NCPA - National Center for Policy Analysis

Social Security Disability on Verge of Insolvency

August 23, 2011

Laid-off workers and aging baby boomers are flooding Social Security's disability program with benefit claims, pushing the financially strapped system toward the brink of insolvency, reports the Associated Press.

  • Applications are up nearly 50 percent over a decade ago as people with disabilities lose their jobs and can't find new ones in an economy that has shed nearly 7 million jobs.
  • The stampede for benefits is adding to a growing backlog of applicants -- many wait two years or more before their cases are resolved -- and worsening the financial problems of a program that's been running in the red for years.
  • New congressional estimates say the trust fund that supports Social Security disability will run out of money by 2017, leaving the program unable to pay full benefits, unless Congress acts.
  • About two decades later, Social Security's much larger retirement fund is projected to run dry, too, leaving it unable to pay full benefits as well.

The trustees who oversee Social Security are urging Congress to shore up the disability system by reallocating money from the retirement program, just as lawmakers did in 1994.  If Congress does not act, the disability program will collect only enough payroll taxes to pay about 85 percent of benefits after the trust fund is exhausted in 2017.

  • Even if Congress does act, the combined retirement and disability trust funds are projected to run out of money in 2036, the trustees say.
  • The new congressional report estimates the combined fund would run out of money in 2038.
  • At that point, the combined programs would collect enough in payroll taxes to pay about three-fourths of benefits.

Source: Stephen Ohlemacher, "Social Security Disability on Verge of Insolvency," Associated Press, August 22, 2011.  "CBO's 2011 Long-Term Social Security Projections," Congressional Budget Office, August 2011.

For study:


Browse more articles on Tax and Spending Issues