Social Insecurity

I was a bit surprised in late July when the Social Security Trustees released their annual report.  The report itself wasn’t so much of a surprise as the fact that it was not mentioned by any of the news media.      

Such lack of attention rattled my mind like a car alarm.  These days, when most people hear an alarm, they simply think of it as an annoyance.  Many don’t even bother to turn their heads to see what, if anything, is going on.  In fact, I doubt many people stop to wonder if someone is actually trying to steal a car.

It seems to me that the same phenomenon is going on with Social Security .  The can has been kicked down the road so many times, I don’t think people even hear the aluminum can bouncing off the road and hitting a brick wall.

We’ve heard it bouncing and rattling for so long we’ve simply become accustomed to the noise.  Such complacency,

I fear it could prove to be a dangerous mistake.

Just over a year ago, I wrote an article about Social Security Disability.  I questioned whether or not all the recipients were really disabled.

Since I wrote that article, I’ve received a number of e-mails from various legal firms offering their services to help me qualify for Social Security Disability.  These aren’t occasional offers; they come on an almost daily basis.

The number of people receiving Social Security Disability Insurance (SSDI) recently reached a new high and now exceeds 11 million people as of this past May.  That represents an increase of eighteen percent since January 2009.

There are all sorts of arguments and debates as to the causes.  Is it the economy?  Is it political?  Is it changing demographics?  Are we getting sick or injured at an alarming rate?   Have the eligibility rules changed?  Quite likely, it’s some combination of these postulations.

But whatever the reason for the surge in disability claims, I think it’s time to stop ignoring the tin can clattering off the walls.  I say this because, according to the Social Security Trustee Report, the SSDI program will only be able to pay full benefits through 2016.  That’s not very far off.  After 2016, there would only be sufficient funds to pay just over 80 cents on the dollar.

As a financial advisor, I always come back to the math.  If the math indicates the numbers do not add up, it is likely a problem.  But problems can be solved.

According to the Social Security Trustee Report, the SSDI problem is just over a year away.  Even more alarming, the retirement portion of the Social Security program is in jeopardy not too many years later.

I’m puzzled as to why the trustees’ annual report receives such little press.  The mathematic realities of the entire program need to be dealt with now.

If they continue to be glossed over, the lead story in the news will soon be the announcement of a major Social Security crisis.  At that point, everyone will wonder how it happened and why we weren’t aware that a crisis was imminent.           

Within two years, some tough decisions need to be made, because borrowing more money to pay promised benefits is not a prudent mathematical decision.