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Social Security Disability: What Happens When It Runs Out of Money?

Social Security helps not only retirees but also roughly 9 million of people suffering from disabilities. Unfortunately, the trust fund that covers disability payments is in even worse financial condition than the trust fund that covers retirement benefits. What will happen when the disability program's trust fund runs out?

Source: Social Security Administration.

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, talks about the two Social Security trust funds, noting that the latest estimates give the retirement trust fund about 20 more years before it runs out of money, but the disability trust fund is slated to be used up by 2016, just two years from now. Dan notes that if it does run out of money, recipients will only get about 80% of their scheduled benefits, with cuts happening automatically. Dan points out that one simple fix would be to have more Social Security payroll taxes allocated toward disability, but that would only leave the retirement trust fund in worse shape and not provide a long-term fix. Dan concludes that what happens with disability could provide answers on what politicians will do with the retirement side of Social Security decades from now.

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Read/Post Comments (13) | Recommend This Article (29)

Comments from our Foolish Readers

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  • Report this Comment On July 06, 2014, at 7:34 AM, nzk91g wrote:

    Don't shift any of my SS retirement money to disability. That will just move up the date that it runs out of money. I know a guy that worked a Ford Motor for 18 years and missed 9 years of that (not all at once) time due to drug & alcohol addiction. Ford gave him medical retirement at age 36. based on that he also got SS disability. He now works delivering newspapers (cash business so he can keep benefits) and makes more total money than he did working at Ford.

  • Report this Comment On July 06, 2014, at 8:04 AM, bigsunday wrote:

    The answer is the Fair Tax Act because it will fully fund Social Security and Disability. Call your Congressman and tell him to cosponsor HR 25, then call your Senator and tell him to cosponsor S.122

  • Report this Comment On July 06, 2014, at 9:46 AM, Dlittle904 wrote:

    I seem to know just too many people drawing this

    that should not be…Many scam it…The only

    answer would be stricter screening of applicants.

    This is an entitlement….SS is NOT….we pay into it and now draw it….

  • Report this Comment On July 06, 2014, at 9:54 AM, gskinner75006 wrote:

    Given that most of the disability is fraud, let it cut to 80%.

  • Report this Comment On July 06, 2014, at 11:26 AM, sporked wrote:

    What happens when they run out of money??

    They print more!

  • Report this Comment On July 06, 2014, at 11:30 AM, drixnot wrote:

    Here's a thought.... cut disability payments. Start with people that could get a job but refuse to do so.... or are working under the table.

    The fact of the matter... the cheats are not collecting welfare... the cheats want disability because that is where the money is at.

  • Report this Comment On July 06, 2014, at 11:53 AM, Waldo wrote:

    Yes SSDI is prone to fraud and yes some fake illness or injury, but the program is something that is paid into just like SS. It is there to cover workers that LEGITIMATELY cannot do their work any more. Make the litmus test to qualify more stringent and stop using obesity, depression, drug and alcohol related "illness" etc. as a "disability. The program is needed by those that get injured or contract an illness that does not allow them to work and bring home a livable wage anymore. Support it, but weed out the fakers.

  • Report this Comment On July 06, 2014, at 12:01 PM, magnru wrote:

    End rampant fraud. Lawyers who hire Reputable Doctors to certify that their clients are disabled in order to receive disability when they are not in fact disabled are scamming the govt. There needs to be more oversight including harsh penalties such as lifetime disbarment to practice law and loss of license to practice medicine. The cost of bureaucracy for govt. oversight is minimal compared to the billions scammed in this way.

  • Report this Comment On July 06, 2014, at 1:07 PM, sapphire wrote:

    I was BORN handicapped (Spina bifida/paraplegia) and so was my daughter (Cerebral Palsy, Epilepsy, Hemiplegia, Mentally Challenged {they won't let me put the R word in}, so her jobs were limited but SHE HAS WORKED TOO. Being BORN this way was in no way our fault.

    My daughter and I have been in the working world. As of now, I am 62, have ALWAYS been wheelchair bound, BUT I worked and as I said above, so has my daughter.

    We have been to all the "organizations" - Goodwill, Best Buddies etc. but they are so overwhelmed with people asking and not enough money to go around, that we keep getting pushed to the bottom of the pile.

    So, those of you who want to hire 2 handicapped ppl, please email me!!! We live in Boston, can travel on the buses and trains, and are WILLING AND ABLE to go to work!!!!!!


    Thank you,

    Mary and Renee

  • Report this Comment On July 06, 2014, at 3:38 PM, soundersfan wrote:

    I understand that there are people who are legitimately disabled, BUT..this country, in an effort to be "humane" has allowed more and more 'suspect' definitions of disability to be included.

    As a cancer survivor, I think it is appropriate for any stage IV cancer patient to be fast tracked to receive SSDI BUT (they all will tell you that they have NO problem with this next part) they should, even at a stage IV, be reevaluated on a YEARLY basis. My friend's ex-BIL drank himself into a stupor, basically mutilated his liver and frankly, they never thought he would survive. However, with modern medicine, this cretin is now fine...a good FOUR years after being approved for SSDI. He travels, chooses NOT to work (has told us so) and takes out student loans to 'live' on in addition to his SSDI payments. He has no intention of ever paying back the school loans and hopefully, they will start deducting his payments from his SSDI. I understand that people like this person may not be able to do the same physical work that he previously did but that doesn't mean he is totally incapable of working. I can't tell you how many people that know someone that is abusing the system like this. It's morons like these that make the whole SSDI so fragile and make us all suspect of who REALLY needs it and who is just milking/playing the system.

  • Report this Comment On July 06, 2014, at 9:39 PM, louis73 wrote:

    Cut off all of the welfare and pay those that payed into the system

  • Report this Comment On July 06, 2014, at 10:30 PM, BRUCEKRASTING wrote:

    CBO's numbers have the DI Trust Fund running out in December of 2016. A timeline:

    Nothing will happen with DI in 2014 because of the bi-elections.

    Nothing will happen with DI in 2015 because the Republicans will control the Senate and the House, and Obama will be a very lame duck.

    Nothing will happen with DI in 2016 as this is the big presidential election year.

    So at the end of 2016 a "temporary" measure will be passed. DI will raid the retirement fund for the shortfall.' This will be the 6th time that Congress has done this.

    The raid will result in the combined OASDI TF to run dry in 2029. That means that there will be only 12 years left to "fix' SS before it goes off the cliff.

    The funny thing about all this is that Hillary Clinton will be the next President, and her first official act will be to gut SS. She will be forced to socialize SS. Roosevelt would be rolling in his grave.

    A muse of history?

  • Report this Comment On June 07, 2015, at 7:43 PM, Scotland2007 wrote:

    I agree there are people that are collecting SSDI that do not deserve it but not everyone on it doesn't deserve it. You can't get SSDI if you never worked and paid into SS. According to the statistics of the current average SSDI monthly check if every SSDI check gets cut in 2016 by 20% the recipients will then be bumped to SSI because they will then be below the national poverty level. Then what? We will still have to foot the bill for them somehow.

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Dan Caplinger

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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