Will the Pandemic and Economic Recession Decrease SSI in the future?
As the economy has taken a downturn, many have been hit hard. The good news is that the SSA funds are currently sustaining those who rely on SSDI and SSI. The bad news is that there will be added stress on these funds over the next decade.
Some are sounding the alarm that the Social Security trust fund could become seriously depleted. Yet, it’s not time to panic just yet. For one thing, the way the SSA receives its funding is through many acts that ensure the trust fund is continually being poured into through income taxes. With the recent increases in those taxes, the fund should be able to stabilize.
What Got Us Here
Yet, even with these actions, there is still a possibility that the SSA may have to cut benefits for different parties. This is due partly to the devastating effects of the Covid-19 Pandemic, which forced many businesses to close and made the unemployment rate skyrocket to a startling 14.8%.
The drop in employed wage-earners lowered income taxes substantially, meaning less funding for the SSA. Unless things change, the SSA will only be able to pay 73% of what those receiving SSI need.
Another drain on the SSA funds is the increased population who have reached retirement age, the baby boomers. As they were born between 1946 and 1964, the oldest boomers are already retired (now being 75), and the youngest of that generation will retire in the next five to ten years (being 57 at present).
As the life expectancy in the U.S. has increased to an average of 79, those receiving SSI during their retirement will be doing so for longer than previous decades. When you add all of these factors together, it becomes a perfect storm as the SSA funds must simultaneously provide more support while having less influx.
How Can We Fix This?
The good news is that lawmakers are working hard to fix the problem before it becomes an issue. On October 26, 2021, Congress introduced a bill to try to combat the depleting SS funds. The Social Security 2100: A Sacred Trust bill increases the amount of income for which an individual must pay social security taxes. If the bill goes through, it could help to bring in more funding for the SSA.
On the other hand, this bill could also create more problems in the future, merely pushing forward the depletion of funds. Lawmakers are currently debating these issues and trying to solve these problems before time runs out.
Who Will Be Affected?
You may wonder how the impending depletion of SSA funds will affect you personally. You might be happy to know that, based on the type of financial support you receive from the SSA, you might be minimally affected or not at all.
Several different trust funds that support different groups of people will be affected, though in slightly different ways.
The Old-Age and Survivors Insurance (OASI) Trust Fund will become depleted in 2033, and the income tax collected from wage earners will only cover about three-quarters of what it needs to. This means those dependent on social security for their retirement will not get enough to meet their needs a decade from now.
Those who are disabled rely on the Disability Insurance (DI) Trust Fund, which should pay full benefits until 2057, which is an extension of the previous timetable for this fund. At that time, at least 91% of the funds needed to pay full disability will still be available.
Those who rely on The Hospital Insurance (HI) Trust Fund to pay for their inpatient hospital care need action taken on their behalf as the funds will be depleted in 2026, at which time only 91% of the benefits these people need will still be available.
The Supplemental Medical Insurance (SMI) Trust Fund, which helps people pay for outpatient care and prescriptions, has enough financing to last long into the future as it receives funds each year from taxpayers. However, as the demand for this fund is expected to increase, so too will the taxes required to fund those needs.
What Can I Do?
Hearing that the SSA funds will be depleted in the future can be scary, but that doesn’t mean you won’t still get the SSI or SSDI that you need. We can help as a liaison to make sure you continue to receive your full benefits and are not adversely affected as the economy struggles.
Contact Lowery Law Group at firstname.lastname@example.org or call (843) 991-0733. There is no fee for a free consultation regarding your claim. Lowery Law Group is experienced in handling cases in South Carolina as well as Georgia.