the entire program, Franklin Roosevelt himself said "We shall make the most lasting progress if we recognize that Social Security can furnish only a base upon which each one of our citizens may build his individual security through his own individual efforts."In the end, I think we have two choices. We can continue to think of Social Security as an imposed savings plan that benefits anyone who pays into it, or we can treat it more like other government programs that are directed to the needy. The problem with the first idea is that it's a really lousy investment for most people, as it turns out. And both the fund and the tax contain the word "insurance", suggesting that the original concept was to protect people if something went wrong and they needed money. I want to means-test Social Security -- making it a program for the needy and not a program for the rich. Many Republicans will continue to press that idea, and they will continue to be excoriated publicly and greeted by commercials showing little old ladies being pushed off cliffs. The simple reality is that Republicans don't want to pay Social Security benefits to rich people, and Democrats who defend the current system do. Republicans see payroll taxes as regressive and disproportionately burdensome on the poor, (and by extension, there is inevitably even a disproportionate impact on people of color). This issue is not called the third rail of politics for no reason. Proposing cuts in Social Security payments is a thankless job. Demagogues and interest groups will do what they can to end the public careers of those who even propose the idea. But we could increase benefits for the poor and cut taxes for everyone by means testing.Now I'll review the usual-suspect category of possible solutions, which I think are bad ideas or wishful thinking:1. Raise revenue through higher tax ratesHigh tax advocates are correct in saying that the trust fund can't run out, assuming you are willing to raise payroll taxes indefinitely. This is exactly what was done from the time the law was passed in 1937 until 1990.Since 1990 the tax stands at 6.2% of your paycheck, which you might notice and miss if you're one of those who looks at their pay stub (which increasingly doesn't exist; you just see some money deposited directly in your bank account, and don't notice that the total of all deposits doesn't match your nominal income). But wait! There's another 6.2% of your paycheck that the employer is required to pay, which is painless and invisible to all workers, and virtually unknown by many. The great majority don't even realize that they're really already paying 12.4% of their income in Social Security taxes.In 2011 and 2012, the government temporarily came to its senses and remembered that high taxes like this hurt the economy in general, and workers in particular, so they temporarily lowered the Social Security tax rate for new employees. But they're back up now, and we're back to pretending that we don't think that high taxes that transfer wealth from the poor to the rich don't harm anyone. It's hard to imagine how much more we can raise this tax, in my opinion. At some point it becomes pretty tempting to just wait tables and not report your tips, or become a professional pool shark and keep all your winnings, which is not good for anyone in the long run.Social Security is a "payroll" tax (as is Medicare). That's completely different from "income" tax. Somehow. This is the sort of thing that any ten year old would call b.s. on. To review very briefly, we hear (and I hope we know now) that income taxes in the US are more progressive than in almost any other country, and that the top 1% of earners pay 35+% of the total income tax revenue collected, and the top 50% of tax returns represent 97% or so of all income tax receipts. Mitt Romney was entirely correct about the numbers on income tax; 47%, cumulatively, pay almost nothing. But payroll taxes are separate.Payroll taxes don't apply to investment income, such as interest or dividends. They don't apply to capital gains when you sell something you bought at a lower price, like real estate or a boat. In fact, if you are a "regular" worker bee like a VP of a bank, they do apply to your salary, but only the part below $113,700. So if you make $160k or 300k or $850k in salary, you don't pay any more than the person making $114k. Gee, there's pattern emerging... How would you describe people who make all their money in investments and very high incomes? Social Security benefits are paid after you reach retirement age (65 to 67) and continue to your death. This is important: if you live to be 70, you get three to five years of benefits. If you live to be 90, you get 25 or so years of benefits. If your child's father was never your husband, you don't get survivor benefits. Your benefits are based on your income while you were paying payroll taxes, so lower income means lower benefits. So the people who benefit most from Social Security are those who make a lot of money, get married and live a long time. You'd be getting a comparatively bad deal if you were not making a lot of money, had children without marrying, or died comparatively early -- which sounds to me like another case of the usual state of affairs: it's better to be rich than to be poor. We need to take less money from the poor and stop giving it to the rich.2. Cut benefit expenses by raising the retirement ageOne way to cut expenses is to raise the retirement age. And it's been done already. My retirement age is not 65 - it's 66 years and ten months. I'm sorry to see those 22 months of my life go to The Man, as I will have to continue in wage slavery before beginning my life of ease under Social Security. Do we want to hand our grandchildren a system that requires that they work until five or ten years before they die? Isn't that the opposite of what we should be trying to do?3. Increase revenue by changing demographicsWhere could we get more taxpayers? Immigration and higher birth rates add to the number of employees paying into the fund. Moderate levels of immigration have made Texas an economic rocket engine; a large percentage of the jobs added in America are in Texas, which gets immigration from the south as well as from other states in the US. But for many reasons we can't absorb infinite levels of immigration. Birth rates are declining all over the world, so that's surely not a solution. In any case, both become a Ponzi scheme -- something that isn't really a fair description of the current Social Security system except in this scenario, where we use mathemagic and posit that the number of workers will grow forever.4. Decrease expenses by lowering life expectancyPeople are living longer much longer now. This is hardly a problem -- an opinion that I hold more dearly as I grow older. I suppose a cataclysmic epidemic would address this issue, or we could take proactive government policy measures, a la Jonathan Swift, perhaps. In his (satirical) novel Boomsday, Christopher Buckley's character Cassandra Devine (good name for someone who sees into the future, right?) suggests that our nation's elderly help eliminate the trust fund shortfall by eliminating themselves altogether, voluntarily, which they do, to her shock and surprise. Cross this one off the list.5. Increase revenue in a better economy with more jobsAnother thing that would make the Trust Fund healthier would be more workers paying current rates rather than being unemployed and paying no tax at all. Unfortunately, current high unemployment is having the opposite effect. People are dropping out of the work force and no longer even hoping to find a job. This lowers the denominator in the unemployment rate, making that statistic look less scary, but be aware that the number of Americans actually working full time jobs has not recovered to 2008 levels even in absolute terms, much less kept up with population growth.Total full time employed civilians - 2001 to 2013 (click to see enlarged, with labels):The civilian labor participation rate (the percentage of the working age population that is working) is falling and is roughly where it was when the Shah ruled Iran and Jimmy Carter ruled the United States.Labor participation rate - 1977 to 2013 (click to see enlarged, with labels):For heaven's sake, and the sake of your children, save money for your retirement and take out private insurance policies in case you die or are disabled. You don't want to be dependent on Social Security income. If you do need government aid, so be it; we must make sure that the funds are available. Use the Social Security Administration's Calculators, and get this firmly into your head: seven percent of our GDP is not enough money to keep you comfortable when you stop working due to age or disability. Will the trust fund ever be completely depleted? I think not. But will we all continue to receive the benefits now built into the system? No. I sincerely hope that you and I and everyone we know will not need Social Security at all, and can reallocate our share of the fund to those who cannot do without it.

If you are actually talking about SSI, the answer is no. SSI is Supplemental Security Income, and is paid for through a different funding stream than Social Security. SSI took the place of the old public welfare programs for the elderly, blind and disabled. It is administered through the Social security Administration, but is a totally different program. You must meet certain eligibility requirements, including very low income. Every person who receives SSI gets the same monthly amount (I think it is around $700 a month; some states add additional money). You get it from the date of application only, not retroactively.Social Security- sometimes called Old Age, Survivors, and Disability Insurance- was originally funded through payroll deductions for workers and a tax for employers. The money was in a trust fund, but that was looted by Ronald Reagan, and the money has not been repaid. Social Security payments depend on three factors: your age when you apply, the number of quarters you have paid into it, and your average income over the years before your retirement. Social Security checks vary a lot in amount. You cannot receive Social Security retroactively, but the amount you receive is adjusted if you apply at an older age (67- 70) and reduced if you apply earlier (62–65). It is unusual for someone who has worked through adulthood to be ineligible for Social Security; a spouse who did not work outside the home is eligible under the employed spouses account.