2015 was a momentous year for Social Security, with the program coming into the limelight as the campaign season kicked into full gear. Here are a few of the most important headlines that pointed toward a positive future for Social Security and the tens of millions of Americans who rely on it for their financial security.
Lawmakers ensure solvency for the Social Security Disability Trust Fund beyond 2016
The most important immediate piece of good news for Social Security came late in the year, when lawmakers came to a compromise that ensured the solvency of the Social Security Disability Trust Fund beyond next year. The Social Security Trustees Report had predicted for several years that the disability fund would run out of money in 2016, and that required quick action to find ways to fund the program and avoid what would have been a potential cut of around 20% for disabled Social Security recipients.
The federal budget deal that became law in early November solved the immediate problem of the Disability Trust Fund's impending exhaustion by arranging to divert some money that would otherwise have gone into the Retirement Trust Fund. The move should extend funding for full disability benefits until 2022, but critics argue that the move did little to solve the structural problems that brought the Disability Trust Fund to the brink of running out of money. In particular, fraud in the disability program has been widespread, with even some federal judges having faced allegations of colluding with lawyers who specialize in disability claims. Nevertheless, for those who legitimately need their disability benefits, the move gives them some breathing room before more extensive reform is necessary.
Social Security gets another year to change its ways
Another good piece of news from the Social Security Trustees Report is that the overall program got a one-year reprieve on the projection for its eventually depleting the Retirement Trust Fund. In 2014, the Trustees reported that they expected that the Retirement Trust Fund to run out of money in 2034. This year, they pushed that estimate back to 2035. They also said that if lawmakers eventually decide to merge the disability and retirement funds, then the two combined funds would run out of money in 2034, a year later than previously projected.
In addition, the actuarial deficit for Social Security over the next 75 years came down slightly to 2.68% of taxable payroll. That makes potential solutions like raising the payroll tax or cutting benefits a little less severe, with an immediate 1.31 percentage point increase to 7.51% for payroll taxes or an immediate 16.4% cut to benefits being sufficient to help the program survive. The longer lawmakers wait to take action, though, the bigger the changes that will be necessary to keep the program financially viable.
Social Security expands for same-sex spouses
The Supreme Court decision in June on the Obergefell v. Hodges case held that same-sex couples have the right to marry in all states and that had an immediate impact on Social Security. In a statement on its website, the Social Security Administration acknowledged that more married same-sex couples will have their marriages legally recognized for purposes of determining entitlement to Social Security benefits than was the case under prior law.
In particular, same-sex spouses will have the right to claim spousal benefits based on their spouse's work history during their joint lifetimes. They will also be able to claim survivor benefits as a widow or widower if they either have reached age 60 or care for the child of the deceased spouse under age 16. Divorced same-sex spouses will be entitled to same spousal benefits as current spouses if they meet the requirement that they were married for at least 10 years.
Prior to the Supreme Court decision, the SSA followed a confusing set of laws. If the state in which the couple lived recognized their marriage, then they were able to receive Social Security benefits. If they lived in a state that didn't recognize their marriage, then Social Security didn't pay benefits. The Supreme Court decision simplifies matters greatly, even if it continues to be controversial.
There was a lot happening with Social Security in 2015, and these three areas involved people getting more benefits or being more secure in the benefits they received. The Social Security program is far from in perfect shape, but it will continue to be an essential part of retirement planning for millions of Americans for years to come.