NCPA - National Center for Policy Analysis


March 3, 2005

The Social Security disability program faces challenges "at least as daunting as the retirement program," says economist Alan B. Krueger

  • According to a forecast by the Social Security trustees, the Old Age and Survivors Insurance trust fund will last until 2044, while the disability trust fund will be exhausted in 2029.
  • Despite improvements in health and life expectancy, the number of workers and their dependents receiving disability benefits increased to 8 million in 2004 from 3.9 million in 1985 because of weaker earning opportunities for low-skilled workers and more expansive disabilities coverage, according to Massachusetts Institute of Technology economist David Autor, and Mark Duggan of the University of Maryland.
  • One in eight people who start receiving Social Security retirement benefits each year come from the disability rolls, says Autor.

President Bush has proposed adding personal retirement accounts to Social Security, but has indicated that he does not plan to change the disability program. Currently, disability benefits equal Social Security benefits, and disabled workers start receiving Social Security retirement benefits when they reach age 65.

But if the disabled moved off disability benefits at retirement age and draw on their personal accounts and (smaller) guaranteed Social Security benefit, their incomes could drop: They would not have accumulated as much in their personal accounts due to their shorter work life.

On the other hand, if disability benefits continue at their current level, they would be more lucrative than retirement for workers who had poor investment returns on their personal accounts.

Older workers could flood into the disability program, which has difficulty in making consistent judgments as to whether workers are disabled, says Krueger.

Source: Alan B. Krueger (Princeton University), "Disability Insurance Side Of Social Security Raises Questions," Economic Scene, New York Times, March 3, 2005.

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